NIL companies position themselves for potential revenue-sharing model
As a growing number of industry leaders publicly acknowledge now is the time to explore what a revenue-sharing model entails, some NIL-focused companies are already venturing deep into the weeds, strategically positioning themselves for a future many see as a virtual inevitability.
A revenue-sharing model that dramatically reshapes the college sports paradigm could very well arrive in the coming years – if not sooner – numerous administrators, conference commissioners and NIL stakeholders tell On3. The only questions: When will the new era begin, and which entity – the courts, National Labor Relations Board or schools themselves – jump-starts the evolution?
“Most objective participants in the college athletics ecosystem acknowledge that revenue sharing with at least some college athletes is going to happen in the relatively near future,” Mit Winter, a college sports attorney at Kansas City-based Kennyhertz Perry, told On3. “The only questions are when and how. If your plan is to wait around until there’s certainty on those two questions to begin preparing your business or organization for a world with revenue sharing, then it’s probably going to be too late.”
While now devoid of concrete specifics, the model proposed this summer by The Collective Association, comprised of seven school-specific NIL collectives, provides general contours of what a revenue-sharing landscape may look like. The crux: conferences would distribute a slice of the league’s TV rights revenue to official school collectives in equal shares. The collective would then distribute the dollars to athletes.
Several prominent NIL-centric companies, including MOGL, Athliance, INFLCR, Opendorse and others that declined to be named, are proactively exploring where their company fits into a potential revenue-sharing world and what benefit it would provide stakeholders if and when that model takes hold.
“I think, ultimately, it’s where we are going,” Ayden Syal, co-founder of MOGL, told On3. “However long it takes to get there remains to be seen. What people might not understand, from an outsider’s perspective, is just how much leverage and power these collectives actually have … Money talks at the end of the day. I think their [The Collective Association] proposal will have a large impact on the final structure implemented in a revenue-sharing world.”
Revenue-sharing models must be innovative
This basic structure outlined by The Collective Association (TCA) would aim to alleviate donor fatigue, which has become more pronounced for collectives nationwide over the past year. And by funneling a portion of TV rights dollars through third-party collectives, the model may ensure that athletes would not be designated as employees of their schools [the NCAA is staunchly opposed to an employee model]. As legal experts note, it is possible to implement a revenue-sharing model without ushering in a formal employee era.
Several industry leaders – including Oklahoma Athletic Director Joe Castiglione, American Athletic Conference Commissioner Mike Aresco and Mountain West Commissioner Commissioner Gloria Nevarez – have told On3 now is the time to at least explore what such a revenue-sharing model would entail.
Asked last week about exploring revenue sharing, Nevarez told On3, “I’m absolutely for exploring innovative models that help us balance the system. And then I read a lot of student-athletes’ statements about these most recent [realignment] moves by schools about the lack of revenue sharing. So, again, I think it’s something we should explore.”
Some NIL-affiliated companies declined to divulge specifics on how they would strategically position themselves in a revenue-sharing world. But an Opendorse spokesperson said, generally speaking, the company’s “institutional market share and product capabilities to distribute and track compensation at scale to 115,000-plus athletes puts Opendorse in a strong position should revenue sharing become reality.”
And MOGL, created in 2019 by athletes, for athletes, outlined in detail how it believes it would benefit stakeholders in such an ecosystem. In a model like the one TCA proposed, Syal said collectives will need to implement several practices that marketing agencies and formal sponsorship entities offer.
This is where he believes MOGL possesses deep expertise and provides value.
Serving as collectives’ sponsor, activation arm
MOGL has worked with numerous Power 5 collectives, including those affiliated with Notre Dame, Texas and Washington State.
From a software perspective, it offers a deal management solution that streamlines all of their day-to-day tasks and reduces operational burden. The software also automates disclosures and taxes, and it facilitates payments without transaction fees.
In a revenue-sharing landscape, collectives will need to effectively distribute a pool of capital, manage communications, facilitate payments, automate taxes, and automate disclosures – and Syal says MOGL’s software enables collectives to do just that.
Syal expects MOGL to begin working with several more collectives by summer’s end. The challenge collectives are increasingly facing, he said, is that they typically staff lean teams, with few full-time employees. Most of their backgrounds are in fundraising, so they may lack experience in building marketing campaigns or lack tools to track performance and provide true ROI for partners.
“MOGL helps them do this,” Syal said.
The bigger opportunity is with support services, where MOGL acts as an extension of the collective’s team. MOGL has executed more than 30,000 transactions this year alone with local businesses and large brands. The company creates, crafts and executes campaigns on behalf of these partners. Syal believes MOGL has influence marketing expertise that is an essential prerequisite for building these campaigns.
“We can serve as the sponsorship and activation partner for collectives,” Syal said. “Say collectives now have their $5 million operating budget every year from a revenue share. Now the task is turning that $5 million into support for student-athletes while providing value for sponsors.”
MOGL works with MMR partners on several fronts
Industry sources say many collectives – regardless of whether they acknowledge it publicly – are working more closely with university sponsorship arms or multimedia rights partners (MMR). The question they have for MOGL is what support it can provide in creating campaigns and monitoring their performance.
MOGL believes it offers the only fully integrated solution across collectives, brands and universities. And as a future revenue-sharing model takes shape, Syal said MMR partners would use MOGL’s software to manage deal flow with student-athletes.
MOGL would serve as the MMR partner’s NIL sponsorship and activation partner because MOGL has expertise in what types of campaigns work, which drive value and how to do it at the micro-scale. Syal believes MOGL can effectively operate as a CRM for MMR partners, which already possess the sponsorship relationships and are already managing all of the sponsors on behalf of that institution and that brand.
His thinking: They own sponsor relationships and now need a partner to create value from those sponsorships, execute the NIL campaigns, automate the disclosures, and distribute the payments in an efficient manner – which is where he believes MOGL comes in.
Still a lot of questions to be answered
A revenue-sharing proposal like the one pitched by TCA prompts myriad questions: What percentage of the TV rights revenue would – and should – a conference allocate for student-athletes? How would that percentage be determined? How much variance would there be from conference to conference or even school to school?
Then, how would a school’s collective divvy up those dollars to distribute to athletes in revenue-producing sports versus athletes in Olympic sports? Will athletes have a seat at the table to bargain those percentages? And just how severe would the collective migraine headache be – much less billable hours for an army of attorneys – related to Title IX implications?
“This could be a new driver for sports to be cut, unfortunately,” Syal said. “It’s another reason for FBS football really becoming its own entity. The NCAA can remain in control of the other sports, but football really needs to be its own thing.”
Syal echoed the sentiments of many industry leaders who believe the flurry of proposed federal NIL bills creates the mirage of impactful activity, when, in reality, they are unlikely to result in transformational change. The proposed bills this summer are wildly disparate. Little to no consensus exists on specifics. And the clock is ticking on securing any kind of federal bill, much less a meaningful one, before the election cycle sucks up all the oxygen in Congress.
“It’s spaghetti on the wall,” Syal said of the bills. “When you have so many options, nothing gets done.”
Leaders say they need to be ‘part of the solution’
The real area to watch? Movement on revenue sharing discussions and evolving opinions on such a model.
Castiglione told On3: “There has to be scenario planning. We always talk about something after it is passed. Why are we letting that happen? Get in front of this.” He stressed the importance of figuring out the role of how the industry involves student-athletes and that the process has to be undertaken with them and for them.
“People really don’t – they are risk-averse to using certain terms [revenue sharing],” Castiglione added. “So, however, it is articulated, that is what I meant about they have to be part of the solution, to be able to engage them in ways. The NIL world is not going to solve it by itself.”
Aresco told On3: “Without endorsing [a revenue-sharing model], I can certainly see it potentially coming. We have all thought about it. But the minute you start formulating plans [to model out a potential structure], it makes it look like it’s a fait accompli. We’re not there yet.”
What collectives are doing now just ‘first domino’
Acting forward-thinking is not always a hallmark of some college sports leaders. Winter points to the advent of the NIL era on July 1, 2021. The NCAA had more than five years to create a framework for allowing college athletes to monetize their NILs after the 9th Circuit affirmed the district court decision that the NCAA’s NIL rules violated antitrust law. But Winter said the NCAA did nothing to start creating that framework until late 2019 and early 2020 after states began passing their own state NIL laws.
“At that point, it was too late, and when the Alston [U.S. Supreme Court] decision came out the NCAA had to scramble to implement something,” Winter said. “It’s been playing catch-up ever since. If I’m the NCAA, a conference, a school, or a business, I’d learn from that and start making plans for how I’m going to operate, or what my role will be, when revenue sharing is a reality. The really progressive step, at least for the NCAA and conferences, would be to create a revenue-sharing framework before they’re forced to create one by another entity like a court or the NLRB.”
NIL-centric companies like MOGL and others are already proactively moving to secure their position in a new revenue-sharing world to benefit stakeholders. The entire enterprise may be on the verge of being dramatically recalibrated. Fortune favors those who aren’t caught flat-footed.
“Everything that collectives are doing right now,” Syal said, “it’s just the first domino in what will ultimately result in revenue sharing.”