Newsletter, Image, Likeness Vol. 5: NIL Collectives And Boosters Will Need Smarter Contracts

The Weekly Longer NIL Thought.

Earlier this week, I tweeted that I expect NIL collectives and boosters to get more creative with athlete contracts and that a feature of that may be to try their best to backload money to players.

Failing to do so would cause these supporters of universities and their athletic programs to run the risk of paying out money to a player only for the player to transfer to a rival.

We have already seen hundreds of players who once committed to and enrolled at universities, some of whom had received NIL money from collectives and/or boosters, put their names in the transfer portal. What happens to the money that has already been paid to them by NIL collectives and boosters? In most cases, you can kiss that money goodbye.

The challenge for NIL collectives and boosters is to best protect themselves in this environment where they technically cannot make payments to induce athletes to enroll or stay at a school (whether it be by NCAA rules and/or state law), but the reality is that it is happening across the country and it is picking up steam as the NCAA does nothing about it. But what happens if an athlete takes the money and then does not live up to expectations (contractual or otherwise)? Will we start seeing collectives and/or boosters suing players?

I don't expect mass litigation in this space. Instead, I think collectives and boosters will become smarter in the way that they craft these relationships, with more of them being supported by strong contractual terms and backloaded payments.

Some argue that players will just go to schools where the boosters and/or collectives do not backload the funds. Maybe that is true, but who wants a one-year loaner, particularly for a player who may not see the field during his first year?

My colleague Mit Winter agreed with me that NIL collectives should get creative, but believes the better option is shorter agreements as opposed to long agreements with backloaded payments.

I agree that a shorter contract is more advantageous for the players, but I'm not as convinced that it is what boosters and NIL collectives are seeking. Again, nothing will then prevent the players from easily transferring and the booster/collective not truly seeing the benefit of the bargain (if we are going to be honest with ourselves, we know the true benefit for these people and entities is to bring talent to/keep talent at the school).

With a longer, backloaded contract, boosters and NIL collectives can include things like the Zip Code clause (yes, this exists), where an athlete is in breach if he does not reside within a Zip Code during the term of the agreement, thereby allowing the booster or NIL collective to escape further compensation obligations to the player. But savvy players can find ways around that clause as well.

All of this is to say we are still in the very early stages of NIL and the transfer portal and there's quite a bit to shake out. I believe we have yet to see a lot of creativity and lavish legal language surrounding many of these NIL deals and I think it will be necessary for that to emerge if boosters and NIL collectives intend to stay afloat in this ever-shifting environment.

Hyatt Signs With Hyatt.

Tennessee wide receiver Jalin Hyatt has signed an NIL deal with Hyatt Hotels. It is the 1st NIL deal for the hotel brand. As part of the deal, World of Hyatt will provide gift cards to help families of the entire Tennessee football team with hotel rooms for the upcoming bowl game in Miami.

NIL Runs On Dunkin'.

Dunkin' has signed 48 athletes, including 25 from Northwestern, to NIL deals, with the assistance of LEARFIELD and Opendorse . Athletes will be able to display school marks in the promotion of Dunkin'. Big-name athletes involved in this campaign include Tennessee QB Hendon Hooker and UNC basketball player Armando Bacot.

Speaking of Opendorse..

The NIL company just raised $20 million, which brings its total fundraising to $40 million. Its founder, Blake Lawrence , predicts that it will have the tools to assist athletes in earning $100 million in 2023.

And Opendorse Says..

That the top Power 5 QBs using the Opendorse platform earn an average of roughly $200,000 annually for the NIL. Importantly, this doesn't include names like Bryce Young, Caleb Williams, Stetson Bennett, and Anthony Richardson, who have each seen in excess of that amount.

NIL Is Now Allowed For Highschoolers In Pennsylvania.

Pennsylvania becomes the 22nd state to allow high school athletes to profit off their NIL.

And Then Tennessee Became The 23rd State..

To allow high school athletes to earn off their NIL.

Adidas Signs 4 Basketball Players.

Northwestern State's Hansel Enmanuel, Kansas' Gradey Dick, and Indiana's Trayce Jackson-Davis as well as Jalen Hood-Schifinio have signed with the 3-stripes brand.

Here's a graphic posted by Enmanuel's rep, Alexander Zapata , EMBA :

Mack Brown Said What?

In case you missed it last weekend, it was reported that North Carolina head coach Mack Brown said he sat down with a UNC starter last week who told him he has 15 offers to go play somewhere for money next year.

Brown said it's an issue with college football that has to be fixed.

As I wrote in a post, let me know when I should stop laughing at the hypocrisy.

Someone should have asked Brown about the “issue” of a successful coach having 15 offers to go lead another program for more money.

It’s not a problem when you can leave the players you recruited and promised to coach.

But we must fix players looking out for themselves?

Conference Commissioner Still Begging For Help From Congress.

Final Thoughts

That is it for Vol. 5 of Newsletter, Image, Likeness. Thanks to the roughly 4,000 people who subscribed to this newsletter in the three weeks of its existence and please feel free to share this free resource with others on LinkedIn or elsewhere.

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