At long last, student-athletes can make money from marketing deals. But it’s a Wild West landscape and regulatory questions loom.
March Madness is a goldmine for the NCAA and its member conferences.
Again this year, the organization expects to rake in nearly $1 billion from the popular tournament for college basketball supremacy.
It’s a cash cow as well for CBS Sports and Turner Sports, which also expect to make about $1 billion in ad revenue for their live game coverage. And let’s not forget America’s bettors and bookies, some of whom will profit handsomely from this year’s estimated $3.1 billion handle.
Curiously, though, one integral group has always been left out of the annual bonanza: the players.
That exclusion, however, has come to an end. Thanks to a U.S. Supreme Court ruling last summer, at least some players are making money from marketing deals — and we’re not talking chump change. “The numbers are getting crazy,” says Frank Vuono, a sports marketing executive for 16W Marketing. Many deals are in the six-figure range, and some top $1 million.
They’re called “NIL deals,” and provide athletes various opportunities to sell their “name, image, and likeness,” thanks to a mixture of new state laws and NCAA rule changes that have gone into effect since last July following SCOTUS’ green light.
As always, NCAA rules prohibit schools from paying student-athletes. But the NIL laws and school policies allow third parties to pay students if they provide marketing services in exchange.
As you may expect, the most talented or sought-after performers are landing the most lucrative deals. Here is a sampling:
- Last August, Southlake, Texas, high-school football star Quinn Ewers decided to forgo his senior year and sign a $1.4-million NIL deal with GT Sports Marketing to be a quarterback at Ohio State.
- Last September, Louisiana State University gymnast Olivia Dunne, who has 5.7 million social media followers, struck a deal worth about $1 million with activewear brand Vuori.
- In February, high-school junior Bronny James signed an NIL deal with PSD Underwear that could pay him $5.1 million by the time he graduates. James is the son of NBA star LeBron James.
Lesser athletes are benefitting too, as March Madness’ bright spotlight has made apparent. After the 15-seeded Saint Peter’s Peacocks advanced to the “Elite Eight” round, a mustachioed and tousle-headed Peacocks guard named Doug Edert announced that he signed a deal with Buffalo Wild Wings and launched a clothing line featuring his image.
Even the players on the bottom of the pecking order are in on the action. The bedding company Sheets & Giggles announced NIL deals with the five most “well-rested” players in the tournament: the ones with the most bench time.
Big Schools Get Big Money
According to Opendorse, a company that assists athletes in maximizing their endorsement value, the average NIL deal for Division 1 athletes as of Feb. 28 was $561. But when you look at the big-time athletic schools, the numbers are far higher. Starting in August, for instance, a nonprofit group called Horns With Heart will pay every offensive lineman with a scholarship on the University of Texas football team $50,000 a year. Another Texas booster group pledged $10 million to the school’s athletes. Ohio State announced that in the first six months of NIL activity, 220 athletes procured $2.98 million in NIL payments for an average of $13,545 per athlete.
As NIL becomes more integral to college athletic success, look for the numbers to escalate ever higher. One indication of where we’re headed was an announcement in early March about a deal involving an unnamed high-school junior. That highly sought-after football quarterback reportedly signed a deal with an unnamed school’s “NIL collective” that could pay the player $8 million by the end of his junior year in college.
That term, “NIL collective,” is the latest wrinkle in the NIL landscape, and it is raising legal questions.
The collectives, often driven by sports-crazy alums, are technically “independent” of the schools. They pool funds from companies and organizations to help finance NIL deals for athletes and assist the athletes in monetizing their own brands. But with the recent news about the unnamed high-school junior signing an $8-million deal, it seems inevitable that the collectives will be competing with each other to recruit the best high-school athletes.
Plausible Deniability With Contracts
It sure sounds like that unnamed school had a hand (or a finger?) in recruiting that athlete. But The Athletic, which broke the news, reported that the contract had just enough vagueness to provide plausible deniability:
“As per NCAA rules, the contract explicitly states, ‘nothing in this Agreement constitutes any form of inducement for (the athlete) to enroll at any school and/or join any athletic team.’ There is no mention of any specific university, only that he be ‘enrolled at an NCAA member institution and a member of the football team at such institution,’ ostensibly to avoid violating the NCAA’s pay-for-play rule.”
The NCAA is taking a mostly hands-off position since the Supreme Court ruling, essentially deferring to state laws and schools’ interpretation of those laws. In total, 28 states have NIL laws on the books; the NCAA says that in the others, athletes are free to engage in NIL activity without violating NCAA rules.
Still, the NCAA is policing some NIL activity. The organization investigated NIL deals involving football players at Brigham Young University and the University of Miami to determine whether the arrangements violated the NCAA’s pay-for-play prohibition.
Looking ahead, it’s a good bet that the current Wild West atmosphere will grow ever wilder. Americans love spending big money on college sports and rooting for their local teams, and now the players are free to enrich themselves as much as they can.
Several bills have been introduced in Congress to regulate NIL, but none have gone very far. Most recently, NCAA president Mark Emmert appeared before Congress last September, asking for a “federal framework” to govern NIL.
Congressional action does not seem likely soon. But if more and more high-school athletes score shady-sounding multi-million-dollar deals, pressure for greater regulation may increase.
Name, Image, Likeness Laws Give Student-Athletes a Chance to Cash in Originally posted on March 29, 2022 3:27 PM by Richard Dahl