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Oklahoma Sooners football: Assessing the NCAA’s NIL problems

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A conversation about potential reforms to name, image and likeness deals looming over college sports

NCAA Basketball: Final Four-NCAA President Dr. Mark Emmert-Press Conference Stephen Lew-USA TODAY Sports

Name, image and likeness – commonly referred to as NIL. It’s all anyone in the world of college sports wants to talk about. The situation around what were intended to be licensing deals spun out so fast that it might have cost Mark Emmert his job as NCAA president.

I’ve been kicking around some ideas with the esteemable Tye Burger of Kansas State site Bring on the Cats about the impact of NIL deals on the NCAA and the college sports industrial complex. We decided to take the conversation online.

We didn’t really solve anything. I’m not sure if we even reached any conclusions. But here are our thoughts on some of the more pressing questions surrounding the explosion in NIL deals. Feel free to chime in down in the comments with your thoughts.

1. Do you think the current state of essentially unregulated NIL compensation in college sports is desirable? Why or why not?

Tye B.: The lawyer’s go-to phrase is most apt here: it depends. For the players? This is mostly desirable. We’ve created an essentially unregulated marketplace with gaping loopholes that allow eager boosters to create a pay-for-play environment under the guise of NIL compensation. The result is that major football recruits and transfers are reportedly making more than NFL rookies and good-not-great basketball transfers are taking in mid-six-figures and getting cars. Good for them.

For coaching staffs, this is a new, and massive, difficulty that falls within their mid-seven-figure job description. Don’t feel too bad for them, they’re paid well to deal with problems. But they now have less control over their rosters and may face locker room problems around how much each player is making.

NCAA Football: Kansas State at Kansas Denny Medley-USA TODAY Sports

Desirability for fans takes into account the coach’s issues, and also may depend on each school’s station in the college sports hierarchy. Allen and OU fans will have more resources at their disposal and thus more power to to attract major recruits and transfers. My K-State Wildcats risk becoming a feeder school for the OU’s and Ohio State’s of the world.

Or maybe this is much ado about nothing. Not every successful player moves up. And K-State is rebuilding its entire basketball roster relying mostly on the transfer portal, presumably competing and winning contests for players at least partially on their ability to compete in the NIL space.

Overall, my conclusion is that a fully unregulated NIL environment is not desirable for college sports. Note that “fully unregulated” is the key component of that previous sentence.

Allen K.: I like your framing here with the separate groups of stakeholders, but don’t forget the schools themselves. Even though it may not be a zero-sum game, they are now competing with players for boosters’ dollars.

If you’re a booster who loves football, are you going to donate to the school or the equivalent of a slush fund for acquiring talent? I imagine more will go for the latter, especially if collectives survive as 501(c)(3) organizations – admittedly, that’s no sure thing.

Here’s something to consider: In the scenario you’ve posed with some schools serving as feeders for big programs, let’s say fan interest in college football declines. (Not a given, but play along.) Meanwhile, donations start falling. At that point, schools decide they would rather collectively bargain to give players a slice of TV money.

How are you going to get the players to negotiate? Unless the distributions are huge, star players benefiting from the existing setup won’t have any reason to change things. The players who don’t command big NIL money can theoretically be replaced without much trouble. Getting everyone to the bargaining table sounds like a serious challenge.

2. Same question as before, but now substitute “sustainable” for “desirable.”

AK: Frankly, I’m not entirely sure how to answer this question due to the fact that I think “sustainable” in this case likely means many things to many people. Admittedly, I also don’t believe NIL will change the overall competitive outcomes in college football dramatically.

Are the rumored dollar figures attached to these deals sustainable? Possibly. From an economic perspective, we know total spending on NIL has to hit a peak at some point. Regarding spending rates, we just don’t know if: a) we started out at a natural equilibrium point; b) there is room for those rates to grow; or c) rates will fall.

Is this sustainable as a compensation system for athletes? I guess so. Fans have been spending money on their favorite college teams since the first time toe met leather. If this system stays in place, I imagine they will continue ponying up.

Does sustainable mean that college football will look the same in five or 10 years as it does now? If not, I suspect the television industry will have more to do with that than NIL deals.

I honestly think the biggest concern right now is that we are in the very early stages of what has become a cottage industry. I suspect a significant number of collectives and businesses organized around NIL will go out of business quickly, leaving many of their obligations unfunded. How many players will that affect, and how will it impact opinions about collectives and the programs tied to them?

TB: Your last point is what I’m most focused on. The ROI just doesn’t seem to exist here. Sure, there are some boosters who have so much f*&%-you money that they can spend six figures here and six figures there because wins are worth it to them. But in the grand scheme, there aren’t that many of them. And inevitably some folks are going to get in over their heads and an athlete who thought he had a six-figure deal will get left holding the bag. What happens then?

3. Broadly speaking, what types of NCAA regulations would you favor for NIL compensation?

TB: NIL compensation should be tied to specific outputs, or organized into specific categories, in such a way that it can be tracked and accounted for. Royalties from merchandise and memorabilia sales are well-established in other sports and industries. Fees for public appearances, promotions and skill camps are another area. Caps should be established for each type of payment and the categories of NIL compensation permitted under NCAA rules should be enumerated with specificity. If your reaction to that previous sentence is negative, you may not be familiar with the NFL’s salary cap or MLB’s luxury tax.

Open-ended and unregulated NIL collectives are essentially just pay-for-play, which as we discuss elsewhere in this post may actually be preferable to pay-for-play under the guise of NIL compensation.

AK: I’m skeptical that those regulations are feasible without negotiating a collective bargaining agreement with the players. Personally, I’d argue that the schools could infuse the sport with some stability by requiring players who transfer to sit out a year.

Syndication: The Oklahoman BRYAN TERRY/THE OKLAHOMAN / USA TODAY NETWORK

I never thought that part of the old transfer rules seemed particularly onerous. (Coaches limiting players’ potential transfer destinations is a different issue altogether.) And if a player has to sit out a year before becoming eligible to compete, it dilutes the benefits of tampering and makes transferring less desirable to players.

I don’t love this solution, especially considering how many players end up transferring at the behest of their coaches – perhaps there are some guardrails for those situations. Going back to the old transfer rules just feels like a more reasonable approach to addressing any problems that might be percolating at the moment.

4. Is a direct, and regulated, pay-for-play model better than unregulated NIL?

AK: “Regulated” is doing a lot of work in this question, but I’m inclined to say yes. What we have now isn’t NIL – it’s a proxy system for directly compensating players. That’s not a good stand-in for a contractual relationship between employers (i.e., the schools) and employees (i.e., the players) for a number of reasons. For example, considering NIL deals are almost certainly contingent in one way or another upon players being enrolled in school and a member of a team, what kinds of conflicts of interest do they pose for coaches with the ability to “process” players out of their programs? And in terms of unintended consequences, consider all the opportunities the NIL system is creating for grifters and third parties to siphon money from the athletes.

A simple, transparent system for compensating players just seems like a more reasonable approach to me.

TB: That’s where I am, and I think a lot of what this comes down to. Unregulated NIL is essentially just a pay-for-play scheme dressed up as ... something else. I know the NCAA and the schools (but I repeat myself) seem willing to die on the hill of amateurism and avoiding collective bargaining. But as I said above, if this current system goes south, then leadership may change their mind. Perhaps it’s better to have control of the compensation.

If you’ll permit me to be naive for a moment, it could even make the sport more equitable. Through the draft and the salary cap, the NFL is designed to promote parity and prevent super teams. By contrast, Alabama doesn’t get the last pick in the recruiting draft after they win a national title. In most cases they effectively get the first pick. And now with NIL, they (and others) sustain their advantages and make it nearly impossible for teams with fewer resources to compete at the highest level. But a pay-for-play system with a reasonable salary cap in place could spread the talent out more evenly.

OK, I almost typed that with a straight face. Now I’m back to the real world where I know that if CFB ever does adopt pay-for-play, it’ll be a toothless version that does nothing to promote parity.