NIL - What We’ve Learned So Far

On July 1, 2021 a rule change went into effect that created a billion-dollar opportunity overnight.

This rule change enabled NCAA athletes across all divisions to generate revenue from their name, image, and likeness (NIL) and it changed college sports forever.

Here’s Some Context:

The NCAA has a near monopoly on all of college athletics in the U.S. and for years they’ve carried a “big stick” as it relates to rules, by-laws, and minimum standards for all of its athletic programs.?

As colleges have invested billions of dollars into athletics, the NCAA has proportionately gained more power. What they say goes and that’s final. The NCAA owns the exclusive possession of overseeing all of college athletics. As such, they reap many benefits that come along with this monopoly - including setting the rules.

Now, don’t get me wrong, the NCAA is an incredible organization. They’ve shaped collegiate athletics in the United States and have established a pathway for kids to become adults, get a great education, and make a difference in the world. That said, they’re an 800-pound gorilla that with checks and balances all over the place that force it to move like a sloth.

When people want change, they literally can’t move quickly - and for good reason. Changing too quickly can create some irreversible side effects - potentially ruining what they’ve built over the last 115 years.

This NIL concept was a long time coming. As technology has advanced and individuals - as opposed to media outlets - have been given the opportunity to have a platform to speak on the supply and demand of attention has shifted.

For example, there are millions of college kids that watch The Cavinder Twins and a much smaller percentage of college kids that watch nightly news. As attention has shifted to individual creators, so has the money supply which has built the framework for the creator economy.?

Websites, YouTube, Facebook, Instagram, and now TikTok have enabled many athletes to grow fan bases of millions of people in some cases. These are fan bases that are worth millions of dollars and until 2021 these college athletes weren’t allowed to monetize them because of the NCAA.

This put some pressure on the NCAA and eventually led to the reformation of their thinking on NIL. We’re almost two years in now and here’s what we’ve uncovered ??

What We’ve Discovered About NIL:

1. NIL has brought a lot of transparency to paying athletes in college - The old paper bag under-the-table transactions can now legally be done over the table
2. There is a lot of money to be made by athletes - Athletes are collectively making hundreds of millions of dollars. The 80-20 Rule definitely applies here as the majority of the revenue is collected by the best athletes. Hundreds of millions of dollars is no laughing matter
3. There is a lot of money to be made by companies - It’s too early to tell who the “winners” will be, but 5-10 years from now I wouldn’t be surprised if there were a few companies in the space worth hundreds of millions if not billions of dollars
4. It has caused a lot of athletes to stay in school - Anecdotally, there are several athletes that are finishing out their college education because they’re able to make more money inside of college as opposed to outside of it
5. Women’s athletes are seeing an equal increase in revenue - In fact, excluding football women are making 52% of the revenue from NIL
6. Talent is starting to spread out a bit more - Perennial superpowers like Alabama Football, UConn Women's Basketball, or Minnesota Hockey now have to compete with gigantic budgets from other schools’ boosters. Over time I can see these further leveling the playing field and then eventually swinging in favor of the schools with bigger budgets.
7. There’s allegedly some shady stuff happening with collectives - These entities are set up as a non-affiliate of the school, but it seems like there might be some transactions happening here to persuade athletes to do certain things
8. Overall this seems to be good for college sports - NIL could have led to the downfall of the NCAA and later the downfall of collegiate athletics. The NCAA serves a very important purpose and creating instability within that organization through litigation or player strikes would have been detrimental to collegiate athletics as we know them.

P.S. I referenced a “big stick” in the “here’s some context” section of this article as former U.S. President Teddy Roosevelt - a strong proponent of big stick diplomacy - actually founded the NCAA way back in 1906.