The NIL business model

[the juiceman cometh]

While I agree with your overall point, not sure the math is correct here.

1% of $6B is $60M, annually. Over three days that closer to half a million dollars. After tax, $300-400K depending on his rate.

Again agree he could give the full year's amount to IU (yuck) and 'suffer' by dipping into the principal.

Whoops you're right. Major math error on my part. This is why I changed majors very early and did not stick with engineering.

Looking back at what I did, I calculated his daily interest at approx. 164,000 but then read it off the calculator as $16.4 million. Yikes. I deserve the public shaming on that one!

 

[aaeismacgychel]

To the bolded, isn’t one of the big differences that the schools themselves are only responsible for ~20% of the revenue sharing. The remaining is paid by boosters who aren’t necessarily doing it to profit, but more so out of loyalty to the program/just for fun?

Correct, but I see the same long-term issues. While booster money right now is free flowing, it's because there's still room for growth. I want to say that for the NHL it was when 90s star salaries hit the $8M/season mark that the business model was no longer viable. Market value for players became higher than could be afforded.

Where I see things going in the NCAA for NIL is similar but boosters will feel those same effects owners did. That eventually it gets to the point where fielding a competitive team starts stretching the limits of what a team's fanbase can supply. And at that point the fans will face the brutal reality. That they can continue busting their budget for an annual 7-5 or 8-4 team or they can just give up and stop the donations as the value just is no longer there. But if the boosters back off or fall behind, the team starts losing more and it becomes much harder to even get back to that competitive level. At which point it's sort of over for them.

To be viable the NCAA needs competitive games including teams from across the country. If they start losing that to pricing 95% of teams out, they'll start hemorrhaging viewers and revenue. Beginning of the end type stuff

 

[WolfpackIllini]

I don't understand how a kid can get NIL money without an enforceable contract (ala Morez Johnson, the Washington QB, etc).
Offer, acceptance, consideration, etc.
If a kid reneges, you slap an injunction on him and he can't play elsewhere until that gets resolved.
And these contracts, if longer than 1 year, could (should?) have buyout clauses just like coaches.
This "not an employee" thing is bizarre and will have to be resolved.

 

[aaeismacgychel]

And how do you teach them right, wrong, morals, ethics, etc.? Imagine Demond Williams’ parents: “Son, you made a commitment, you signed on the dotted line, in life we have to do what’s right even when we want to go against our word. If we don’t stand by our word then we … I’m sorry … how much more? 2 million? Son, sometimes you gotta do what’s best for you.”

I'm still waiting for the moment someone takes an NIL deal from the boosters of one school, then decides to bolt for a better NIL deal at a second school, and after the first school refuses to pay them, the player takes that first school's boosters to court to try and get that payment still under the auspices that they're still willing to do the agreed upon appearances per the original agreement they signed. Get that double dip upheld.

 

[STLini25]

I don't understand how a kid can get NIL money without an enforceable contract (ala Morez Johnson, the Washington QB, etc).
Offer, acceptance, consideration, etc.
If a kid reneges, you slap an injunction on him and he can't play elsewhere until that gets resolved.
And these contracts, if longer than 1 year, could (should?) have buyout clauses just like coaches.
This "not an employee" thing is bizarre and will have to be resolved.

Please explain. What did the kid renege on? Who is slapping an injunction? Why can’t they play football?

 

[aaeismacgychel]

I don't understand how a kid can get NIL money without an enforceable contract (ala Morez Johnson, the Washington QB, etc).
Offer, acceptance, consideration, etc.
If a kid reneges, you slap an injunction on him and he can't play elsewhere until that gets resolved.
And these contracts, if longer than 1 year, could (should?) have buyout clauses just like coaches.
This "not an employee" thing is bizarre and will have to be resolved.

I know there was a change in the past year regarding schools being allowed to have NIL related discussions, but from my understanding NIL is still entirely based on paying for that player's likeness for appearances and ads and the like which is *cough* completely unrelated to the school they play for. So you can have contracts based on payout for appearances and there's probably clauses there for not attending those appearances, but I don't believe they're able to legally have clauses in there that includes playing for a specific college.

So legally, I think you're dealing with a nudge nudge wink wink so if you play for our college we have this NIL deal set up for you, when what is actually being legally signed is solely a contract based on payment for appearances.

i.e. there's no actual legally binding obligation for a player to play at that school, just an obligation to show up at those appearances to get paid.

 

[HereSoIDontGetFined]

Nothing about what's happening right now involves NIL.

NIL implies being paid for being able to sell your name, your face, whatever, through licensing to apparel companies or other businesses. These things involve contracts. But you don't ever hear about who those contracts go through.

This is not the NIL era. It is the pay-for-play era. And that's why it's unsustainable.

 

[WolfpackIllini]

I know there was a change in the past year regarding schools being allowed to have NIL related discussions, but from my understanding NIL is still entirely based on paying for that player's likeness for appearances and ads and the like which is *cough* completely unrelated to the school they play for. So you can have contracts based on payout for appearances and there's probably clauses there for not attending those appearances, but I don't believe they're able to legally have clauses in there that includes playing for a specific college.

So legally, I think you're dealing with a nudge nudge wink wink so if you play for our college we have this NIL deal set up for you, when what is actually being legally signed is solely a contract based on payment for appearances.

i.e. there's no actual legally binding obligation for a player to play at that school, just an obligation to show up at those appearances to get paid.

Very interesting stuff.
There would presumably be clauses related to exclusivity of the appearances being only for one school.
But in the case of Morez or the Washington QB, there must be an "out" clause on the kid's side, which the college would have had to agree to (that would seem to be dumb), otherwise the kid couldn't sign a different NIL deal with another school, no?
OTOH, the contract would be in breach if either the kid didn't make appearances, or the school/donor didn't make payments, which would enable the kid to go elsewhere, unless there are penalty clauses also included and in effect in case of breach (which I would assume to be the case, but since this is still the Wild West...).
Crazy times, for sure.

 

[STLini25]

Very interesting stuff.
There would presumably be clauses related to exclusivity of the appearances being only for one school.
But in the case of Morez or the Washington QB, there must be an "out" clause on the kid's side, which the college would have had to agree to (that would seem to be dumb), otherwise the kid couldn't sign a different NIL deal with another school, no?
OTOH, the contract would be in breach if either the kid didn't make appearances, or the school/donor didn't make payments, which would enable the kid to go elsewhere, unless there are penalty clauses also included and in effect in case of breach (which I would assume to be the case, but since this is still the Wild West...).
Crazy times, for sure.

What do you mean the college would have to agree to?

 

[Chukwuwumba]

Everything is all effed up because college football administration didn’t make the necessary changes at a reasonable time. Changes to the playoffs came way too late and conferences broke up/mega conferences formed. Player compensation came way too late and now it’s a free for all.

First step - the calendar has to ironed out. Coaches and players should not be transferring during playoffs. Should not be an option until season is done.

2nd - to figure out players compensation. Coaches are employees-are they teaching (probably not) or going to school?

Afraid everything will move to slow to the detriment of the sport.

 

[WolfpackIllini]

What do you mean the college would have to agree to?

When the contract is being developed, either a service is to be performed absolutely, or there will be an "out" clause that would enable one party or the other to bail out. Assuming both the athlete and the college/donor signed the contract, for the athlete to change his mind and go sign with another school, there must be an "out" clause that enables him to do so (without recourse), otherwise he is in breach of contract and would be subject to whatever terms the contract has wrt breach.

 

[STLini25]

When the contract is being developed, either a service is to be performed absolutely, or there will be an "out" clause that would enable one party or the other to bail out. Assuming both the athlete and the college/donor signed the contract, for the athlete to change his mind and go sign with another school, there must be an "out" clause that enables him to do so (without recourse), otherwise he is in breach of contract and would be subject to whatever terms the contract has wrt breach.

You stated earlier you don’t understand how the contract isn’t enforceable? And if the player reneges then slap with an injunction preventing him from playing football and earning a living.

1) the University isn’t a party to the agreement.

2) the contract can’t and doesn’t prevent the student athlete from transferring schools.

3) the student athlete isn’t “reneging”.

4) there are conditions in the agreement where the payer can void the contract.

How can you enjoin a student athlete from transferring because of an NIL deal?

 

[Illini in Italy]

I think one topic that no one is discussing regards the other XX number of intercollegiate sports activities that fall under the DIA's purview. With the big money sports (MBB, FB) generating 99.999% of the revenues, how long until today's collective university system spins off those big money sports outside the DIA as seperate legal entities with only an "affiliation" to the universities to wall off concerns over Title IX and DIA funding? "Welcome to Gies Memorial Stadium/ the State Farm Center, home of the Fighting Illini, sponsored by the University of Illinois at Urbana Campaign". It also solves the issue of a CBA/antitrust exemption . . . . . can you say minor leagues?

And the other sports? They can continue to be funded by the DIA, but with a MUCH smaller budget, if any budget is left over.

 

[Illwinsagain]

Everything is all effed up because college football administration didn’t make the necessary changes at a reasonable time. Changes to the playoffs came way too late and conferences broke up/mega conferences formed. Player compensation came way too late and now it’s a free for all.

First step - the calendar has to ironed out. Coaches and players should not be transferring during playoffs. Should not be an option until season is done.

2nd - to figure out players compensation. Coaches are employees-are they teaching (probably not) or going to school?

Afraid everything will move to slow to the detriment of the sport.

This would be great, except school starts before the playoffs end. If college football can get the playoffs have semi's 1/1 and championship on 1/8, this COULD work. Maybe round of 8 the weekend prior to Christmas and the round of 16 (yes, I believe it is coming), the week prior.

 

[Chukwuwumba]

This would be great, except school starts before the playoffs end. If college football can get the playoffs have semi's 1/1 and championship on 1/8, this COULD work. Maybe round of 8 the weekend prior to Christmas and the round of 16 (yes, I believe it is coming), the week prior.

Exactly. Have to work from the end. Figure out if that is 1/1 or first week. Then work backwards.

It would be a big shift in traditional scheduling. Will a dramatic change be made ? I don’t know. Saw some internet talk of pushing games to week 0. End conference championship games? Less regular season games?

 

[the juiceman cometh]

Nothing about what's happening right now involves NIL.

NIL implies being paid for being able to sell your name, your face, whatever, through licensing to apparel companies or other businesses. These things involve contracts. But you don't ever hear about who those contracts go through.

This is not the NIL era. It is the pay-for-play era. And that's why it's unsustainable.

Pay-for-play would actually be very sustainable. It would allow for collective bargaining, enforceable contracts, and negotiations about all the kinds of things fans want (limitations on eligibility, limitations on transfers, salary caps, transparency, and c.). Pay-for-play would also mean the players are employees, with all the protections of being employees, and the NCAA has decided that is the red line they will not cross. So the end result is the NIL system. The system we currently have is essentially a result of the NCAA refusing the obvious solution of players as employees while also still having to comply with anti-trust laws.

 

[illinistephen]

1. Fix the schedule: Have the championship game be Jan 1. Playoffs round 1 starts Dec. 11. Turn week zero into week 1.
2. Set a maximum number of years of eligibility everyone has to be on a college roster, no exceptions, no redshirting. Get ahead of the future 9th year senior who never leaves college who's a perpetual student.
3. Have some form of multi-year agreements between an individual player and school from the revenue sharing fund the school can disperse.
4. Get rid of the revenue share cap. Let schools spend whatever they can, want, or need. Just like in mlb where the dodgers and marlins spend what they can at vastly different amounts. Power teams will just cheat with the NIL system to go above the revenue share cap limit anyways.

 

[HereSoIDontGetFined]

Pay-for-play would actually be very sustainable. It would allow for collective bargaining, enforceable contracts, and negotiations about all the kinds of things fans want (limitations on eligibility, limitations on transfers, salary caps, transparency, and c.). Pay-for-play would also mean the players are employees, with all the protections of being employees, and the NCAA has decided that is the red line they will not cross. So the end result is the NIL system. The system we currently have is essentially a result of the NCAA refusing the obvious solution of players as employees while also still having to comply with anti-trust laws.

Right and that is what we are missing.

 

[WolfpackIllini]

You stated earlier you don’t understand how the contract isn’t enforceable? And if the player reneges then slap with an injunction preventing him from playing football and earning a living.

1) the University isn’t a party to the agreement.

2) the contract can’t and doesn’t prevent the student athlete from transferring schools.

3) the student athlete isn’t “reneging”.

4) there are conditions in the agreement where the payer can void the contract.

How can you enjoin a student athlete from transferring because of an NIL deal?

I haven't been working contracts in a long time (and never labor/employment contracts), and this NIL environment seems to have some unusual aspects, but it seems to me:
1. whomever is the party to the agreement could certainly bring charges
2. while the student can transfer schools, if the NIL contact requires him to perform services on, say, saturdays in Urbana, or elsewhere where the UI team happens to be, at the demand/discretion of the donor, you could certainly make this effectively prevent the kid from playing at another school
3. if the kid doesn't comply w (2.) he is in breach and reneging
4. the donor would have to agree to the conditions that allow the kid to void the contract.
So while you can't prevent a kid from transferring, you can achieve the same end in ways like the above.
But again, I am not a labor law expert.
Possibly, the kids hold the most cards here, and the donors might have to agree to a weak contract to get the kid to sign.

 

[STLini25]

I haven't been working contracts in a long time (and never labor/employment contracts), and this NIL environment seems to have some unusual aspects, but it seems to me:
1. whomever is the party to the agreement could certainly bring charges
2. while the student can transfer schools, if the NIL contact requires him to perform services on, say, saturdays in Urbana, or elsewhere where the UI team happens to be, at the demand/discretion of the donor, you could certainly make this effectively prevent the kid from playing at another school
3. if the kid doesn't comply w (2.) he is in breach and reneging
4. the donor would have to agree to the conditions that allow the kid to void the contract.
So while you can't prevent a kid from transferring, you can achieve the same end in ways like the above.
But again, I am not a labor law expert.
Possibly, the kids hold the most cards here, and the donors might have to agree to a weak contract to get the kid to sign.

You are missing the point or making it way too complicated. The athlete can transfer. If he transfers, cannot is void. NIL cannot prevent transfer.

 

[Mr. Tibbs]

You are missing the point or making it way too complicated. The athlete can transfer. If he transfers, cannot is void. NIL cannot prevent transfer.

at the same time , when are NIL payments being made ?
100% in August ?
should be staged over the school year or season if you ask me

we need to prevent Skyy Clark situations

 

[STLini25]

at the same time , when are NIL payments being made ?
100% in August ?
should be staged over the school year or season if you ask me

we need to prevent Skyy Clark situations

It’s all negotiable but generally spread out during the season or at least past important dates

 

[Mr. Tibbs]

It’s all negotiable but generally spread out during the season or at least past important dates

I was under the impression Clark took all the money & ran

 

[STLini25]

I was under the impression Clark took all the money & ran

He was asked to leave. I think it was a situation of it’s better to let him keep the money rather than fight about it. I don’t know what he was owed when he left and what actually happened but I think it was “here’s what your owed and get out”

 

[Mr. Tibbs]

He was asked to leave. I think it was a situation of it’s better to let him keep the money rather than fight about it. I don’t know what he was owed when he left and what actually happened but I think it was “here’s what your owed and get out”

I wasnt aware of the details on that one
it just seems to me that giving out all the NIL funds at the beginning of the season in any sport is problematic