Inside NIL collectives' strategies to men's basketball's transfer portal

On3 imageby:Andy Wittry04/14/23


More than 20 percent of Division I scholarship men’s basketball players have entered the transfer portal in the sport’s second offseason of the NCAA’s name, image and likeness era, including at least eight reigning conference players of the year who have eligibility remaining.

“I don’t know if you can even call it tampering anymore,” said Jason Belzer, who’s the co-founder and CEO of Student Athlete NIL, which provides support to roughly 20 NIL collectives nationally. “I think it’s just business as usual. If you have an open-ended market like it is, there are conversations happening everywhere.

“It’s pretty clear – I would say that every single school that we work with has had at least one student-athlete enter the portal and do so unexpectedly, meaning that essentially the school thought that they were coming back, everything looked good and now they’re in the portal, and it’s pretty clear that somebody’s getting into their ear.”

High-quality players who entered the transfer portal – or their representation – are often hoping the players will sign agreements worth $250,000 to $400,000 per year, with some of the most in-demand players hoping to earn at least half a million dollars.

Welcome to the status quo in an era filled with conflicting cliches, where stakeholders often simultaneously describe their approach as doing things “the right way” internally, yet the landscape in which they exist is the “Wild, Wild West.”

Correlation between the start of the NIL era and the rising number of transfer portal entrants doesn’t necessarily equal causation in terms of the sport’s offseason player movement – at least not uniformly.

Verbal Commits reported just a three-percent increase in the total number of Division I men’s basketball transfers from 2021 (1,710) to 2022 (1,762). The 2021 offseason was the last one that started before the start of the NCAA’s NIL era, as well as the first offseason in which first-time transfers received immediate eligibility in the sport.

As of April 13, more than 1,400 DI men’s basketball players have entered the transfer portal, which has a window that closes May 11. How many players have entered the portal primarily due to NIL-related reasons?

“I really think it depends on a case-by-case situation but I mean I would vouch to say at least half of them just because they’ve seen what other players have gotten,” said On3 National Recruiting Expert Joe Tipton.

John Ruiz’s tweet ‘caught everyone’s attention’

The increase in transfer portal entrants predates July 1, 2021. It includes factors such as the one-time transfer exception, veteran players who have an extra year of eligibility and players who experienced limited high school recruitments due to the COVID-19 pandemic. However, even if the pursuit of NIL deals isn’t solely responsible for the increase in transfer portal entrants, NIL opportunities are inherently part of modern roster decisions.

“I think it is a part of every discussion – at some point,” said a high-major assistant coach, who spoke on the condition of anonymity, when asked what role NIL opportunities plays in discussions about roster construction. “At the very least, it’s like housing, you know. It’s like your room and board. It’s just become sort of one of the utilities, the basics, of a scholarship offer.

“You’ve got to be prepared to discuss it. It might not be the kid’s looking for anything significant in some cases but just sort of having the opportunity. And to be honest, a lot of kids, it’s not want out of greed but it’s just they don’t want to be naive about it. You know they don’t want to leave something on the table. There’s so much smoke about NIL that kids are curious what (is) the actual fire.”

Last offseason provided a rare example of fire, not just smoke, when Miami-based businessman John Ruiz announced the terms of a deal between his company LifeWallet and Kansas State-to-Miami transfer guard Nijel Pack: $800,000, plus the use of a car, over two years.

“I think Nijel Pack and John Ruiz kind of set the standard for that last offseason and that just kind of opened up Pandora’s box,” Tipton said. “So even if you’re a player only averaging five points a game in the SEC, you can still make some money even if you have to drop down a level. There are A-10 programs with NIL backing and it may not be $400,000 a year but $40,000, $50,000 is still a solid amount of money in these players’ pockets.”

It was a flash point in the NIL landscape, where all deals are technically supposed to be structured as marketing deals under NCAA policy and state laws. But the value of many is understandably and unsurprisingly tied to the value of their athletic production and performance because of market forces and the competitive incentives to do so.

“It most definitely caught everyone’s attention and for advisors that are helping these kids,” the high-major assistant coach said of Ruiz’s tweet.

‘It’s hard to know what your actual competition is’

Not only is $800,000 a notable figure because Ruiz announced it as the value of Pack’s two-year deal but it might also set the top end of the market for collective-driven deals signed this spring.

During the sport’s current and first-ever transfer portal window, the high end of the market for a reported offer from a collective to a transfer men’s basketball player is believed to be in the high six figures and nearing $1 million – specifically, at or around $800,000.

However, whereas professional salary structures are established through collective bargaining agreements and then made public, part of the job for any athlete, agent, collective executive, or coach is to filter through rumors and private posturing. There can be a difference between the alleged value of a reported offer, the value of a signed contract, and the cash compensation that is ultimately paid.

Plus, is the value of a rumored six-figure deal annualized or paid over multiple years?

“There’s so much bullshit that floats around out there,” said Joe Messmore, a co-founder of Home of the Brave, which supports athletes at Bradley.

There’s a trickle-down effect, such that collectives that support high-major or mid-major programs might identify compensation that’s competitive with professional basketball salaries in the U.S. or Europe in order to try to retain their best players, and then collectives that support mid-major or low-major programs are forced to try to come close to matching their high-major peers in order to try to keep the program’s roster intact.

“It’s hard to know what your actual competition is, too,” said Patrick MacWilliams, the director of The Massachusetts Collective, “and what the actual value of a kid’s deal is or what would make a good impression on them.”

Coaches may or may not have relevant insight into a player’s market value, the competition in the landscape of collectives, or how contracts are structured. Plus, they’re limited, at least by rule and in theory, as to their level of involvement.

“I’m not saying every coaching staff in the country is tampering but there are third parties that are tampering,” Belzer said. “Absolutely. There are absolutely people that are going – whether it’s a collective or an AAU coach or somebody that is going out and saying, ‘Hey, you can get a lot more in this market than what you’re getting now,’ because that’s in their best interest, right?

“Everybody’s looking to make a buck.”

The largest collective budgets for men’s basketball

Based on discussions with executives from NIL collectives that support men’s basketball players at the high-major, mid-major and low-major levels, here are the general ranges of budgets for collectives in the landscape.

Belzer said SANIL’s recommendations to the collectives it supports are based on what it sees and hears from collectives that it believes are in the top 10 to 15 percentile. SANIL forms tiers of collectives based on the NET rankings of the schools in a conference. The company generally sorts collectives based upon the top 10 conferences in the NET rankings, then the next 10, and then the rest of the 32 Division I conferences.

“For basketball, I would say the biggest pots are in the $3 to $4 million range,” Belzer said. “There are probably five to 10 programs that have, you know, $2.5 million-plus for basketball.”

After launching last October, LinkingCoogs had facilitated more than $2 million in NIL deals for Houston athletes by March, according to spokesman Landon Goesling. Goesling told On3’s Pete Nakos that Houston men’s basketball players received a “good chunk” of that revenue. The Cougars earned a No. 1 seed in the 2023 NCAA Tournament, and they recently received commitments from high-profile transfers LJ Cryer and Damian Dunn, who quickly signed with LinkingCoogs.

One industry source with firsthand knowledge of how collectives operate projected that collectives with a men’s basketball budget that’s between $1 million and $1.5 million would likely place them in an elevated tier.

Belzer said a collective that supports a men’s basketball program in one of the sport’s top 10 conferences likely has an average budget between $500,000 and $1 million for men’s basketball players, or at least that’s the budget likely required to stay financially competitive with its peers.

The effects of the transfer portal and one-time transfer exception impact even a collective that supports a men’s basketball program whose staff prefers the collective to focus on its partnerships with the players currently on the team’s roster.

“The chaos from the portal has placed more of an emphasis on fundraising and increasing those numbers for the current players, so the pressure is still felt regardless,” said the director of one collective, on the condition of anonymity.

The NIL market for high-major starters

A collective that supports a blue-blood men’s basketball program, or one that wants to compete at that elite level, might be prepared to sign not only its starters but also at least one or two of its top reserves to agreements that are each worth close to six figures annually. The top two or three players on a roster might earn a higher level of compensation – maybe at least $150,000 each – than the other starters or rotation players.

While a collective that supports a mid-major men’s basketball program might have a $250,000 annual budget for the sport, a collective that supports one of the sport’s best programs might agree to a $250,000 contract with a player who’s considered one of the best who entered the transfer portal.

Market value is determined essentially by whatever one collective is willing to pay a player. Players (and their advisors) and collectives often make decisions in a vacuum with incomplete information about what else is going on in the transfer portal and NIL landscape. During a visit to a school’s campus, a player who entered the transfer portal might meet with a member of the school’s affiliated collective to discuss potential financial opportunities, or even to negotiate. Also, keep an eye on coaches and players who are represented by the same agency, who might then unite through the transfer portal.

There’s not a one-size-fits-all approach to the number and value of agreements between a collective and the men’s basketball players on a roster – “The bigger question is to ask, ‘What’s your budget?’” Belzer said – although many collectives try to offer at least some compensation to every player, or at least every scholarship player. Some might focus just on rotation players or the most important starters, based on factors such as years of eligibility remaining, production and a player’s projected fit on the next season’s roster.

SANIL recommends $75,000 for a high-major starter. The second tier of compensation is around $50,000, then a third around $25,000 and finally there’s a drop-off for the players who comprise the final spots on a roster. A smaller budget means smaller individual deals on a percentage basis.

Every Iowa men’s or women’s basketball, or football player who has signed with The Swarm Collective for this year had the opportunity to earn a minimum of roughly $10,000, according to The Swarm Collective CEO Brad Heinrichs. The collective’s executives “really socialize it,” he told On3.

If coaches want to comply with the NCAA’s interim NIL policy or existing state legislation while they’re recruiting, they can use current players’ past and present earning opportunities to tell recruits what the donor and business community has provided players in terms of NIL opportunities. The director of the collective who said the men’s basketball coaching staff prefers the collective to focus on the team’s current players said the coaches can then use current players’ deals when they’re out recruiting.

“We talked about it this morning with compliance,” the high-major assistant coach said. “You know, it’s ‘What can we say?’ That’s definitely what people are doing and what we need to be able to do. You need to sort of say, you know, ‘Here’s what our guys are able to do’ and go from there. Starter, all-conference, position.”

Potential budgets for supporting mid- and low-majors

Collectives that support a school at the mid-major level, which is admittedly a broad classification of schools, will likely have a budget for men’s basketball players that ranges from $150,000 to $350,000. One collective’s budget doubled from the 2022 season to 2023 due to the number of current men’s basketball players with whom it wanted to partner.

MESA Foundation co-founder Jeff Smith previously told On3 the collective signed 11 San Diego State scholarship men’s basketball players for the 2023 season. The San Diego Union-Tribune reported the players receive $2,000 per month, which would equate to $264,000 annually.

A collective that supports a mid-major program might also need to be able to raise an additional $100,000 to $200,000 in some years, especially if an all-conference player from a mid-major league could potentially earn six figures if he decides to transfer to a high-major program.

“It is what it is and you almost kind of have to embrace it at this point and almost look at it as an opportunity…,” said Home of the Brave co-founder Ryan Pierson. “To me, I look at it as an opportunity. There are still only 13 scholarships. There are still only 200 minutes a game. Guys who go up are gonna come down. Guys who started down are gonna go up.”

One collective executive said “the one major deal” the collective wanted to finalize in February wasn’t executed until the day the transfer portal opened.

A collective that supports a mid-major program could sign the program’s top one, two or three players to agreements that are each valued in the mid-five figures, especially if the players could receive interest from high-major programs if they choose to enter the transfer portal. However, depending on the collective, that level of spending could also test the collective’s budgetary restraints, especially if it partners with the majority of the players on the roster.

“You can get your arms around basketball,” said Frank Ambrose, a co-founder of Saints March On, which supports athletes at Siena. “Football – wow. Good luck with that.”

A couple of estimates project that a collective that signs basketball players at the low-major level might have an annual budget for men’s basketball players that starts around $50,000 to $60,000, sets a target of around $100,000 and could potentially reach up to $150,000.

“Most of the money right now, we’re focused on retainment,” Ambrose said.

Home of the Brave, which signed every Bradley men’s basketball player last season, has re-signed agreements with six players who are returning, including reigning Missouri Valley Conference Defensive Player of the Year and second-team all-conference selection Malevy Leons. Home of the Brave’s contract terms are in line with the academic year, such that compensation for the next academic year’s contracts starts in August.

Ambrose used the metaphor of having “dry powder” in case any transfers committed to Siena. MacWilliams said The Massachusetts Collective’s budget would likely be split equally between players UMass retained and those the program might ultimately add through the transfer portal, although the ratio could skew 60/40 towards the latter.

“We also think about the collective as an adjunct to the Alston money that schools may or may not be funding,” Ambrose said, in reference to the $5,980 in maximum allowable annual education-related benefits some schools pay athletes following NCAA v. Alston. “I think our philosophy is this is probably a couple, two, three-year thing with collectives and these things are just going to collapse. I mean, you’re already seeing legislation changing in the Southern schools and states where the schools are just going to deal with this directly.

“We tease the athletic director, ‘You’re going to have an NIL office. We’re going to have to port this over to the school eventually,’ because I think that’s where this is all going to go.”