INFLCR founder believes progressive collective model the future of NIL

As the fast-evolving NIL Era moves into year three, Jim Cavale, founder and CEO of industry-leading INFLCR, believes collectives are here to stay. Plus, he thinks Texas A&M‘s highly publicized progressive model is the wave of the future.

Cavale’s state-of-the-industry perspective focused largely on school-affiliated collectives, which are a flashpoint in an intensifying debate among NIL stakeholders. NIL data released by INFLCR, which works with more than 200 Division I colleges and supports nearly 90,000 student-athletes in building and managing their NIL businesses, only underscores how collectives are monopolizing the space.

Specifically, 76% of all payments in INFLCR have come from collectives. And nine out of 10 business vendors in INFLCR Exchange are collectives (more than 200 have been launched nationwide).

How they operate is evolving before our eyes and under scrutiny. An increasing number of new state NIL laws are greasing the skids for in-state school fundraising arms to establish a closer relationship with collectives. By bringing the collective more under the fundraising arm’s umbrella, the fundraising foundation’s robust muscle – and institutional credibility – can help raise money for athletic department endeavors as well as for NIL deals facilitated through the collective. 

The new law in Texas, for instance, allows donors to receive priority points for their contributions to a collective, in apparent violation of NCAA rules. The law also prohibits the NCAA’s enforcement apparatus from policing NIL activity. Texas A&M is the most prominent school taking advantage of the new law, a move that has attracted attention, and in some cases stirred envy, on campuses nationwide.

It may also set the stage for a legal clash with the NCAA.

“I think collectives are here to stay, and I think the model that Texas A&M is doing is something you’re going to see a lot more schools do,” Cavale told On3. “It solves a lot of problems. Whether they’re donors, businesses, or fans, they’re used to hearing from the school about donation campaigns, capital campaigns, scholarship funds, ticket sales, merchandise sales and events. This is just another addition for that same audience to hear about, and it should be done in unison with the school’s existing efforts.”

Current NIL collective model creates confusion

Instead, as the model is currently constituted, NCAA rules prohibit school fundraising arms from establishing too close of a relationship with collectives. As a result, fundraising arms and collectives often compete for the same dollars from donors. It leads to donor confusion and fatigue.

“It becomes very confusing to these three groups of people [donors, businesses and fans] who have these dollars,” Cavale said. “And that’s why Texas and other states are following to try to bring the efforts of the collective, which I think will stay around for a long time, in conjunction with the development department, the MMR [multimedia rights partner] and the other people.”

Cavale added he does not believe any federal or state bill will eliminate collectives, and that state law trumps NCAA rules. His last point has been echoed by several legal experts on the heels of the NCAA’s recent memo that said member schools must “adhere to NCAA legislation (or policy) when it conflicts with permissive state laws.”

“The NCAA has been saying, until just recently, follow your state law if you have one,” Cavale said. “Now all of a sudden they’re changing their tune. They still haven’t set any rules. People are acting like this memo is a set of bylaws. It’s not. It’s just suggestions and recommendations. And it’s the new tune, because before they would say, ‘Hey, we want you to listen to the states.’ Now they are saying, ‘Hey, don’t listen to your state.’

“That is the biggest thing that, I think, frustrates [A&M Athletic Director Ross] Bjork because if they would have put out even a recommendation memo like this a year ago, I don’t think they would have pursued this bill. But they thought this was the best route and they didn’t hear any different.”

NIL collectives need to rely on brands, fans in future

As Cavale described it, collectives over the last two years were created as separate entities from the school. They broker NIL activity from three sources of dollars: donors, which provide the deepest dollar pool at this point, but also brands and fans, secondary and tertiary sources of dollars that can flow through the collective as well.

Cavale calls the current iteration of collectives a “great bridge” to a business model of the future that will need to lean more heavily on brands and fans. Citing widespread donor fatigue, Bubba Cunningham, North Carolina‘s athletic director, echoed that sentiment when he told On3 recently that “I don’t think the current model will exist going forward.”

Cavale believes in general – and he stressed the words in general – many collectives may have “hit their peak” in terms of annual fundraising totals. While some collectives may produce “a little bit more from donors in year three,” he added, “I think most schools will see that it stays steady or even decreases, and brands and fans are going to have to make up the difference. Donors are the investors for these school entities now, collectives, that are brokering NIL deals, helping athletes facilitate them. But investors don’t just keep investing without revenue, and real NIL revenue comes from brands and fans, not donors.”

Cavale noted that collectives affiliated with the top half of Power Five schools may be still growing their donor dollars per year, whereas that is generally not the case for the bottom half of P5-affiliated collectives. 

“An SEC school can raise more money because they have that following, they have that credibility,” Cavale said. “And a Group of Five school, or a smaller Power Five school, probably can’t. And so they have less runway. They better figure out how to get their business community and fan community involved faster because there’s only so much runway coming from donors.”

Softball players exceed baseball players in NIL deals

Among other notable metrics in INFLCR’s data is that softball players have reported 40% more NIL transactions than baseball players during the first two years of NIL.

“Usually – the keyword is usually – when women athletes have a following on social [media], they worked their butt off to make that following what it became,” Cavale said. “It wasn’t just they were great athletes and all of a sudden they had 100,000 followers. Because of that, now that NIL is live, they have more NIL business behaviors that they’ve garnered and molded over the years in building their social following that most male athletes don’t have.”

Many male athletes have large social media followings, Cavale said, but they may have amassed those followers primarily because they were, for instance, a ballyhooed basketball player on the high-profile summer-league circuit. While there are exceptions, they don’t necessarily post often or have a strong understanding of how the social media business works. 

Cavale also pinpointed the impressive work on social by the national title-winning LSU women’s basketball team and standout Angel Reese, saying “It’s clear that women are putting in great work and running really good NIL businesses.”

Average value of a football NIL transaction: $3,343

Other INFLCR data points through two years of NIL (Data reflects that of NIL activity reported to INFLCR):

• 68% of transaction volume since the start of NIL has been reported in the second year of NIL.
• There’s been 20% transaction volume growth every quarter since the start of NIL.
• The average value of women’s sports transactions was $1,195
• The average value of all transactions was $1,936.
• The average value of football transactions was $3,343
• The average value of P5 transactions was $2,786.
• The average value of non-P5 transactions was $1,440.
• 70% of all transactions were social media and royalty payouts.
• The top five transaction types in average value were: autographs ($10,601); public appearance ($8,135); representation disclosure ($4,168); other ($4,551); and business ownership/creation ($1,655).
• Among P5 transactions, football, men’s basketball and softball are the top three sports in reported transactions. In transaction value, the top three are football, men’s basketball and women’s gymnastics. 
• Among non-P5 transactions, football, men’s basketball and women’s basketball are the top three in reported transactions. In transaction value, the top three are football, men’s basketball and men’s golf.