In a League of Their Own: NIL and the Commercialization of Collegiate Athletics
By all metrics, Alabama Crimson Tide quarterback Bryce Young is a star in the making. At only twenty-one years old, Young collected the trifecta of college football awards — the Maxwell, Davey O’Brian, and Manning Awards — before claiming the vaunted Heisman Trophy in his sophomore year, his first year as a starter. The year before, he won the 2021 College Football Playoff National Championship behind current New England Patriots quarterback Mac Jones.[1] Now, as April approaches, Young is projected not only to be the number one quarterback selected in the NFL’s 2023 draft, but the first draft pick selected overall. But even before the Alabama star started piling up his accolades — indeed, even before he started a single game — Young commanded enough renown to have allegedly signed over $800,000 in name, image, and likeness (NIL) deals, a mere three weeks after the National Collegiate Athletics Association lifted its erstwhile restrictions following a landmark Supreme Court decision that struck down similar ordinances prohibiting athletic compensation.[2] Young’s deal, though not completely representative of the typical NIL deal, shows the extent to which college athletics has been transformed by the introduction of an individual’s right to profit from their own persona.
Ever since the Supreme Court handed down their landmark decision in NCAA v. Alston[3] affirming that the NCAA’s restrictions on education-related benefits for college athletes violated federal antitrust laws, the path has been cleared for student-athletes to profit from their own likenesses. Shortly after the Supreme Court ruling, the NCAA’s Board of Directors expanded the path even further by independently voting to allow enrolled student athletes to engage in NIL activities — a dimension of athletic compensation which was not explicitly addressed in Alston.[4] Previously circumscribed by proscriptive bylaws pertaining to pay, compensation, financial awards, and collegiate eligibility, student athletes were freed from their regulatory shackles on July 1, 2021, and no longer barred by the NCAA from seeking out sponsorship or endorsement deals. However, instead of creating a new governing framework for the complicated world of NIL, the NCAA instead deferred the problem to the athletic body’s respective member institutions, giving each school and conference the responsibility (and perhaps even burden) to create their own NIL framework, hoping that the legal vacuum would be filled in due time by state and national legislators.
But this “best case” situation is not happening — instead, large corporations, college boosters, and cash-strapped athletic programs are taking advantage of this legal lacuna to transform college sports recruiting into a system that approaches that of the NFL. Indeed, I argue that unless two measures are undertaken in order to provide a legal basis for the collectivization of NIL, collegiate athletics will devolve into an athletic labor market with a veneer of academics. Namely, legislators should finally intervene in this winding process and delineate what a collective can and cannot do, and colleges should ensure that student-athletes are fully informed about the options they have.
Many schools, faced with a completely new administrative burden rife with legal ambiguity and lack of precedent, took one of two understandable courses of action. Some schools — Harvard included — decided to err on the side of caution, establishing doctrinaire NIL policies that detached the athlete from the institution and disassociated all NIL activity from the school.[5] Beyond mandating that student-athletes must refrain from mentioning the institution or utilizing institutional intellectual property (branding, logos, and even team name) in all endorsement activities, these schools also severely limited the scope of what athletes could permissibly do while enrolled.
Other schools, largely football powerhouses located in the SEC or other Power Five conferences, went in the complete opposite direction and took advantage of this regulatory devolution to empower their boosters, publicly and privately using NIL as a conduit to fund their sports teams. In the Deep South, where football, not religion, is the opiate of the masses, school-affiliated NIL collectives are engaging in bidding wars to attract the top talents out of high school to come to their institutions. As unsavory as this commercialization seems, any school wanting to make a splash in college football must play this game — in the words of Hugh Hathcock, an alum of the University of Florida whose $1 million contribution provided the starting capital for the school’s Gator Collective, “everybody is doing it now.”[6] If a given school does not offer its courted athlete a neat, no-frills $10,000 package, another competitor will happily do so, even if only to prevent their rival from filling a much-needed roster spot. In this sense, the commodification of college players — the single most important factor that distinguishes collegiate from professional athletics, according to the NCAA — is being precipitated by NIL activity, and the rate at which it is doing so is being magnified by something called an NIL collective.
Fundamentally, an NIL collective is not a new entity — they operate as LLCs, non-profits, or whatever form confers the greatest business advantage for its operators. Nor is the product they offer fundamentally unique — endorsement deals and sponsorships have existed since the birth of modern advertising. It is merely an entity that does completely legally what was illegal for almost one hundred years — pool together resources from boosters and corporate brands and provide NIL opportunities for affiliated student athletes. Collectives operate independently of the university whose students they represent — a distance that is crucial in allowing schools to circumvent other extant restrictions on paying student athletes.[7] Aside from these shared functions, each collective serves to accomplish disparate goals. Some collectives are little more than glorified boosters, now given legal sanction to pay athletes indirectly as a recruiting incentive; others are more benevolent in the sense that their priority is not the school’s athletics program, but the welfare of their students. The latter goal is probably what the NCAA had in mind when they paved the way for the expansion of NIL activity in 2021.
To that end, it is an incontrovertible fact that the legalization of NIL activity has been a boon for college athletes, though not in an entirely equitable sense: many athletes, though given the opportunity to sign deals, do not actually do so; and the vast majority of athletes who do sign NIL deals do not make nearly as much as what stars like Bryce Young do.[8] However, the bar is rather low — when the baseline comparative was a regime under which no compensation could be earned, having the option open to earn compensation for a quick promotional post or autograph signing is an objective Pareto improvement, to borrow an economic term. Even for student-athletes who prioritize their former quality over their latter, the ability to enter into a compact with a local store gives them access to capital unobtainable under the pre-Alston status quo.
But there is a more insidious side to this story as well. As with any industry that has opened its floodgates to mega money, collegiate sports is being inundated with shady actors looking to make a pretty penny of their own, often under the guise of helping — but at the expense of — the touted prospect in question. Take the case of Jaden Rashada, a four-star composite recruit coming out of Pittsburgh. The number six quarterback in the 2023 recruiting class, Rashada was courted by a series of powerhouse football schools — California, Ole Miss, and Oregon among them — before he declared his intent to enroll at the University of Miami to play for the Hurricanes. However, a month before early signing day, the University of Florida and its head coach Billy Napier managed to flip Rashada to play for the UF Gators in Gainesville. Though Napier was (and still is) a first-rate coach, the biggest inducement was most likely the Gator Collective’s tantalizing $13.85 million NIL deal offered to Rashada — split between $500,000 upfront and increasing monthly stipends paid out for the duration of his academic career.[9] If this seems like an inordinate amount of money to be paid out to a high schooler yet to receive their GED, the Gator Collective eventually came to think that too. Shortly after Rashada signed his National Letter of Intent (NLI), the Gators reneged the deal right before the first half-million dollar payment was to be made. As the offer from the Gators was no more than a proposal, Rashada’s camp had no legal recourse, and he promptly sought rescission of his NLI to Florida.[10] Now, the number 44 recruit in the nation is signed to Arizona State University — a fantastic school, but in a game where rankings matter for the big leagues, one that is ranked in the bottom third of all authoritative football boards, and without an NIL deal to show for it.[11]
Though Rashada’s is an extreme case, there is valid concern to be had over this example. As mentioned above, this absence of a standardized set of regulations to govern NIL means that Rashada’s case can become the general norm rather than the exception to the rule. If NIL collectives can continue to make grand offers and rescind them without legal repercussions, the market for college athletes will quickly break down due to commitment issues. Of course, it might be better for such a market to not exist in the first place, but so long as there is money to be made, there will always be willing participants — such as parents looking to capitalize on their children’s success, agents looking to entrench a future client, or schools looking to attract a star recruit. But it is remarkably difficult to remove these perverse incentives without undermining the fundamental premise of NIL to begin with. Now that money has entered the game, it has been irreversibly altered; the deluge is on the horizon — the only possible course of action is to control the flow of this tide. To that end, there are two things that should be implemented immediately.
Firstly, policymakers should pass a definitive set of clearly elucidated and unambiguous policies governing NIL activities nation-wide. As it stands now, there are no federal statutes that refer to NIL, and the few state legislatures that have passed laws in the wake of Alston make no explicit mention of the permissible scope of NIL collectives. To prevent the college NIL-sphere from devolving into a quasi-Wild West environment, the regulatory absence should be filled as soon as possible to prevent malicious and predatory collectives from entrenching and establishing as precedent their actions. To ensure that college sports does not simply become a prototype for NFL free agency, legislators should establish hard caps on the amount of money that can be offered in any single NIL, and similarly implement lifetime limits on how much money a player can receive over the course of their collegiate career. In contrast, it is quite interesting to note how leagues like the NBA actually do have salary limits, although admittedly they range in the tens of millions annually. To those that complain these caps would inhibit athletes from being paid their true value, it is important to note that collegiate athletics was not meant to be a marketplace for athletic talent to begin with. There is a fine distinction between paying college athletes a fair sum commensurate with what they contribute to their schools and undermining the amateur nature of the game with multi-million dollar contracts.
Secondly, and of vital importance, more education should be provided to college athletes who want to independently pursue NIL opportunities separate from massive booster-funded recruitment offers — the audience that NIL policy originally targeted. Five-star recruits will always find a way to receive six-figure sums of money, NIL collectives or not — what NIL should do is serve those athletes who don’t command the same fame or reputation, but deserve endorsements nonetheless — the hometown heroes or hidden talents of the world that would otherwise go about unpaid and uncompensated for what they bring to the table. To bring back the focus on the intended target of NIL, colleges should start providing NIL training to their registered NCAA athletics teams, offering support resources and contacts to individuals who are not courted by million-dollar donors, but are instead seeking deals of their own. This athlete-driven focus — as opposed to donor- or institution-driven focus — is what makes the legalization of NIL so promising and advantageous to begin with. By allowing self-driven athletes to seek out their own endorsements, you also foster a healthy sense of ambition and motivation, and give them real-world experience in developing their own business acumen.
Fundamentally, NIL goes beyond just multi-million dollar contracts — but today’s collegiate landscape would paint a completely different picture. Without further intervention from policymakers or even schools, conferences, and the governing bodies themselves, there is no saying how commercialized collegiate sports will become. To the dismay of laissez-faire economists, some degree of regulatory authority must be maintained over the domain of NIL activity, and supplementing this administrative overhaul, student athletes themselves must be made aware of the potential opportunities and perils that NIL newly allows. Schools that are overly restrictive in terms of their own NIL policy only do a disservice to their students, who are frozen out of opportunities their peers at other institutions are given. Ultimately, the effect that NIL will have on the future of collegiate athletics is dependent on how quick legislators and policymakers can fill the regulatory void, and given the reputation they have for promptness, it seems as though the future is bleak.
References
[1] “Bryce Young Draft and Combine Prospect Profile,” NFL, accessed Mar. 3, 2023, https://www.nfl.com/prospects/bryce-young/3200594f-5512-4763-ab24-c1bd051ef0ef.
[2] Alex Scarborough, “Sources: Alabama Crimson Tide QB Bryce Young has already signed more than $800K in NIL deals,” ESPN, Jul. 29, 2021, https://www.espn.com/college-football/story/_/id/31911674/sources-alabama-crimson-tide-qb-bryce-young-already-signed-800k-nil-deals.
[3] 141 S. Ct. 2141 (2021).
[4] Michelle Brutlag Hosick (for the NCAA), “DI board approves clarifications for interim NIL policy,” NCAA Media Center, June 30, 2021, https://www.ncaa.org/news/2022/10/26/media-center-di-board-approves-clarifications-for-interim-nil-policy.aspx.
[5] To see an example of a relatively stringent NIL policy, refer to Harvard Athletics NIL Policy (PDF).
[6] Ross Dellenger, “Big Money Donors Have Stepped Out of the Shadows to Create 'Chaotic' NIL Market,” Sports Illustrated, May 2, 2022, https://www.si.com/college/2022/05/02/nil-name-image-likeness-experts-divided-over-boosters-laws-recruiting.
[7] Pete Nakos, “What are NIL collectives and how do they operate?” on3NIL, July 6, 2022, https://www.on3.com/nil/news/what-are-nil-collectives-and-how-do-they-operate/.
[8] “NIL Deal Tracker,” on3NIL, https://www.on3.com/nil/deals/.
[9] The Athletic College Football Staff, “Jaden Rashada’s unprecedented recruitment: How a 4-star QB went from $13.85 million to no NIL deal,” The Athletic, Feb. 6, 2023, https://theathletic.com/4149181/2023/02/06/jaden-rashada-nil/?source=emp_shared_article.
[10] Evan Crowell, “Jaden Rashada's NIL Figure Creates New Precedent,” Sports Illustrated, Feb. 6, 2023, https://www.si.com/college/tennessee/football/jaden-rashadas-large-nil-deal-changes-college-football-recruiting.
[11] Shayan Moghangard, “ASU football tumbles from Top 25 to bottom third in national rankings,” Cronkite News, Sep. 23, 2022, https://cronkitenews.azpbs.org/2022/09/23/asu-footballs-national-ranking-tumbles-bottom-third/.