Newsletter, Image, Likeness Vol. 113: What The Hell Is Fair Market Value?

The Weekly Longer NIL Thought.

What is "Fair Market Value," also called "FMV," and why does it seem that the NIL world is becoming obsessed with the phrase?

It's because, if the House v. NCAA settlement receives final approval, then all third parties who are construed as "associated entities or individuals" (certain boosters and all NIL collectives), may only pay NIL money to athletes if the money spent is "for a value business purpose to promote goods and services provided to the general public for profit, with payments at fair market value rates, consistent with existing NCAA rules." (Emphasis added).

So, what is fair market value? I've recently had multiple discussions with NIL collectives who wish to do everything in their power to include provisions in contracts to proactively prepare for any scrutiny. But the reality is that we have no clue what "FMV" is. Even worse, the entity that has been tasked with ultimately determining fair market value doesn't know how to calculate it.

This was recently brought to light by my colleague Tom Mars , who dug into Deloitte's prior admission that a "return on invested talent," similar to "fair market value," metrics are not a "silver bullet" and do "not mean that the value proposition of people can simply be reduced to numbers."

That's reassuring (sarcasm font). The company that will be tasked with determining FMV says there's an inherent problem in trying to reduce FMV to numbers.

It makes sense that Deloitte has problems assessing FMV. The value of the players is whatever someone else will pay in exchange for their services. That's not formulaic; it's determined on a case-by-case basis and certainly not something that can be analyzed by Deloitte.

Mars also found an article published by Deloitte from December 4, 2020, where the accounting firm said, "the potential ROI for brands investing in student-athletes through NIL is speculative." If the return on investment is speculative, then isn't the FMV also inherently speculative? And if so, how would Deloitte's position, if it decides to invalidate a deal because it doesn't appreciate the actual FMV of an athlete, be defendable if challenged? It probably isn't and I expect a lot of escalation in the future if the plan to empower Deloitte comes to fruition.

In the meantime, this is creating a lot of unnecessary hypothetical gymnastics exercises in NIL collective conversations.

Lead Named Plaintiff In House V. NCAA Expresses Concerns With Pending Settlement.

"Though many believe [Grant] House to be the sole architect and benefactor of the settlement, that’s anything but the case, he says. In reality, House holds some of the same, or similar, concerns and frustrations as many of those within college athletics," wrote Ross Dellenger. "The lead attorneys in the case have not communicated with him regularly enough, he says. In a point of clarity, House says he did not agree to the much-maligned roster limitations that could cost his own sport hundreds of positions and, like so many others, he was 'shocked' earlier this month at the attorneys’ requests for more than $700 million in fees.'"

“This isn’t the end-all be-all,” House said. “It’s not the answer we should stick with for the rest of time. It’s a starting point and a leverage point to go forward and develop this over time.”

6 Former FSU Basketball Players Sue Head Coach For $1.5 Million In Unpaid NIL Promises.

I represent the players, so I'll link to an article covering the litigation.

Michael McCann had a great breakdown of the case, as he does with most Sports Law matters.

UConn Head Coach Jim Mora Threatens Action Against Schools Tampering With His Players.

“A simple note to the schools and coaches that have blatantly broken @NCAAFootball rules by tampering with our players in the last 24 hours. We do know who you are, we will pursue all avenues to hold you accountable,” wrote Jim Mora. "We are excited that we’ve built a program where coaches have to cheat to beat us and we will protect that program. Think hard before you tamper with our players. #justgettingstarted"

Dartmouth Basketball Unionization Effort Comes To Early End.

On New Years Eve, the union that represents Dartmouth College men's basketball players decided to withdraw its petition to the NLRB that had sought unionization. The NLRB docket already shows that the case is closed.

Seth Greenberg Produced His 'Plan To Fix College Athletics.'

Final Thoughts.

That is it for Vol. 113 of Newsletter, Image, Likeness. Thanks to the more than 9,490 people who have subscribed to this newsletter thus far, and please feel free to share this free resource with others on LinkedIn or elsewhere.

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