Most of this sounds OK to me. I agree that regulating agents will be important. Not that letting the schools handle NIL would be problem free, but it makes a bit more sense to me. Maybe there's a hybrid model where the agents have to have a formal relationship with the school? I'd imagine they need to sanction anything that involves use of school branding, which will be important in obvious NIL opportunities like jersey sales, autograph sessions, and local business advertising.

I'm not going to pretend to understand all of this but I think I understand that Alabama, Clemson, OSU and maybe Georgia currently run semi-pro organizations that set them apart from the rest of D1 college football programs. These changes are going to alter the landscape in huge and somewhat unpredictable ways and only those programs that have a plan to take advantage of the new rules will have a realistic chance at the CFP. I hope that Michigan is aware of this and making a plan to do so. As you write, the network is there, the marketplace is huge, and this is an enormous opportunity.

I like your diary, but in all fairness, paying players above the table is not going to eliminate the payments being made under the table.

"Ok son, you'll get around $10,000 shilling tea playing for Michigan, but you can get that at the central ohio football school plus a plain white envelope full of cash every week from Bubba here."

Thanks for the thorough writeup.  The unintended consequences will be very interesting.  Have you heard of Michigan making any efforts to do some of the things you prescribed?  Agree we have assets that are superior to most:  Alumni network, Business connections, Huge TV ratings, Big House.

Not looking forward to the increasing demands of unproven players however!

This is great stuff. Thanks.

What I want to know is how soon will we be hearing, “I’m JJ McCarthy, and I’m Reid McCarthy, from Ann Arbor Elder Law, and we’re proud to support MGoBlog and provide legal advice for all your elderly needs.”

Good stuff. The comments about a few QBs making millions was eye opening. I’m not sure how well that will work in the locker room, but LeBron makes a lot more than the schlub at the end of the Lakers bench.

 Very interesting read - thanks !

The underground payments are the problem.  Big money, like what was offered to Rashan Gary, goes to stock pile those 5-star recruits at the top programs.  For sure this is happening at places like Alabama, Clemson and Georgia ... maybe even OSU.  I am convinced that Zach Smith was Urban's bag-man coordinator both at Florida and OSU.  Why did Urban protect him at almost any cost at both programs ?  Because he was a great "football coach" ?  No way, because he was Urban's tool to the under-belly of Florida and OSU boosters.

NIL could reduce the impact of the underground world for the top skill players, like QBs as you point out.  But if DTs don't get the same NIL benefit, the underground payments will still be there to get their signature.  $10K in shill money ain't going to be enough.  I hear the minimum is like $150k for top 4-star DT.  Gary was offered about $350k.

My view is that NIL will not stop the criminals from stock-piling players, because the NIL will only be valuable to the skill guys that can sell / market things.  QBs as you point out are going to make a killing, but not very many others will.  So, yes, QBs might get more evenly distributed but not likely the balance of the recruits.  ... some DT's Mom "always needs a new home".

This seems like the death of college sports.  Although it may spread talent among the Power 5 types, it will kill the talent pool below that. 

Great write up.

Somewhere I see a “salary cap”.

I think this will be the tipping point.  College football still probably has a few good years left, but this is the beginning of the end for the college game.

Another thread asked what Harbaugh could do to recover confidence in his leadership. In a word: this. Get in front of the NIL. Now that Michigan's advantages can be used within the rules, do so. It makes no sense that a good but not great university, with a mediocre alumni network, in a State with no major metropolitan area, is stacking 5 star talent in the model corporate machine of college football. Alabama? Seriously?!

NIL may be great for Michigan, but in the long run I think it will spell the end of what makes college football special. It's hard to be as emotionally invested as a fan when the coaches, players, and teams that you root for are basically mercenaries. But maybe that's a good thing if it gets everyone to pay more attention to their own lives and families than what is essentially just another entertainment outlet.

As I always say when this comes up....why require college football players to be college students? Stop the show. Make colleges teams formal NFL farm teams that represemt their univeristy in the same way the Bears represent Chicsgo. Schools should not use economic and human resources.on this....let the NFL pick up the tab and take care of the admin side of it.

The strangest thing to me in all of this is why the IRS hasn't cracked down. The amount of violations and uncollected taxes has to be staggering. Tax evasion, willful failure to file 941s, failure to report income, back payroll tax penalties and interest, Trust Fund Recovery Penalties, to name a few. People go to jail for these things on a small scale all the time (particularly the TFRP). And the best part is, if there is ANY shred of evidence that the NCAA is aware that payments are being made without payroll tax deposits, they can also have the TFRP levied against them. This would be millions upon millions of dollars in penalties and interest alone. And they can file liens and eventually seize the personal assets of any individual who has any knowledge of it.

Another thought: I wonder if this will open the door to lawsuits being filed against the scouting services, because in this case a player's marketability and value will be directly related to his star rating. There could be a $100,000 difference between a 5 star and a 4 star. I'm not saying it will be successful but if there is evidence that the rankings are manipulated by anything other than pure evaluation (like the auto bump, etc) I could see this being tried.

I think there is a lot of misunderstanding about how athletic departments and college athletics in general work in this post. I could be wrong, but being an insider, so to speak, I think that some of the takeaways are fantasy at best. 

Lets focus on the NIL rights. There is not an unlimited amount of marketing dollars available for individual collegiate athletes, especially when the school can (and will) restrict use of their branding. In addition, lets consider how many individual college athletes are household names across the nation. Not just locally, or not just for a few months out of the year. But year round, household names that will drive revenue for companies looking for athletes to endorse their products? And to do so at a level competitive with professional athletes? Very few if any. 

Student-athletes being able to sign with agents is huge. But how many power agents, those who will bring in the "millions of dollars in endorsement deals", are going to find collegiate student-athletes that will provide an immediate payoff. Again, very few if any (see above). But, they might try to lock them up earlier in their lives. Of course, again, those who will have the ability to draw big endorsement deals will only be interested in a small group of athletes, exclusively football and men's basketball. All other athletes won't be in any consideration, because their stature won't compare. Locking these athletes up early in college (which they won't) will occur only to limit the student-athletes later earning potential (younger - less understanding of what their value is worth). Maybe this is three to five dozen athletes across two sports who are viewed as can't fail athletes, and here is the key - at the next level. Even then, how much marketability outside of their local markets do they have. Sure, every once in a while there is a super marketable college athlete - maybe a Zion Williamson, or a Trevor Lawrence, but that's about it. Nike, Adidas, major businesses aren't going to invest in these potential projects when they can invest in people already with strong national recognition and interest. 

So what does this all mean. Very few if any student-athletes are going to get any serious paydays from this. Controlling NIL is nice when you want to do a charity calendar and don't want to have to sit out a few games. But it isn't much of a cash cow for student-athletes. What it looks more like is this - the top two or three star players on the campus (again - lets be realistic - football and men's basketball) might get an endorsement deal with the local car dealership, or some other business, restaurant or bar. Since they can't represent their school's brand, they have to be recognizable to the public beyond the university ... see why this is so limiting. This will be a positive to some of these businesses, because they can sign a few limited athletes for a few thousand here or there, much less than they'd contribute to the university to be able to use player likeness in their ads. So again, a few student-athletes will have a few thousand dollars more in their pocket, while the rest see no positive gain. Get out of your mind these huge contracts, local/regional businesses know they can exploit these individual athletes well. And even some of the group deals will still be cheaper than paying money to State U for using their brand. 

Now lets look at the impact on the athletic department. In the past, local sponsors shelled out huge amounts of money for the right to use the university's likeness. Well, now that I signed Cade McNamara for a few grand, why would I pay many times more to Michigan so I can use game footage or pictures of him in a uniform in action for my promotional material. I wouldn't. Essentially, businesses can get what they want (star athlete promoting them), at a much cheaper price. The university drives up the licensing rights because well ... they have at minimum 14 teams to fund to stay at the D1 level. That's a lot of money. Now, that money starts drying up, and there goes the rest of the athletic department. Unless the NCAA moves to reduce the minimum number of sponsored athletic teams (this has nothing to do with actual funding teams ... unless they're women's team - Title IX), that could take money away from the actual "revenue sports". So now, Cade is making extra cash, while his teammates might see a reduction in what they actually get because endorsement money to the athletic department is slashed. 

But wait, that's not all. The fullness of the proposal basically creates revenue sharing across the FBS programs. Read it carefully. First, do all 130 FBS actually generate revenue? Probably not. Even if they do, how many of them use that money to fund the rest of their other 12 athletic teams (assuming men's basketball is self-sufficient)? Most. But the proposal only has cost of scholarships being removed for revenue consideration. Some schools don't even account for scholarship costs the same (some schools athletic departments pay for only the instate component, while most pay the full scholarship cost). Suffice to say, the 65 or so Power 5 schools will heavily subsidize this payment to players. Not only will it hurt funding at Group of 5 schools, but will also mean for a loss at Power 5 schools. So why would P5 schools agree to this. They won't, and they'll finally tell the NCAA to stick it, and will go out on their own. And they'll make their own rules that Senate Democrats won't like. But what about the players? This proposal does nothing to deal with the amateur status of athletes, or them cashing in. Why? Under this proposal, the third string quarterback at FBS Independent New Mexico State would get as much at Alabama Heisman trophy candidate quarterback Mac Jones.  Or Devonta Smith. I'm sure they'll be completely content with that arrangement. But hey, the local TCBY might offer a few thousand for Jones and Smith to toss the football around while promoting their TWO locations. 

Finally, lifetime scholarships. Right now, the P5 conferences provide guaranteed athletic scholarships to their student-athletes. That means that some athletes can take complete advantage of it, not work hard, and guess what, you can't take away the scholarship because they aren't performing. But what is an athletic scholarship. It is an investment in a student-athlete by an athletic department and coaching staff that they'll get athletic results, while paying for part or the whole of the student-athletes academic endeavors. You invest this much time in athletics, and we'll compensate you for your lost time doing other things college students do. Sound like a job. And the more we provide additional compensation for NIL and additional income for revenue sports, the more they become employees. You'd like think student-athletes would be faithful actors in this athletic scholarship situation, and most are. But as with any endeavor, some are not. Students lose academic scholarships with regularity, because they don't meet certain standards (some of which are very hard to achieve). But we don't protect them. But student-athletes, they need that protection. Then they are not employees and don't need the extra compensation. But if they do receive that as a benefit of their athletic performance, how are they not employees? 

The key take away is that for only a handful of athletes will this even bring in the potential of millions of dollars they aren't currently receiving. For maybe three to five dozen, extra thousands of dollars via small promotional deals, and then whatever comes to college football and men's basketball from revenue sharing - which will be small. Athletic departments apart of FBS P5 will crumble under the deals, and the P5 will leave the NCAA, creating chaos, and probably diminishing the cash cow that is March Madness (no Cinderella stories now). 

 

If you've ever done any media rights negotiations, you know that what is proposed in the original post has some additional issues that need to be reconsidered.

The first error is to believe that the school's alums and fans make the value of NIL higher. They might make NIL on jerseys and hats higher, but the serious money is in national media, not the other stuff.

Licensees who will use the NIL with serious money are looking only for results to be gained through their investment in association with the most famous players. The most famous players play for the most high profile teams. The most high profile teams are the ones that go to the biggest stages in the sport.

It's the exact same reason why so many high caliber players choose schools that are already winners, and why the schools keep winning , the attraction being the chance of a big NFL contract.

Nor does the location of the school matter. Look at pro sports. Example: The Detroit Lions' Matt Stafford has regional and local deals with, say, the Metro Detroit Ford Dealers Association. He makes a few bucks that way. But he's not doing the national ads for State Farm and other advertisers where the serious money is made.

Why? He's a good player. He's just on the wrong team. They aren't winning.

However, Green Bay's Aaron Rodgers is doing those national ads, because he's a bigger star on a better team that makes the big stages more often.

The Detroit metro market is FAR larger than Green Bay or Milwaukee. The size of the market he plays in is irrelevant. It doesn't matter at all that Green Bay is 'where the hell is that', or if Alabama is a school in the middle of nowhere, if the team's games and stars attract eyeballs.

If no one's heard of the player, the license has no value, and the players/licensors don't get much of anything.

These days it's easier than ever to track media and find out which players are getting the most media plays and the most attention. Heck, just look at how easy it is to track plays on something like Youtube, or media on ESPN's website, etc.

It's nice to hope that the new NIL rules will level the playing field. In fact, they might do the opposite, allowing schools that get more publicity by virtue of high profile games, championships, and bowls to attract even more star players in search of marketable publicity.

So I honestly don't think this is going to work out to be a gift to any of the more typical, middle-of-the-pack schools. Michigan is probably somewhere between schools few care about, and the schools with the highest championship profiles.

As for players transferring if they don't get playing time, that's already happening with the transfer portal. It might, in fact, give the already successful programs even more power.

But Boise State isn't going to the National Championship game, and no matter how good the QB is, the value of a license isn't all that high, even for the starters.

You should also be aware that the proposed NCAA rules include prohibitions about the schools being involved in any part of the licensing process. Harbaugh won't be able to call up a big time company via his connections and get a kid a licensing deal. That will be prohibited.

So there's a lot that needs to be thought about, even though the post that started this thread is very interesting.

On a personal level, I've been losing interest in college football as it professionalizes. It simply becomes less exciting and personal, and I begin to think about it the way I do pro football, which is not at all. I haven't watched a pro game in ten years, except for the occasional Super Bowl.

I sometimes wonder why universities in the United States should be involved in big money sports at all. Anyway, I'll watch Michigan football until it's so obvious that it's just another pro sport that I can't stomach it.