The NCAA’s NIL has Changed the Game!

The NCAA’s NIL has Changed the Game!

On June 30th, 2021, the National Collegiate Athletic Association (NCAA) changed the rules and changed amateur sports forever as we know them, by ruling that college players can earn money by using their Name, Image, and Likeness (NIL) to earn money while remaining college!

My understanding is that the premise behind this rule change allows colleges to earn money from their student-athletes.  Therefore, why shouldn’t the athletes be able to share in the revenue that their NIL earns for their university?

Here is how this new arrangement works; players can earn money by signing autographs, striking endorsement deals profiting from their social media, etc.  They can market themselves or hire agents or consultants to find ways to maximize their earning potential.  Companies can sign college players to contracts for appearances or promote them, just like professional athletes do.  There are no current guidelines on how much compensation can be earned.

Additionally, donors can contribute money to “Collectives,” which are managed by third parties, often booster groups.  The “Collectives” can also enter into agreements with companies recruiting athletes, or the “Collectives” can distribute the money to athletes directly.

Currently, colleges and universities cannot be directly involved in distributing money BUT, the NCAA doesn’t seem to be enforcing that rule!  It is quite possible that coaches could be secretly directing the “Collectives” on how much money to distribute to specific players. 

Just like the Wild West!

Not only have the financial rules landscape changed, but athletes now may also enter “The Transfer Portal” without having to sit out and lose one year of eligibility!  This has created a record transfer frenzy where players are holding out for the best offer!  Nebraska football coach Matt Rhule told reporters last week that, “a good quarterback in the (transfer) portal costs $1 million to $2 million right now!”

There is also a proposal pending that would allow colleges to make NIL (Name, Image, and Likeness) deals directly with their athletes via a “Trust Fund.”  In this case, schools would use booster/donor monies put in the trust fund to pay athletes lump sums of income on top of athletic scholarships.  No matter what happens, amateur collegiate sports will NEVER be the same!

You may be asking yourself, “Self, what does this all mean?”  I will break this down into ripple effects and the results of those ripples.

Some of the ripple effects are:

  1. Colleges are in a race to build their NIL infrastructures and fund them with millions of dollars ready for distribution.
  2. A new cottage industry is born due to the necessity for marketing strategists and “NIL Collective” experts who now need funding and staffing.
  3. ALL major Division 1 colleges must immediately change the way they do business with recruiting and the NIL to compete!
  4. As the system continues to grow, so do the bank accounts of the top athletes.

Some interesting results I have seen over the past 2 years of NIL rule changes:

  1. Student-athletes are now choosing schools based on how much money they can earn.  They are also “chasing paychecks” in the fertile transfer portal!
  2. University of Texas sophomore backup quarterback Arch Manning, son of Cooper and nephew of Peyton and Eli, earns $2.9 million while, Brock Purdy, star quarterback of the San Francisco 49ers (and MVP candidate) makes the pro $870,000 minimum wage. 
  3. More athletes are staying in school.  Iowa women’s basketball star Caitlin Clark (some call her the female Stephen Curry) will be returning for her senior year.  She’s making almost $800,000 in NIL.  The average WNBA salary is $120,000.  Why leave school when you will be taking a 600,000% pay cut to enter the pros?  Also, freshman Bronny James, son of LeBron James, is making the highest NIL income for playing hoops at USC (University of Southern California) at $6.1 million. 
  4. Due to fear of injury, many athletes currently in the transfer portal are skipping their team’s bowl game. 
  5. There are new NIL metrics now available.  For example, St. John’s is recruiting VJ Edgecombe, the #1 noncommitted boy’s hoop star prospect (from Long Island Lutheran High School) for 2024.  VJ’s “NIL Valuation” estimates that it will take roughly $512,000 to sign him.

In summary, the NIL is here to stay, and my take is that it will grow exponentially! 

This season, as per rivals.com, there were 1682 college football and 1134 college basketball transfers.  High school athletes now get ranked nationally versus their same grade-level peers starting in 10th grade.  There is added pressure for them to perform as collegiate freshman, especially if their NIL income is lucrative as those income figures are public records. 

I hope it is all worth it in the endgame and it doesn’t adversely affect their academic pursuits!