NIL: the revolution in US college sports | FT Scoreboard
A change in the rules means university sports stars in the US can now make money from their name, image and likeness, through sponsorship and endorsement deals. But will they ever get paid to play? The FT talks to athletes, agents and policymakers to see how NIL is changing the game and whether the age of amateurism is dead
Directed, produced and edited by Donell Newkirk; additional production and editing by Joe Sinclair; executive producer Veronica Kan-Dapaah; Camera operators Donell Newkirk, Lloyd Barnes, Rashawn Colton, Omar Torres, Corey Easley; Motion graphics Evan Hammerman, Russell Birkett; additional footage and images from Getty, Bloomberg, Reuters, Senate Commerce Commitee, University of Tennessee, Louisville University, Opendorse; Music by Epidemic Sound
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There's a revolution happening in today's multibillion dollar college sports industry. Over 100 years ago the NCAA was created to regulate and control college sports.
Their core principle is that college athletes should be classified as unpaid amateurs, barring those who compete in it from profiting off their fame. Fast forward to 2021 and college athletes are still not getting paid to play. But for the first time in history they can make money off their name, image, and likeness. And they're using social media to build their personal brands and businesses off the courts and outside of the lines.
With some of today's top athletes garnering million-dollar endorsement deals, will the new rules even the playing field or destroy college sports? And will the NCAA ever pay athletes a share of its billions in revenue? In this film we'll talk to some of today's top athletes, agents, schools, lawmakers, and leaders in tech to take you through the story of NIL, how it started, where it is now, and where it could be heading in the future.
'NIL' is an acronym for name...
Name, image, likeness.
College athletes are now able to leverage their brands and who they are in order to make money.
That allows them to really start building their brand away from the sport that they play at a younger age.
Today's student athletes are earning, at the high level, seven figures through endorsements and NIL monetisation.
They can also go after third parties who use their name, image, and likeness without their permission.
And intellectual property, that's a term of art that most college students may never have heard until NIL came about.
Name, image, likeness, or NIL for short, will go down, for me as a sports industry professional as well as a fan, one of the most significant things that's ever happened in the history of college sports.
Our first stop on this journey was to Fort Lauderdale, Florida, to speak with Darren Heitner, legal adviser to some of today's top-earning NIL athletes. He explained how the NCAA came under increased pressure to change the rules on NIL, from changes in state laws giving students the right to payment to landmark Supreme Court rulings.
Having a unanimous decision in favour of Alston in 2021 against the NCAA is vitally important for where we are today with name, image, and likeness. It basically called the NCAA a cartel, that it was in collusion in order to prevent athletes from a certain type of benefit. That being academic-related benefits.
And Justice Kavanaugh went a step further in his concurring opinion to say that maybe all restrictions should be shot down. And ultimately, the NCAA, on June 30, 2021, finally changed its regulations on this subject, implemented what it's called an interim NIL policy. And that's why, as of today, you see college athletes around the country finally enjoying these rights.
So why would the NCAA forbid its athletes from earning money in the first place? For that answer, let's start from the beginning.
On November 6, 1869, Rutgers and Princeton played what is known as the first college football game ever. But by the early 1900s football had gotten so dangerous that there were public outcries to ban the sport completely. And players not even enrolled in school often filled out the rosters.
So in 1905, US President Theodore Roosevelt called together colleges from across the country in a last-ditch effort to clean up the sport. And in 1910 this group became known as the NCAA.
The newly established NCAA's mission was to regulate the rules, protect young athletes, and establish amateurism as the foundation for all of college sports. But it wasn't until a quarter of a century later, in 1936, the athletes were allowed to receive academic scholarships to help offset the cost of attendance.
Athletic ability should receive consideration in determining student values and in the assignment of scholarships, loans, and opportunities for remunerated work.
Thus, with the Southeastern Conference's forthright action, college football becomes openly subsidised.
The NCAA classifies itself as a non-profit organisation. But it generates revenues in excess of $14bn annually, a number that has more than tripled over the last 20 years and rivals professional sports around the world. But despite all the marketing and TV deals, ticket sales, and merchandise sales, college athletes still aren't paid a share of the revenue.
This has been a source of much controversy over the years. In fact, over 80 years ago in 1936, MIT Professor George Owen brought up this exact issue.
If it is necessary for a boy to undergo extreme risks of limb and, yes, life, why not reimburse him in a substantial and regular business manner? Why shouldn't the players share in the profits of the game?
Their reasoning for not paying athletes directly? Amateurism.
We need to safeguard the non-employment status of student athletes to maintain the core principles of collegiate athletics.
The colleges don't want anything to change because the largely white men, who are making the million dollar salaries, who are putting the product on the field. That's a civil rights issue. That's an economic rights issue. And it needs to change.
I'm not saying the coaches... I mean, the administrators don't do a good job of doing their job. But we're the ones out there playing. And so, yeah, I mean, I don't feel like we should receive a lot of it. But some of it we should receive.
There should be a point where the NCAA should compensate athletes at a certain level for ticket sales, jersey sales, anything directly related to the name on the back of the jersey or the team because the fans come to watch the players. And the fans buy the jerseys of their favourite players.
Your name, your image, and your likeness isn't as big as someone else's, you're not the superstar on the team, maybe it's harder for you to get deals. So within that, the NCAA could possibly pay you with that. But I feel like it would have to equal out to where everyone is happy with the fees and it's not one being paid more than the other.
I think we should look at the big-time college sports, in particular football and basketball, just like we look at pro sports. There should be revenue sharing. A portion of money should be kept by the owners, who in this case are the colleges. And then a portion of the money should be guaranteed to go to the students.
If student athletes are classified as employees of their university, their college or university, it is, as Senator Schatz pointed out, it does change, very fundamentally, the nature of that relationship. It moves student athletes out from underneath the guise of education law, for example, to employment law. It changes everything about what college sports really is and why we have created college sports 120-some years ago.
The college sports industry got away with this for so long because they convinced people that these were student athletes. And the scholarship was their form of payment. That scholarship is worth peanuts compared to the money that the coaches and these assistant coaches and the athletic directors are getting.
According to ESPN and the US Census, head coaches are among the highest paid public employees in almost every state in the country. Top football coaches, like Nick Saban at Alabama, make upwards of $10m a year.
Although college athletes still are not paid a share of the revenue, 2021 saw a major shift in the college athletic financial ecosystem. To see just how some of today's athletes are taking full advantage of the new NIL rules, I travelled to the University of Tennessee to document Grant Frerking, student athlete and entrepreneur, for a day in the life.
My name is Grant Frerking. I am the founder and CEO of Metro Straw based out of Atlanta. I'm also the founder of GTF enterprises and the president of NILU at On3 Sports. I also double as a wide receiver on the University of Tennessee football team, wearing number 0.
You know, my day in the life looks different than even a lot of my fellow student athletes that I share a field with. My mornings start very early. I usually get up around 5:30. We usually roll to the football facility around 7:00 in the morning. Go through breakfast, meetings, treatment. Get out on the practise field, come back, and usually aren't leaving the football facility until lunch is done, around noon or so.
And then my afternoons are usually filled with a meeting with my On3 team, so going and creating all of our content strategy plans for the week. And then at night catching up on emails, phone calls, studying when I can, and getting to bed at a decent hour before I go do it again the next day.
The new rules have allowed Grant to start his own NIL business, GTF Enterprises, an independent NIL company in which he's helped his own teammates secure NIL deals.
It's a very busy schedule. And it's really hard for myself to get a job or to do other activities outside of my sport. So that's where the NIL deal situations have come in. It's been an opportunity for me to focus more on myself and my brand. But on top of that I'm getting paid for posts on Instagram and Twitter as well.
So my teammate explained to me that the cookie deal was to where I would do a video on Fridays before each game. I'm here to let you know again that Moonshine Mountain cookies will be giving away two free cookies if I get an interception tomorrow at tomorrow's football game.
The day of the game, when he got that interception, they saw an 8,000 per cent increase in Twitter growth. And they saw a 200 per cent increase in revenue in the stores over the previous Saturday, just with new traffic coming in to get these cookies. And all the cookies were free.
So people were coming in there and buying all sorts of other products while also taking advantage of these free cookies. That's, at its core, what NIL is all about. You're helping the athlete. But you're also able to change the lives of these local business owners and making them feel part of being something a lot bigger than themselves, which is the University of Tennessee and watching Alontae play on Saturdays.
A number of colleges have employed tech companies to help them and their athletes navigate this new NIL territory. So I travelled to Louisville University to talk with Blake Lawrence, the co-founder and CEO of Opendorse.
...things out to your stories, as well, which is great. But stories disappear in 24 hours. We've been fortunate to partner with Louisville. And now more than 50 schools across the country are turning to Opendorse as their NIL education solution.
Athletes download Opendorse and create a profile and list out the types of endorsements or services they're willing to do and get paid for. They receive an alert to their phone any time an opportunity comes their way. They can review the deal, hit accept. And Opendorse does the rest. It reminds them of where to be, what to say, what to do.
We handle everything from the contract to the completion of that contract and even tax preparation. Today's athletes are using social media to build audiences that are enviable by celebrities. Their follower count and their bank account are forever linked.
According to Opendorse, the vast majority of NIL revenue has come from posting on social media apps. We asked Dev Sethi, head of sports partnerships at Instagram, just how big of a role does social media play in the NIL ecosystem.
There are a variety of ways in which student athletes can make money by leveraging a platform like Instagram, whether it's in partnering with brands and leveraging our branded content tools to really amplify their content and grow their exposure and reach. We've seen a number of college athletes that have invested in developing their own merchandise lines and leveraging commerce tools on Instagram, such as Instagram checkout. Really, the world is their oyster in terms of how they're able to bring their name, image, and likeness to life on social media.
Louisville star quarterback Malik Cunningham, who has amassed over 20,000 followers on Instagram, was able to sign a lucrative NIL deal on the very first day of eligibility.
Social media plays a big factor because that's where everybody is. Like, that's what everybody does at work. That's where the media comes and finds you, looks at your page.
And a lot of those companies look at your Instagram before offering you a deal to see what type of guy you are. And so social media plays a big part in it. And you got to watch what you post and what you say and how you treat people on there. And yeah, it takes you a long way.
The larger their online audience the more opportunities they will have for endorsement deals, autograph signings, appearances, social media posts. They'll get paid more per post the more followers they have. So an athlete with 10,000 followers on Instagram could earn anywhere from $200 to $1,000 for one social media post. There are student athletes across the country that are getting paid upwards of $50,000 for one Instagram post.
The highest earning student athletes in the first 100 days of NIL are women's basketball players, women's volleyball players, women's gymnasts. These are individuals that have built a large online audience, like Hanna and Haley Cavinder at Fresno State or Hailey Van Lith right here at Louisville.
Hailey Van Lith is one that built her large audience because she's an incredible athlete. And she's attracted a lot of followers because of that.
Being a student athlete, time is something of great value. And we don't have a lot of it. And there's no time to have a job. And we get cost-of-living paychecks. But really, honestly, that covers about our food so we get to survive. And some of my teammates, even at the end of the months, right before we get paid again, they're struggling.
We can't hold a job down. We commit ourselves every day to this sport. And we signed up for it. And we love it. And this is the sport we want to play. But at the same time, we should have the freedom and the money to live a nice life and not be struggling. We have 6am weights. We have practise for three hours.
And season is a whole different story. It's even more intense. I'm going all day. I get home at 9 o'clock. I do homework for two hours and hopefully get a dinner in before 11:45. And I get back up in the morning, and I do it again.
So there's a lot of mental and physical stress that I don't think people really understand unless you live it. And so I think the NIL will definitely benefit us from a financial standpoint.
My next stop took me to Marina del Rey in Los Angeles, California, to speak with Sabrina Ionescu, former women's basketball star at Oregon and the number one pick of the 2020 NBA draft. She's also the chief athlete officer at Division Street, Oregon's newest venture helping its athletes create and monetise their personal brands. We talked about how today's college athletes can best choose deals and partnerships that maximise their earning potential.
I think being able to earn money from NIL for college athletes, it's so important just because it teaches you a lot about business, a lot about your brand and what you stand for. And a lot of athletes now are not only seen as athletes, but they're also influencers.
If you want to build your brand and partner with brands and having partnerships and deals, I think it really has to be true and authentic to you. And I think that's when it will be successful.
Sometimes a lot of these athletes might sign really long-term deals and kind of sell themselves short, because every year you're supposed to get better. Every season you want to get better. And if you sign into a long-term deal and you skyrocket and end up playing really well and exceed all expectations, you're really locked into this deal that you signed your freshman year.
And so I definitely think athletes should have representation and have an agent. People might not tell you the truth and might not portray who they really are. And I think it's your job to really either have agents that know the business and know who these people are or really trusting in the right people and asking the right questions to figure out what that is.
To hear more about the agent's role in NIL we headed back to New York City to speak with Colleen Garrity of Excel Sports Management, one of the top grossing sports agencies in the US.
An agent's role in NIL is really to serve as an adviser and to guide the student athletes through this process. We handle everything off the court from sales pitches to contract negotiations to compliance and making sure we're not jeopardising their eligibility so they can really focus on the two most important things for them, which is their sport and their classes.
I think it's also important that... because agents have experience, they know the space, they're familiar with the brands, and they know how to put a strategy together for a student athlete that's most authentic to them and can really help them down the road develop a brand that they're proud of. Excel recruits athletes that are high character. We want good people. And so that's probably number one for us.
And then we look at the marketing potential. So that could be followers, engagement, unique interests or hobbies a student athlete might have that sets them apart from everyone else.
So there's a lot of things that go into marketability, all factors which we consider when signing someone. It's important to have an agent primarily because this is such a new space and the rules and the laws are always changing, to make sure that someone's providing good advice and ensuring compliance, number one, so student athletes don't lose their eligibility.
So how do athletes stay in compliance with all the rules?
The NCAA, in its minimalised restrictions, has said there are three important things that must happen in all of these deals, or must not happen. Number one, there must be some deliverables provided by the athlete to the third party in exchange for that compensation. Number two, money cannot be based on future performance.
Obviously, brands that do deals with athletes are hoping that the athletes do well. However, there can't be bonuses or incentives in these contracts where an athlete gets more money based on having x number of yards or y number of touchdowns or winning the Heisman Trophy. And third, money can't be conditioned on an athlete attending a university or staying at a university.
Although the NCAA has released basic compliance rules each of the 50 states in the US also have their own separate NIL compliance rules.
I definitely think the compliance rule should be the same across the board.
If we see some regulation happen that I would be a proponent of, it would be regulating the ability for schools to pool money together, crowd source a lot of money, and go and just try to buy athletes left and right.
So where are we today with federal NIL regulation? I asked the FT's Sara Germano for the latest.
What I've heard from sources on the Hill is that there are quibbles over what federal legislation might look like for college athlete compensation.
You have Democrats on the far left saying NIL isn't enough. We need to do more than that. We need to have revenue sharing between the universities and the athletes.
There needs to be more strict concussion protocols put in place, health and safety type of measures, et cetera. Whereas on the far right you're seeing people who want to provide safety mechanisms for the NCAA to try to give them some form of an antitrust exemption and shield them from litigation that may come out. And that is actually currently pending based on their prior abuses.
Passing an NIL bill at the congressional level is critical to moving forward, in part because we want to get this done. And we want to do it and not be then immediately sued for having done the right thing in this case.
I think the NCAA is one giant walking, talking antitrust violation. They have colluded the schools through the NCAA to set the wages that every student athlete will make, right?
Right now, a student athlete is only going to get the scholarship from the school, nothing more. That's the definition of collusion. One of the reasons why I think we should pursue federal legislation is because this right, right now, could disappear any time that the NCAA feels like their money is being threatened by these endorsement deals.
The NCAA is at a point right now to where its existence is on the line.
I think most fundamentally, senator, converting student athletes, or having them change into an employee-employer relationship, fundamentally blows up college sports. The notion of collegiate athletics is that these are not employees. They're not hired professionals. They are, in fact, students who are participating in sports voluntarily.
It's all illegal. We would never allow this in any other industry. But for some reason, we've allowed it in the college sports industry. It's time for that to come to an end.
I'm interested in federal action if it empowers athletes. I'm not interested in federal action if all it does is give the power back to the NCAA, because there's nothing the NCAA has done that convinces me that they are going to act responsibly if they're given even more power than they already have.
If, senator, the policy only deals with direct name, image, and likeness and doesn't include a revenue sharing model, then I think it can have a very positive impact on women and Olympic sports because it could provide them with greater opportunities to gain access to media markets, to be involved in any of a variety of NIL activities. If, conversely, it required a revenue-sharing model that took resources away from the dominant sports that produce revenue, it could have, as a number of us have said earlier, can have a very negative, even cataclysmic impact on the big sports.
No less than seven pieces of legislation have been drafted between the end of 2019 and today. And yet not a single one of those bills has even reached the floor for debate. The problem is this issue has now become so conflated on Capitol Hill that it's actually rather unlikely that anything gets done in the near future.
The one thing that's for certain is that the old rules of amateurism seem to be done for good.
Is there a possibility at some point in the future that there will be unionisation? Yes, I wouldn't count it out of the equation absolutely. I think more likely than a union perhaps would be some sort of trade association, where athletes around the country are able to do group licencing agreements and ultimately group licencing deals, allowing things like a college football video game to return with athletes' names, images, and likenesses.
So what happens now? Overarching federal regulation for NIL may be some way off. But with more college players making more and more money the old rules of amateurism are finished. And public opinion is shifting in favour of athletes being paid to play, and not just through NIL deals. The NCAA's reputation may have taken a hit. But the game goes on.