Why NIL has fans, coaches, administrators anxious about future of college sports

On3 imageby:Pete Nakos08/12/22

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With the inception of NIL last summer, decades of NCAA oversight on student-athletes turning a profit came to a halt. The massive change to the college athletics landscape has not come without its share of headaches and headlines. The norm has been flipped upside down for coaches, fans and administrators.

More importantly, daily conversations with prospects and student-athletes has altered. If there is a lesson a year into the new era, it’s become clear NIL will continue have an impact on the outcome of sporting contests and the revenue institutions pull in. 

This is the new norm. Coach after coach has vocalized the need to get with the new times or be left behind. Yet, that does not mean everyone shares the same sentiment. In a survey conducted by LEAD1, a group representing the interests of FBS athletic directors, 77% agreed an unregulated NIL market will lead to an increase in scandals, such as athletes being taken advantage of. 

On3 is providing an insight as to why NIL has major figures across the NCAA and fans alike anxious about the future of college athletics. 

What is NIL?

NCAA rules still prevent schools from paying players directly. College coaches cannot offer high school prospects money as a recruiting enticement to pick their school. Plus, current student-athletes can not receive compensation for their athletic achievements. 

Yet, NIL is a workaround for athletes to receive financial compensation for their accomplishments on the field and the brand they built while in college. Players can profit off endorsements, signing autographs, selling apparel, corporate partnerships, charitable appearances, teaching camps and starting their own businesses, among other things. They can also hire professional service providers for NIL activities. 

The NCAA released updated guidance in early May, stating collectives – groups of boosters and businesses – are not to be involved in the recruiting process or in the transfer portal. However, there are a number of states that have recently passed legislation that remove the prohibition of schools from directly or indirectly arranging for a third party to provide compensation to a student-athlete through NIL. And in some states, it is legal for high school student-athletes to earn NIL deals without losing their eligibility.

National conversation surrounding NIL

The growth of NIL in Year 1 has been exponential. The median transaction almost doubled from July 2021 ($25.99) to June 2022 ($50), according to data from the NIL business management app INFLCR. Opendorse, a NIL marketplace, projects athletes in the Southeast, defined as the states of Florida, Georgia, North Carolina and South Carolina, to earn a combined $234.5 million in the second year of the NIL era. The company projects the total market spend to be more than $1.1 billion.

But none of this is what has fans, coaches or administrators on edge about the future. The real tipping-point in the NIL conversation came in mid-May. Speaking at an event, Alabama head coach Nick Saban did not hold back when discussing how NIL has altered the recruiting landscape. Specifically, he took aim at the Aggies’ No. 1 ranked recruiting class and Jimbo Fisher.

“We were second in recruiting last year,” Saban said. “A&M was first. A&M bought every player on their team. Made a deal for name, image and likeness. We didn’t buy one player. I don’t know if we’re going to be able to sustain that in the future because more and more people are doing it.”

Saban’s comments set off a firestorm and became the biggest headline of the college football offseason, rivaling news of conference realignment. Fisher did not sit on the sidelines for long, unleashing a tirade a day later at his former boss. But the clash showed the role NIL is playing behind closed doors in recruiting and transfer portal

The NCAA has sat on the sidelines through most of it. President Mark Emmert will soon be stepping down from his role. While the organization did release updated guidance for collectives earlier this spring, the absence of leadership has been noticeable. 

Conference commissioners have been scrambling to put pressure on Congress to enact NIL legislation. SEC commissioner Greg Sankey and Pac-12 commissioner George Kliavkoff headed to Washington, D.C., in early May, held meetings on Capitol Hill with multiple influential senators but nothing fruitful emerged. While NIL is not at the top of agenda at the nation’s capital, November’s elections could have a long-term effect on what NIL looks like in the coming years. 

Former Auburn football coach turned U.S. Senator Tommy Tuberville announced in early August that he’s leading the drive to regulate Name, Image and Likeness on a federal level.

Tuberville, now an Alabama senator, told Sports Illustrated’s Ross Dellenger that he intends to draft a bipartisan NIL bill with fellow Senator Joe Manchin of West Virginia.

Inducement in recruitment, transfer portal

There’s been no shortage of stories on the role NIL has played in recruiting and the transfer portal. For years, the NCAA has banned boosters from paying student-athletes to attend a certain institution or directly for their performances. Those rules are still in place, yet NIL allowed those individuals an opportunity to move cash to athletes thanks to collectives.

The Athletic’s Stewart Mandel reported in March that a Class of 2023 five-star prospect signed a multi-million deal with the school’s NIL collective. The deal is thought to be the largest ever for a non-professional athlete. The report outlined how the recruit could make up to $8 million by the end of his junior year in college, with $350,000 coming immediately. 

It has been widely speculated Tennessee quarterback commit Nico Iamaleava is the prospect . The report exposed the millions of dollars being spent by some collectives to land top-ranked recruits. Iamaleava’s deal has created a multi-million market rate for blue-chip quarterbacks

Suddenly, schools such as Georgia, Alabama and Ohio State are not the only ones competing for these recruits. Miami, Texas A&M and Texas, among others, are seriously vying for commitments and irking both coaches and fans. 

The NIL tsunami does not stop in recruiting, though. The one-time transfer rule was ratified as a rule change in April 2021 and went into effect for the 2021-22 academic year. This allows all athletes who have not yet transferred the ability to do so one time in their college career. It also happened to coincide with Year 1 of NIL. 

In just one year, fan bases have been ravaged by the new era of pay-to-play and the one-time transfer rule. Rumors started to fly when reports leaked that Pitt receiver Jordan Addison was leaving for USC. The Biletnikoff Award winner eventually headed to sunny California, but he was just one of many to pack his bags. Countless former four- and five-star quarterbacks transferred this past offseason, including Caleb Williams, Quinn Ewers, Spencer Rattler, Jaxson Dart, Bo Nix and JT Daniels

These programs not only fear players leaving early for the NFL anymore. For fans, coaches and administrators alike, there is serious concern over star players walking after just one season because their playing time expectations are not met. Now they can just leave for a guaranteed lump of cash and playing time. Some collectives are even offering life-altering money to athletes before they even enter the portal.

Concerns over balancing NIL, academic life

Before the age of NIL, student-athletes had a tall task in managing their daily schedules between classes, practice, studying and workouts. These same athletes are now able to profit for the first time in the history of the NCAA. None of it is as easy as it sounds, however, as players are expected to fit in NIL duties into their daily schedule. This has key parties across college athletics nervous that athletes are being taken away from their sports. 

The common athlete needs to rely on family and friends to help vet potential NIL partnerships. And while the star SEC college football quarterback may have the full force of an agency searching for the next opportunity, thousands are trying to find the deal that can put some much-needed cash in their pocket. It is never that simple, either. Sports lawyers have taken to social media to situations where student-athletes don’t have a grasp of the contracts they’ve signed. 

Trying to say no to opportunities can be a challenge, too. Athletes want to find businesses that they are passionate about. In some states the NCAA’s interim policy is law, in others students are forced to build a general understanding of school and state regulations

Kentucky quarterback Will Levis told On3 he opted to sign his first NIL deal after the regular season on purpose, trying to avoid the noise and energy put into a partnership. 

When the floodgates opened last summer, there was little to none educational resources available for these student-athletes. A year later, not much has changed. A 2021 athlete survey conducted by the NCAA showed that 49 percent of respondents wanted help on tax and financial literacy, and 40 percent wanted help on navigating NIL. 

The apparent need for tax guidance is even stronger in Division I, too. Fifty-three and 55 percent of male and female athletes at the DI level, respectively, said they need more tax resources.

“Most institutions, they’ve been the reason why we haven’t had the right to exercise our NIL and profit off of working,” UCLA quarterback Chase Griffin told On3 this summer. 

“It wasn’t in the culture because it was literally prohibited to be in the culture to have enough money to even be taxed, so it’s new for everyone.”

A major piece for athletes has been trying to find their brand and niche. While Levis is an SEC starter and Griffin was featured in Sports Illustrated as a teenager, most athletes have to identify what they hope to accomplish through NIL. A successful brand in college can be built on for the rest of a student-athletes’ professional career.   

Will fans, coaches, administrators have an answer?

Nearly every fan, coach and administrator has an opinion on NIL. Some think the current model is sustainable, others believe the NCAA is headed towards a meltdown. Nobody has the correct answer. 

NIL was installed in the summer of 2021 to allow student-athletes the opportunity to monetize their likeness. An option to profit while not benefiting solely from their on-field performance. A year in and there are more questions than answers. 

Approaching Capitol Hill showed how administrators truly felt about NIL – uncomfortable. Coaches across the country, specifically in football and basketball, feel similar. Many, however, still discuss the need to get with the times or be left behind. 

Fans are left to ponder what the future of college athletics looks like. While regional conferences are torn apart for television contracts, speculation on NIL runs rampant. Did this recruit take a pile of cash? Will this revamped transfer-portal team find success? 

All of these answers remain unknown. And that’s the same response many anxious coaches, administrators and fans will receive when asked about what direction NIL is headed.