Reported value of Jaden Rashada NIL deal did not make economic sense

On3 imageby:Jeremy Crabtree01/19/23


(Photo by James Gilbert/Getty Images)

Every economy goes through a course correction over time. And thanks to the Jaden Rashada recruiting saga, a course correction was absolutely needed in the NIL-fueled blue-chip quarterback market.

According to On3’s Pete Nakos, Rashada officially filed paperwork on Tuesday to be released from his national letter of intent with the Florida Gators. Rashada, the nation’s No. 7 quarterback recruit and a top-65 prospect overall, verbally requested the release last week. But Tuesday’s move seemingly put an end to what quickly became a broken marriage between the Pittsburg, California, native and Billy Napier’s staff.

And like many fractured relationships, the biggest beef was money.

NIL money, in this case.

According to multiple reports and On3 sources, Rashada flipped his commitment from Miami to Florida in November largely because of a massive $13.85 million NIL deal facilitated by Gator Collective operators.

However, the deal was so ludicrous that it dramatically exceeded fundraising levels for all of the major players in the Florida NIL marketplace. Rashada has an On3 NIL Valuation of $450,000. For comparison, Caleb Williams, a returning Heisman Trophy winner, has an On3 NIL Valuation of $3.2 million. Alabama quarterback Bryce Young has a valuation of around $3 million after winning the Heisman Trophy in 2021.

Sources told On3 that a contract termination letter was sent to Rashada in early December. Florida boosters and Gator coaches worked feverishly to rectify the situation. But the damage was done.

That it even got to this point is simply outlandish.

“Regardless of Jaden’s level, following, or how you feel about player valuations, it’s hard to wrap your head around numbers like this,” FanWord CEO and founder Chris Aumueller said.

“It’s not my place to argue for or against what a player’s brand is worth, but when a deal of that magnitude falls through, it’s not good for anyone’s brand. I don’t know the specifics of the agreement or where things went wrong, but I truly hope this doesn’t become the norm in college athletics.”

$13.85 million deal was ‘not good business’

Like the rest of the college sports world, NIL observers across the country were completely floored when they heard about the $13 million figure for Jaden Rashada.

Through On3’s reporting, the NIL market for top-ranked quarterbacks is upwards of $750,000 annually. Yes, a select few On3 Consensus five-star quarterbacks can push for NIL deals into the $1 to $3 million annual range.

But even those situations are extremely rare.

Yet, nobody expected a $13.85 million deal that equates to around $3.46 million annually, especially for a quarterback that’s yet to play a down of college football and is not considered a top one or two signal-callers in his class.

An ACC assistant said the deal was “the dumbest shit I’ve ever heard.”

“I’m all for NIL and players getting rewarded,” the coach told On3. “But come on, no player, let alone an unproven high school quarterback – even if he is a four-star and a top-10 guy at his position – is worth that much. He’s not won a single college football game.”

A prominent Big-12 collective operator pointed out that most top-end collectives operate with an annual roster budget of around $3.5 to $4 million for player retention and recruiting purposes. There are others that have bigger banks to work with, including some that are willing to spend $7 million plus on roster deals. So, in theory, the Big 12 collective director said the Rashada deal would have eaten up almost his entire budget for multiple seasons.

“It’s a bizarre time to work in college athletics,” the collective operator said. “I saw that and thought, ‘Jesus.’ It’s unthinkable that somebody would float this offer out there, let alone put it on paper. It’s not good business.”

Multimillion-dollar deals usually reserved for big brands

To further put into perspective how bizarre the $13.85 million deal for Jaden Rashada was, you have to keep in mind that multimillion-dollar deals are normally driven by brands with deep pockets – not collectives.

They typically are reserved for the Bronny James, Bryce Young, Livvy Dunne and Caleb Williams of the college sports world. James and Dunne are established brands and have millions of social media followers. Both Young and Williams have won a Heisman Trophy and have hundreds of thousands of followers.

Unquestionably, Jaden Rashada has NIL value for brands. With more than 43,000 social media followers, Rashada also ranks No. 6 in On3’s High School Football NIL Rankings. Yet, the $13 million deal would have put him in the same stratosphere as budding celebrities.

“In my experience, multimillion-dollar deals are reserved for somewhat proven entities or based on metrics that justify a certain amount of engagement that can be projected based on an individual’s social media presence,” Los Angeles-based sports and entertainment attorney David McGriff told On3. “The James name, Caleb Williams’ successful Heisman run, and Olivia Dunne’s substantial social media reach are all examples of the foregoing.”

There are lessons to be learned

Coaches, brand experts and collective operators all agree a more pragmatic deal was clearly needed in this situation. However, you have to credit Jaden Rashada and his family for finding a party that was willing to strike such a rich NIL agreement.

And like other economic fallouts, there are lessons to be learned from this story.

“I believe that the Jalen Rashada situation may generally be informative to athletes and other NIL participants in terms of managing expectations when it comes to some of the massive numbers that have been reported in the media,” McGriff said. “That could be a good thing in the ongoing development of the NIL market.”

Others believe what happened, in this case, is the course correction needed with “pay for play deals” moving forward.

“This is a wake-up call for everybody in the collective space,” a Pac-12 collective operator said. “If you want to win big, you have to have a big-time quarterback. And the market has dictated that you’re going to have to present an awfully attractive NIL package to get that type of quarterback.

“But, man, if you thought we were doing our homework before, this changes everything. We’re going to have to go above and beyond from a legal and due diligence process to ensure that we don’t ever get into a situation like this.”

A Big 12 recruiting coordinator agreed.

“You already hope you’re doing a good job of identifying any roadblocks with a recruit, especially with somebody that’s going to be the face of your program,” the coach said. “But this situation at Florida has taught us that we’re going to have to double down on our research, talk to more people and make sure we have a clear understanding of what’s really important to that recruit and his family. It also means we’re going to have to find ways to build an even stronger bond with our collectives. 

“We have to be on the same page so promises made are promises kept.”