State of College Sports: Why NIL is so concerning for top stakeholders

On3 imageby:Pete Nakos11/27/23

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Andy Staples on the Congressional Hearing Regarding NCAA and NIL

Roughly 28 months ago, the college sports landscape underwent a tectonic shift. 

After mounting pressure from state laws and a Supreme Court decision, the NCAA put an interim policy in place, allowing college athletes to profit off their name, image and likeness for the first time since the governing body’s inception in 1905.

If each NCAA division was broken into different tectonic plates, each is still dealing with its own aftershocks.

On3 asked more than 50 stakeholders what their biggest problem is with the NIL space, with each opinion different from the other because of how NIL has created divisions. The interviews with commissioners, athletic directors, coaches, athletes, NIL and legal experts and others are part of On3’s State of College Sports project. As part of the series, On3 examines the biggest issues facing college sports today and what the future looks like. On3 will publish their responses, along with accompanying stories, over the next several days with Monday’s focus on how NIL has fractured college sports.

IN THEIR OWN WORDS: College stakeholders discuss biggest issues with NIL

At the Division II and III levels, trying to secure endorsement NIL deals and dollars remains an uphill for most athletes. And in Division I, fissures are littered everywhere. College football continues to hurl itself toward a professionalized model. NIL serves as the stopgap between amateurism and revenue sharing. 

Booster-backed NIL collectives are doling out payroll, with the top half of the Power 5 operating on multi-million dollar budgets. Others are late to the NIL game, unable to produce dollars overnight. The same rings true in college basketball.

“Everyone doesn’t have the same amount of money, so it’s challenging for a lot of schools,” Memphis basketball coach Penny Hardaway told On3. “It’s been hectic on the donors and everyone trying to get involved to help. You have donor fatigue. You go back to the same donors all the time.”

Leaders say NIL issues show new model needed

For many, those concerns over collective are just more evidence of why a new college sports model is needed. Situations like a Florida collective voiding a $13.85 million contract with a recruit and a Michigan State collective canceling agreements with 35 to 40 athletes are evidence. 

Cases like the Johnson v. NCAA case or the NLRB proceeding against the NCAA, Pac-12 and USC could force an employment model if the NCAA doesn’t move quickly. 

“So to me, the NIL, while it’s important, it’s not the main issue that we need to solve,” Texas A&M athletic director Ross Bjork told On3. ”What we need to solve is what is the financial arrangement between the athlete and the institution, and what is that structure.”

Added Athletes.Org founder Jim Cavale: “I think that the fact that the majority of NIL, 80% or so, comes from an entity separate from the school that is funded by donors, that is paying payroll to athletes in exchange for legitimate NIL activities like appearances and other things, to be a Band-Aid for the school not sharing gross revenue with the athlete is – the sand timer is running out.”

Title IX compliance a top NIL concern

NIL collectives are not tied to schools, though. The Utah-focused collective, the Crimson Collective, announced in October that it was leasing all 85 scholarship football players – and no female athletes – 2024 Dodge Ram 1500 Big Horn trucks for free. 

The deal serves as a case study of the thousands of deals that have been executed by collectives. Title IX has been a complex issue to understand for many stakeholders, as the booster-run organizations are not tied to institutions, yet make up for the most dollars in the space. 

“NIL and Title IX are about to collide – and it’s just a question of when and where,” prominent Title IX lawyer Arthur Bryant of Bailey & Glasser, LLP told On3. “Title IX says schools have to provide male student-athletes and female student-athletes with equal treatment and benefits, and almost no school in the country is doing that now without NIL.”

That’s not to say women haven’t been successful. Names like Angel Reese, Caitlin Clark, Livvy Dunne and Paige Bueckers have been some of the biggest earners in the NIL Era. 

Endorsement deals and social media have only boosted women’s basketball’s popularity, too. Last year’s national title game between Iowa and LSU set a new record. And some of the top talent is outearning what their WNBA contracts would look like. 

Speaking with On3, Bueckers said she believes there is a notion that top-caliber basketball players are not leaving for the WNBA because of NIL. That’s not the situation. 

“It doesn’t really have anything to do with NIL, but I think people sort of have that misunderstanding like, ‘Oh, I don’t want to go to the WNBA because I’m not going to get paid as much or I’m not gonna have as much NIL deals,’” the former national player of the year said. “Like I said before, that can continue and it can even grow in terms of evolving the WNBA landscape and how that’s covered and sponsored.”

Lack of clarity for international student-athletes

U.S. immigration regulations currently prohibit international students in the U.S. on F-1 student visas from participating in employment. F-1 visas provide for only limited employment authorization types, most of which must be connected to the degree the athletes pursue.

Because of that, international athletes are not able to legally participate in NIL while in the U.S. Roughly 20,000 international athletes at high schools and colleges across the nation are in that same bind. Typical NIL deals require athletes to perform a service for compensation, which conflicts with immigration policy.

Some have executed agreements in international waters, similar to former Kentucky star Oscar Tshiebwe, who filmed activations for deals during his team’s trip to the Bahamas. 

“The real lack of clarity, the fact that there is any risk whatsoever is very troublesome,” NIL attorney Darren Heitner said of the struggle international athletes face. “So, to me, the biggest issue is that. My hope is Congress recognizes that’s the low hanging fruit and attach to that issue, as opposed to getting caught up on these much more robust pieces of legislation that go well beyond NIL.”

NCAA pushes Congress to solve NIL frustrations

Since Charlie Baker took over as the NCAA’s president this spring. He’s made countless trips to Washington, D.C., to lobby Congress to craft a federal NIL mandate. Earlier this fall, the Senate Judiciary Committee held a hearing, marking the 10th legislative hearing on college sports since 2020.

Baker spoke as a witness, next to Big Ten commissioner Tony Petitti and Notre Dame athletic director Jack Swarbrick. On the NCAA’s wishlist is a registry of NIL deals, a certification process for agents and a uniform NIL standard.

While Congress might not produce any legislation with the upcoming Presidential election, the NCAA has started to craft policies for its membership. 

“There are legitimate concerns about the lack of transparency in the space, which can put student-athletes at risk for exploitation,” Baker said. “Right now, there is no standard contract for NIL, like you might have if you purchased a house, and that leaves student-athletes open to agreements where 50% or more of their earnings are paid to attorneys or agents, or the terms of the agreement can be canceled at any time by the other party.”

For SEC commissioner Greg Sankey, securing a preemption of state laws is high on the to-do list.  Lawmakers in Arkansas, Colorado, Missouri, New York, Oklahoma and Texas passed bills this summer to prevent the NCAA from launching investigations into NIL activities. 

“The biggest issue I have is this has been introduced on a state-by-state basis,” Sankey said. “You’ve seen states adopt laws, and then pull back on what were reasonable laws. And states that adopted appropriate frameworks have backed away in kind of a competitive race.”

NIL is here to stay

One thing that will never change about college sports is NIL will always exist. If revenue sharing does come to exist in the foreseeable future, endorsement deals will still be common. Financial packages from NIL collectives could lose their luster, but athletes promoting local and national companies will always be a core of college sports moving forward.

“I’ve always been pretty vocal that NIL is the stopgap between what is happening now and what will be revenue share,” said Jason Belzer, the founder of Student-Athlete NIL which operates more than 40 collectives across the nation.

“That’s functionally what a lot of collectives are doing. Obviously, we are focused in all of our efforts on real NIL. When revenue share becomes a reality, real NIL is going to matter even more because just like when you’re a free agent and professional sports, you always want to go play in New York or LA, because you want to be in the two biggest media markets in the country. NIL will matter.”