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The NCAA’s Name, Image, and Likeness (NIL) policy passed in June 2021, allowing student-athletes to earn money from their personal brands. The news revolutionized the landscape of collegiate athletics, but no sport has felt the impact more than football. Entering its fourth season, NIL has seemingly reached the peak of its current form, but where does it go from here?

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The Current NIL Landscape in College Football

The NCAA’s move followed a Supreme Court decision and multiple state laws that made it illegal for the association to prohibit athletes from making money from endorsements. It’s likely the NCAA underestimated the impact NIL would have, believing only star athletes would land social media contracts, jersey deals, etc. — they were wrong.

Shortly after NIL was passed, collectives (independent organizations that fundraise money for universities and provide it to college athletes in the form of NIL agreement payouts) read the fine print and created a model that bypassed the NCAA’s still-standing ban on paying players directly.

In January, the NCAA passed multiple transparency and disclosure rules to protect student-athletes while NIL collectives reign:

  • The creation of a registry for agents and financial advisers.
  • Students must report any contracts over $600 to their school.
  • New standardized contracts for all athletes.

At a Senate hearing last year, Tony Petitti, the Big Ten Conference commissioner, said, “We are concerned that management of college athletics is shifting away from the universities to collectives,” calling the collective system a “pay-for-play scheme disguised as NIL.” It’s hard to argue that sentiment.

According to On3, more than two-thirds of NIL transactions come from school-specific collectives, with middle-of-the-pack Power Five ones raising $3-5 million and top SEC entities pulling in $5-15 million. Is all that money necessary to bring in college athletes?

A power conference administrator said, “At the end of the day, NIL is probably the most direct line to being competitively relevant. The old adage in fundraising is to say: ‘Coach, what do you need, how can I help you?’ It used to be, ‘I need a new locker room’ or something like that. Now, 90%, if not 100%, of coaches are going to say, ‘I need NIL money.’”

Last year, the New York Times reported that a Michigan State player was making $750,000 a year, with some players at Ohio State not only receiving payments but also a free car lease.

There is at least one collective for every school in the Power Five, with the average starter at top programs earning $103,000 a year, per Opendorse, a company that processes athlete payments for the collectives. In 2023, Opendorse said it expected to process over $100 million in payments, with roughly 80% coming via collectives.

There are effectively three avenues through which these entities raise NIL money: brand activity/commercial relationships with athletes, low-level donors, and “whales” — the minority who can afford to drop tens of thousands to support their team.

While large up-front sums certainly matter, tapping into the entire fanbase for smaller monthly donations is more sustainable. Only one problem: In Year 4, the novelty is starting to wear off.

Is 2024 the Year of Donor Fatigue?

Because schools can’t pay athletes due to the NCAA’s rules, they are essentially asking fans to pick up the tab. When speaking with The Athletic, Georgia season ticket holder Brent Freeman shared his concern over the current system:

“No ill will toward the university or anything. My gripe is with the system. Asking us fans, I think, is wrong. I think it’s comical the money the NCAA brings in, and the fact they’re asking fans — and not just Georgia fans, but fans across the country — to give more, it’s just kind of comical. You can’t explain to me that this is the best way to do it.”

MORE: Nick Saban Opens Up About NIL: “All the Things I’ve Believed in No Longer Exist in College Athletics”

These donors are usually the same people who have historically given millions directly to their programs, but collectives have monetary freedom that the universities do not. Thus, athletic directors and administrators understand that money donated to a local collective often goes further.

Most programs have shifted their focus from winning the facilities arms race to securing on-field talent. Take Maryland for an example, which moved into a new $149 million football-only facility last season. As Maryland head coach Mike Locksley told The Athletic, “Unfortunately, we moved in at a time when facilities have been de-emphasized in a recruit’s mind … they’d get dressed in the trash can for $25,000.”

Speaking of recruits, that’s another pressure point for schools. They can spend big NIL dollars up front, only for their prized newcomers to transfer out or simply not live up to expectations.

Yet, there was a nationwide bump in donations to athletic departments last year, continuing an ongoing trend. From 2018-19 to 2021-22, total donations to FBS public schools increased by 20%, with expenses being up just 8% over that timespan, according to Sportico. In 2021-22, donations accounted for 24% of all revenue generated by Power Five athletic departments and 27% for Group of Five programs.

Cincinnati athletics CFO/deputy AD John Daniel told Sportico, “While there could potentially be a future correlation between collective dollars raised vs. institutional dollars raised, at this point, it’s too early to tell.”

The facts: direct-to-school donations are up, and NIL collectives are certainly earning enough to afford top athletes. The takeaway: Fans are asked to foot the bills … and fatigue is wearing in.

A lack of transparency from the collectives certainly doesn’t help, as they are not public and don’t have to divulge their finances. Additionally, the vast majority operate as legal entities that do not provide a tax break, with the IRS releasing a memo claiming that most NIL collectives who have registered as 501(c)(3) do not meet the standards of a charitable organization.

All this means that the current NIL format has turned into a results-based market. If your team hasn’t produced winning records, or at least the hope of success in the near future, the funds are going to dry up. Add in a shaky national economic outlook, and those who initially jumped into the NIL craze could rethink their investment.

Jason Belzer, the founder of Student Athlete NIL, an agency that advises around 50 collectives, said, “Those people have now had to step up to pay not only the university’s regular operating costs but now the payroll of these teams. We’re now in the third year of NIL, and a lot of schools’ donors aren’t getting a return on their investment. Before you at least got your name on the building. Now you pay for the payroll, and your team doesn’t win.”

In 2023, Belzer estimated at least 15 collectives would pay more than $10 million to football teams, with the median among power conferences being $4-5 million.

Neil Paul, a Clemson fan, had been giving money to Clemson’s athletic department for over 20 years but stopped in 2020 and never looked back. “I’ll hear friends who are donors say, ‘Well, they’re hitting us up for this, can you increase your donation by 10%’ or whatever amount,” Paul said. “Where does it end?”

Shortly.

The Future of NIL

The predominant idea is that revenue sharing is the best — if not the only — proper replacement for the current NIL model.

Walker Jones, the executive director of the Ole Miss-focused The Grove Collective, stated, “It certainly is on the minds of all of us right now. I think there’s an understanding that donor-led and fan-led model is not equitable and not sustainable.

“I think it’s wise for these power conferences to figure out a revenue share and to figure out a way to collectively bargain, which would then address donor fatigue — it would add sustainability, and it would give the athletes the ability to truly capitalize on name, image, and likeness, through revenue sharing.”

The schools have taken notice as well, with North Carolina AD Bubba Cunningham telling On3, “I don’t think that the current model will exist going forward. The never-ending need for more resources will continue to be. But how we go about prioritizing and how we go about asking for resources is going to have to change.”

Collectives wouldn’t fade away entirely, but revenue sharing would offer another source for athletes and one that can be regulated to a higher degree. The Johnson V. NCAA court case, which involves D1 student-athletes arguing they should be considered employees, will have huge ramifications on the current landscape and presumably force a revenue-sharing model, so getting ahead of the landmark decision is ideal.

Per On3, the current median revenue for a Power Five athletic program is roughly $126 million, with 41% going to staff, coaches, and severance. As such, those conferences should pave the way toward revenue sharing, specifically the SEC and Big Ten.

A collective bargaining agreement (CBA) would need to occur to ensure the revenue-sharing percentage isn’t too high and every sport is viable. If not, non-revenue sports could be cut entirely, such as golf and cross country, and women’s programs could lose funds.

MORE: Lane Kiffin Gets Candid About NIL — “It’s a Disaster Even Though It Benefits Us at Ole Miss”

Currently, collectives don’t have to comply with Title IX, the federal law that requires universities to provide equal treatment to male and female athletes.

The New York Times detailed how, at top schools, the average men’s basketball player with a collective contract is paid $37,000, while the average women’s player receives $9,000. Additionally, University of Illinois professor Michael LeRoy found that one school paid 89% of its money to football and men’s basketball players.

As for collectives, they’ll need to provide value outside of assisting athletes. Some are already getting ahead, such as CougConnect, which produced the first-ever NIL cruise, where subscribers could go on a four-day carnival cruise and interact with various BYU athletes.

Other examples include:

  • Classic City Collective launched a NIL initiative offering short-form videos with ads and purchasable merchandise for Georgia fans.
  • Yea Alabama provides online content, autograph events, and a car decal.
  • Crimson and Cream includes a cashback/discount offer package, monthly giveaways, trading cards, and more for the Oklahoma faithful.
  • Lastly, Dam Nation offers unique merch, decals, and events Beavers aficionados can attend.

If collegiate athletes are deemed employees by the Supreme Court, there is also the issue of the potential CBA prohibiting current NIL transactions. Plus, donors likely wouldn’t want to actually fund someone’s salary.

Thus, if collectives don’t pivot to becoming marketing agencies (not glorified fundraising groups) and supporting athletes outside of football/basketball, most will shut down. That’s to be expected when they run on a market where athletes cannot be paid by schools directly.

We’ll soon see the effects of donor fatigue and other factors on the NIL landscape. A country-wide reduction in NIL spending would only lead to a decrease in average athlete compensation. However, if only schools with struggling programs experience a drop in NIL investment, a significant gap in competitive parity could follow.

Furthermore, the adoption of penalty-free transfers appears to be the first step toward the complete abolishment of transfer restrictions, pushing college football even closer to NFL free agency, where, at the end of each season, a player’s able to leave his current program for the highest bidder.

KEEP READING: Dan Mullen on NIL, Transfer Portal, and the Future of College Football — “It’s Gonna Lead to Free Agency”

College football is filled with unknowns, but we do know one thing: The current model is on expiring time. A new era is being ushered in, and it’s up to the NCAA and the conferences to explore what it will look like.

The evolution of NIL policies is not only a pivotal moment in the history of college sports but also an opportunity to redefine the relationship between athletes, institutions, and fans. For far too long, student-athletes weren’t paid for what they provided for their programs. Now, it’s a question about how they will be paid and how much.

Miss any action from the top college QB Rankings during the 2023 football season? Want to track all the movement with the college football transfer portal? College Football Network has you covered with that and more!

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