Myth: The Michigan Money Cannon and NIL

Submitted by Bigku22 on December 14th, 2022 at 6:13 PM

Obviously, been a ton of posts over the years on the "Michigan Money Cannon". More so recently a lot of sarcastic comments in regards to our lack of NIL/collective funding. 

Michigan is obviously not short on financially successful alumni. Even at the billionaire level. So why the struggle (outside of the athletic departments current policy)?

If you look around the country, in most cases, the highly funded NIL schools (schools that have been reported to be most active in pay for play) are not being funded by a massive group of donors all chipping in small amounts. It is a small group of ultra wealthy individuals (or in some cases literally just one) that is a superfan of athletics. Phil Knight at Oregon. John Ruiz at Miami. A couple of very wealthy oil businessman at TAMU. 

The ROI on your money for pay for play, cash incentives, "bag man" is basically 0. You get no financial return. The return is you help the football program secure high profile recruits. Which may or may not lead to on field success. You basically need someone that is such a rapid fan, and so wealthy, they have no issue burning millions of dollars annually that will see little to no financial return. And in some cases (under the table payments) cannot even be used as a charity donation write-off. 

I am personally a big Michigan football and athletics fan, but I do not have any interest in funding athlete salaries. And my personal opinion is these athletes should be getting a piece of the massive TV revenue (as the pro leagues do). 

Maybe Stephen Ross decides he wants to be Phil Knight. But unless that happens I think most schools (including Michigan) without one of these mega NIL donors that choose to burn millions annually on recruiting, will have challenges competing for the highest level of recruits. 

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Romulan Commander

December 14th, 2022 at 6:33 PM ^

Everyone involved has the incentive to exaggerate, positively or negatively:

Teams: "Look how much we can offer players."

"Look how much other schools are offering players."

Players: "Look how much I am getting."

"See how little I am getting"

Fans:  "Look how much my school can offer players."

"Look how much other schools are offering players."

Press: "Look how many clicks I get when I speculate or report rumors on NIL."   

  

Joined: 12/04/2012

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maizerayz

December 14th, 2022 at 6:47 PM ^

Been said a ton of times already, but CFB is basically the English Premier League except salaries are paid by fans.

So if our fanbase and donners aren't willing to pay these salaries despite having money, we have no one else to blame than us, and lowering expectations is in order.

You simply don't expect Aston Villa to compete with Manchester United year in year.

 

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Kevin13

December 14th, 2022 at 7:53 PM ^

Not sure any fans or rich donors are to blame. Football is a game and maybe most people don’t feel a need to pay 18 year old kids large amounts of money to play a game. People probably have better things to spend their hard earned money on like living expenses or worthy causes like charities! 
 

I hate people saying well fans should funnel money to pay kids to play a game and like the OP pointed out there is no return on this investment   

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KC 97 03

December 15th, 2022 at 7:36 AM ^

Exactly.  Here is the key part of the law.

 

Sec. 3. A postsecondary educational institution, athletic association, conference, or other group or organization with authority over intercollegiate athletics shall not do either of the following: (a) Provide a prospective college athlete who will attend a postsecondary educational institution with compensation in relation to the athlete’s name, image, or likeness rights.

 

http://www.legislature.mi.gov/documents/2019-2020/publicact/pdf/2020-PA-0366.pdf

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Jaqen H'ghar

December 14th, 2022 at 9:18 PM ^

Couldnt we just hire a bunch of "new" employees in the AD and pay them as like a consultant or advisor that they could then pay into whatever NIL pools we prioritize? Seems like it could be one way to somehow funnel TV dollars in a semi-legal way cause technically all the tv money is from the players image and likeness being broadcase all over the US

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BlueCE

December 14th, 2022 at 6:20 PM ^

This does make sense, it seems like most of the ultra-wealthy Michigan donors tend to donate to non-athletic causes (i.e. saw this $50M donation a few days ago) and that may not be the case at other schools where those donors may be more inclined to donate to athletics (Ross has done some to athletics but I believe more to b-school/etc). And it does seem that the impact to NIL funds comes from a few very large donations rather than thousands of small donations.

Top 10 donors to UM (as of 2017)

Top donations in 2022 - none of them to athletics
 

 

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Jkidd49

December 14th, 2022 at 6:20 PM ^

Not sure I buy the premise that UM doesn't have super rich people willing to throw irrational money at sports.  Far more likely is certain people's at UM are actively getting in the way.

Joined: 01/30/2012

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CarrIsMyHomeboy

December 14th, 2022 at 7:31 PM ^

This quote showed up this week in a nytimes bit about Iran and seems strangely relevant here:

"The paradox of revolutionary movements is that they are not viable until they attract a critical mass of supporters but that to attract a critical mass of supporters, they must be perceived as viable."

I'm thinking that we have the putative critical mass of supporters but an A.D. struggling to exhibit viability for the idea.

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UMxWolverines

December 14th, 2022 at 10:33 PM ^

I think they're letting it play out a bit, sounds like Ohio State is too. You got Texas A&M just pissing money down the drain with all their NIL deals this year. Eventually it's going to reach a point where donors are not gonna want to donate millions of dollars for their teams OC i.e. Josh Gattis to put up 14 points per game. 

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Msmittakins

December 14th, 2022 at 6:23 PM ^

I’m in support of athletes making some money, but this system is just stupid. I can’t explain my creeping ambivalence. Something to do with hoping there’s a billionaire in your fanbase who is somehow still kind of a loser enough to buy recruits. I wish leagues would just agree to some sort of compensation structure, but I’m not naïve enough to hold my breath. 

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grumbler

December 14th, 2022 at 10:34 PM ^

But then players become employees, and the university cannot require employees to be students because being a student is unrelated to the job of playing football.  And at that point the university has to spin off the football team because the university has no charter to run professional sports teams.

It's a mess.  The amateur model doesn't work, and neither does the pro model.

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Red is Blue

December 14th, 2022 at 7:09 PM ^

I understand you may not like it, but it isn't up to you to determine how much the market is willing to pay.

Where should the line be drawn ($10k, $100k, $500k), how do you determine the line and how would you legally regulate adherence?

If it further distorts the competitive landscape, we might be faced with a decision of do we live with it, or put our energies into following a different sport/doing something else.

 

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Carpetbagger

December 14th, 2022 at 7:17 PM ^

Actually, as he is part of the market, he (and I and you) help determine how much the market is willing to pay. Which for me is zero.

I'm ambivalent about the whole thing. Although I used to laugh at the naivete of the 'michigan money cannon' comments before, and now still laugh every time someone complains about said cannon not existing.

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rice4114

December 14th, 2022 at 8:33 PM ^

All deals (major professional sports or in business) are made before you walk onto the field or in the boardroom. Now deals can be renegotiated after the fact sure. My question is these high end players will play a huge role in Michigan bringing in $150mil+ per year. Why are they the only people that have to perform before pay structure is in place? Strange line to draw since they probably should be considered a potential top 1% earner. Im talking about top 100-200 recruits here.

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mbrummer2

December 14th, 2022 at 6:26 PM ^

Their ROI is the power and notoriety and access their money gains them for donating.  I would just remember Isbia as that walkon for Izzo that daddy paid his way on the team if at all. 

Ross would just be another name on a building to me without the athletics donations.  

Think you would know T Bone Pickens without his $$ dumping at Oklahoma State.

Michigan is taking the stance of not paying them to come here, but once here getting them the opportunities and cash.

 

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tigerd

December 14th, 2022 at 6:27 PM ^

This NIL stuff is like the wild wild west right now. There don’t appear to be any rules and it’s pretty apparent that the NCAA doesn’t want to get in any legal battles so they are just letting this thing go haywire. Unfortunately the toothpaste is out of the tube and you ain’t getting it back in so good-bye to the way college football used to be and what made it great as kids used to play for their school, now its all about the money.

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Hops

December 14th, 2022 at 7:02 PM ^

It’s not, according to a meeting that my wife attended with an SEC fundraiser and athletic donor (cool story, bro). As it was explained, donations to athletic department are tax deductible but money earmarked for the “collective” that handles NIL is not. 

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