Good New Article About NIL...

[Charles Fischer]

And it is fine to discuss new breaking news, new articles, etc. about NIL, Portal, Pac-12, NCAA, as long as we are discussing the new content, and not rehashing what has been written 100 times already.  Thanks to mrspenny for the article...

 

Welcome to College Football’s Free Market

WWW.THERINGER.COM

---

NIL has created a messy, lawless recruiting marketplace, but that has always been true in college football. Suddenly, the sport is, for everyone, what it’s always been for the people in charge: a...

 

[Jon Joseph]

At least now a lot of this 'stuff' is above the table. Man, the NCAA should have settled the O'Bannon and Alston cases, seen 'this' coming from a mile way and adopted NIL with reasonable restrictions. 

 

Not a cap on the money that a player can make off of NIL but rules against NIL be used as a recruiting and portal inducement.

Edited April 27, 2022 by Jon Joseph

[mrspenney]

Here is a lengthy follow up to Charles's post;

 

The Athletic

COLLEGE STATION, Texas — After dinner Friday night, they danced on Kyle Field.

 

This wasn’t like last Oct. 9, when they stayed in their suites and cheered while thousands of Texas A&M students spilled onto the field to celebrate Seth Small’s field goal that slayed Alabama. This time, the Aggies’ biggest athletics donors had the field to themselves. The Limelight Band of Emerald City, a Dallas-based group with a seriously hot horn section, blasted Earth, Wind & Fire’s “September” from a raised stage at midfield, and a group of millionaires shook their asses down below.

 

This evening kicked off the 12th Man Foundation’s Champions Council Weekend. These were the heaviest hitters in a moneyed fan base. Several had given eight figures in lifetime donations. At least one had made a $10 million pledge that, instead of paying over the customary five years, he made good on with a single wire transfer.

 

The 12th Man Foundation, Texas A&M athletics’ fundraising arm, had put together this weekend celebration to launch a new capital campaign, and that seemed as good a time as any to answer a question: In the age of name, image and likeness (NIL) deals, when college football players can essentially be paid for any reason (except, oddly, for being football players), will donors still give to the athletic department for facilities and other expenses?

 

The weekend certainly answered that question as far as the Aggies are concerned.

 

The “quiet phase” of the $120 million Centennial Campaign* — which will fund a 140-yard indoor football practice facility, a new academic and nutrition center for all athletes and a new indoor track — netted $88 million in pledges to be paid over several years. As of Friday night, the 12th Man Foundation already had $27 million of that in hand. Shovels can go into the ground immediately on a group of projects estimated to cost $235 million by the time they’re completed.

 

But at the same time, some of the donors to the capital campaign met among themselves inside and away from the official program to discuss their roles as investors in what they, with tongues planted firmly in cheek, call “The Fund.” This is the marketing company — set up as a for-profit limited liability corporation — that manages NIL deals for Texas A&M athletes. In accordance with Texas law, it is not officially affiliated with the school or the athletic department. It is run by some of Texas A&M’s biggest donors, and as of Friday night, some of them were worried that they were falling behind the NIL collectives working on behalf of the rest of the big-money schools in the SEC.

 

Is that surprising?

 

Were you one of the people who believed an Oklahoma fan site message board poster (whose handle is slicedbread) when Mr. Bread declared that Texas A&M-adjacent groups spent $30 million on the 2022 recruiting class? Don’t worry. You weren’t alone. That post got aggregated on a site called BroBible.com, and lots of people believed it. A vice president at Notre Dame believed it.

 

Heck, some of Texas A&M’s current players believed it and asked coach Jimbo Fisher why they weren’t getting those kinds of deals. Fisher told them to call the recruits and ask what kind of deals they were actually getting.

 

“That would have been the dumbest business deal in the history of ball,” Fisher said of the rumor when speaking to the donor group Saturday morning at a presentation detailing the planned facilities.

 

The reason Fisher said that, Texas A&M administrators and donors explained, is if that amount of money was available, why wouldn’t the group simply try to equal or surpass the first-year NFL salaries of offensive lineman Kenyon Green and defensive lineman DeMarvin Leal to stay for another year? Blue-chip recruits are great, but they’re a gamble. First-team All-SEC performers are sure things. But even if the collective could have convinced Green or Leal — projected as first- or second-round picks in this week’s NFL Draft — to stay, it wouldn’t have had the funds to make that sort of deal.

 

Speaking to the donors, Fisher didn’t deny that NIL deals will be important going forward. “NIL is going to factor into the way you do business, and these kids need to develop and earn things,” Fisher said. “It’s not going to be the world we lived in.” But just as he has said multiple times since landing the 2022 class, Fisher insisted that NIL can’t be the only reason a player chooses a school if that school wants to have a successful football program. Just as NFL teams — who are about to pay some draftees large guaranteed amounts — spend much of the pre-draft process trying to determine if those potential draftees love football enough to keep trying to improve despite millions in the bank, Fisher pointed out that his job is to find players who want to win games whether they get paid or not.

 

“At the end of the day, understand something, the people who are only focused on NIL, I don’t want them,” Fisher said. “Because they’re never going to be able to be at the level of ball where you have to play if that’s the way they’re going to make decisions.”

 

Several investors in The Fund told The Athletic that while several members of the 2022 class did secure deals, the total numbers on the deals are in the low single-digit millions. Asked why they’d bother to correct an assumption that almost certainly would lead more recruits to consider Texas A&M, the answers were similar. They don’t want current players to feel shortchanged, and they don’t want future recruits to be disappointed when they learn the actual numbers. But make no mistake, they’re working to make those actual numbers larger.

 

A day before the gathering in College Station, a group working adjacent to Florida announced that donor Hugh Hathcock was leading the charge to fund an NIL collective. This group, called the Gator Guard, would be a select group of high-dollar donors supplementing the work of the Gator Collective, which had been working to land and fund NIL deals for Florida players. Hathcock also helped answer the question of whether big donors would choose giving to the athletic department or to the NIL collectives. His answer is a resounding “both.” Earlier this month, Florida’s athletic department announced that Hathcock had pledged the single largest donation ($12.6 million) in the history of Florida’s athletic department. Darren Heitner, a Florida graduate and attorney who advises the Gator Collective and Gator Guard, told The Athletic’s G. Allan Taylor last week that the Gator Guard group had raised $5 million in less than a week.

 

On Saturday, as the Texas A&M donors gathered to learn about the new facilities, former Oklahoma coach Barry Switzer announced a Norman-based NIL collective called 1Oklahoma that will operate as a non-profit and pay Oklahoma athletes for doing work for other non-profits. According to a release announcing the collective, Oklahoma athletes can make between $40,000 and $50,000 a year partnering with 1Oklahoma.

 

Investors in The Fund at Texas A&M don’t understand why investors in other collectives feel the need to advertise those collectives. None in the Texas A&M-adjacent group would speak on the record, though several shared working details of the operation with The Athletic. As far as publicity, they feel word-of-mouth between recruits and players will be plenty to ensure the people they’ll work with know what is available.

 

With various state NIL laws going into effect on July 1, 2021, the investors behind The Fund began designing the structure of the organization in May 2021. Originally, the plan was to operate almost strictly as an apparel/memorabilia company, making T-shirts and other player-branded items that could be sold to an adoring fan base. That didn’t last long. Eventually, the backers of The Fund came to the same conclusion that other for-profit collectives have. The most efficient way to handle players — and the easiest way to guarantee an amount of money — is to buy the players’ NIL rights entirely and then act as a marketing agency, making deals on behalf of the players and then using the proceeds from those deals to recoup the marketing guarantees made in the players’ contracts.

 

This is nearly identical to the way marketing agents have handled NFL-bound players for years. A player would finish college, and multiple marketing agencies would pitch the player on their ability to make that player money in exchange for a percentage of the revenue. Those pitches would include guaranteed amounts, with the agency assuming the risk of loss if it couldn’t book enough deals to cover the amount it guaranteed.

 

The same applies in the college NIL world. For example, the deal for the five-star class of 2023 recruit that Stewart Mandel outlined in The Athletic last month is structured this way. That deal could pay the player up to $8 million over a four-year period and includes several guaranteed payments at various dates within the deal. Should the collective book enough deals for the player to cover the amount of the guarantee, then the contract converts to a relatively standard split (90 percent for the player, 10 percent for the collective) for the remainder of the deal. If the collective doesn’t book enough deals, then it eats the loss. That player is believed to be Long Beach, Calif., quarterback Nico Iamaleava, who is committed to Tennessee. If he is indeed that player and Spyre Sports Group, the Knoxville-based collective operating as a marketing agency, wants to recoup its investment, then Iamaleava either will have to sell a lot of pajama pants or win Tennessee a bunch of games.

 

An administrator at a Power 5 school recently compared the philosophy behind such deals to the music business. A record company signs 100 artists hoping one turns out to be Tim McGraw. That deal then pays for the other 99 deals and generates a profit for the company.

 

But the win/loss piece is what makes the profit/loss math different for these collectives. Though multiple state laws forbid NIL deals as an inducement to choose a school, only the true Pollyannas thought that wouldn’t instantly happen as soon as such deals were allowed. Investors are willing for their collectives to operate at a loss as long as the arrangement produces wins on the field. Organizers across the country are split on how to set up the funds, though. The Oklahoma fund described above operates as a 501(c)(3) organization. So does a collective attached to Ohio State. Meanwhile, some who have organized their collectives as for-profit LLCs have expressed reservations about the non-profit model. They aren’t entirely sure the IRS ultimately will view such organizations as charitable entities.

 

 The LLC operators feel their investors can write off donations as business expenses because players can be hired to promote the investors’ businesses. Another possibility is that if a collective operates at a loss, it could provide a Schedule K-1 form to investors who then could claim their portion of the loss on their taxes.

 

The hope in College Station is that The Fund will generate enough money in promotional deals to cover any guarantees. But those investors, who didn’t get rich by being dumb, aren’t naive. “It’s going to need to be refilled every year,” said one person who has invested in The Fund and given to the recent capital campaign. “I’m not sure how many of these people understand that yet.”

 

Some of the meetings outside the festivities last weekend were aimed at helping potential investors understand just that. And as of early this week, the people organizing The Fund felt more confident that their fellow Aggies understood and were willing to keep giving.

 

Understanding all aspects of these arrangements remains a work in progress as everyone learns about a system that didn’t exist a year ago. For instance, one current Texas A&M Football player who has a deal with The Fund that includes all of his NIL rights recently made an appearance and then asked the business owner when he would be paid. After a few confused phone calls, an organizer of The Fund explained to the player that he would be paid by the LLC on an agreed-upon schedule and that the money for each individual appearance would go directly to the LLC. A current player also had a large marketing agency representing him for NIL deals before deciding to sign a deal with The Fund for a marketing guarantee. Instead of elbowing out the large agency, organizers of The Fund decided to allow the player’s agent to continue representing him provided all revenue from any deals went through The Fund’s LLC — which would then pay the agent’s commission. Another reason for such deals?

 

 Most state laws forbid pay-for-play. Organizers of The Fund produce deals that will get approved by Texas A&M’s compliance department. This keeps players from striking individual deals that, for example, pay per touchdown or per tackle. Those wouldn’t be allowed under the law.

 

Organizers of The Fund also worry about how the players will handle the money. That’s why several of the contracts are set up so that a substantial portion of the guarantee will be paid out in April 2023. Why? Because that’s when taxes are due, and it would ensure the player would have enough cash on hand to pay the IRS. There was some trepidation about providing a payment so close to the May 1 deadline to enter the NCAA transfer portal and play somewhere else the following season, but ultimately the collective decided helping to keep its favorite team’s players on Uncle Sam’s good side superseded any concerns about those players transferring.

 

The law — federal and state — is a constant refrain when discussing NIL. Schools in Oklahoma, for example, are afforded much more latitude to deal with NIL arrangements than schools in Texas. “The next phase of this is probably having to adjust the Texas law where perhaps maybe we can be more involved as an institution,” Texas A&M athletic director Ross Bjork told donors last weekend. “We can’t really advise on business terms. Is it a good deal or not? We can’t be involved in that. Does it follow the law or not is really all we can advise on.”

 

Bjork would love a federal law that would standardize how schools across the country can handle NIL deals, but many of his peers aren’t optimistic that such a law will ever be passed. Bjork is much more optimistic, though, that Texas A&M’s donors will continue to give to the athletic department rather than redirect their money exclusively to an NIL collective. Some donors still would prefer to only give to the athletic department. Plenty seem willing to give both ways. “Right now, we’re embracing everything,” Bjork told donors. “We’re embracing facilities, scholarships, NIL, sponsorship, season tickets. Every business engagement, we have to embrace all of it.”

 

According to some of the athletic department’s fundraisers, the money didn’t really start rolling in for the capital campaign until it became apparent that Texas A&M was putting together the No. 1 recruiting class for the class of 2022. That’s what the group finds hilarious. The outside world thought NIL money alone bought Texas A&M a recruiting class. In reality, that class probably bought the Aggies a new indoor facility.

 

“If people were mad about Texas A&M and NIL before, wait until they hear about $88 million raised,” Bjork told the donors. “Wait until they hear about $235 million in facilitie

[Jon Joseph]

1935. Last time A+M finished #1 in CFB.

 

Jimbo without a Jameis? Playing in the SEC west? Good luck.

 

No more delusional fans than A+M and UT fans.