NIL turns one – After a year of radical change, what happens next?

Former Rutgers guard Geo Baker said “NIL was the first step of whatever comes next.” Rick Osentoski/USA TODAY Sports

Former Rutgers guard Geo Baker spent the final summer of his college basketball career last year preparing for post-student life. He launched a clothing line, set up basketball camps and Cameo accounts and started learning to invest.

Baker, a third-team All-Big Ten guard, says he earned roughly $50,000 in the first year that college athletes were allowed to make money from the rights to their names, images and likenesses. He said he learned to read contracts, file taxes and made a point to sit in on meetings or speak with executives at any company he endorsed.

“You get to learn some things and see how businesses operate, and you can apply that yourself if you go down that road,” Baker said.

Anecdotes about the first year of radical change in college sports are as abundant as they are disparate and dangerous. The opportunities for entrepreneurial-minded young adults to earn money and learn how to manage it are real. The droves of athletes sending tweets for free products or minimal payment are real. The headline-grabbing, seven-figure deals that have purportedly incentivized transfers or commitments are (even if at times exaggerated) real as well. It’s all happening all at once.

Data detailing how athletes, schools and sponsors are using the new market is hard, if not impossible, to find. No individual or anecdote has proved to be emblematic of the past 12 months or provided a singular answer to where the world of college sports is headed.

More questions than answers remain one year after impending state legislation forced the NCAA to dramatically change its approach to amateurism. What is clear, though, is that the college sports industry isn’t going to move backward. And if there is any universal truth to what the NIL era has wrought, it is that the athletes themselves have realized their power to shape where it goes from here.

“NIL was the first step of whatever comes next,” Baker said. “Once you give athletes that power, and they understand they have that power, you can’t take that away. I don’t think we’ll ever go back to athletes having less of a say.”

What happened in Year 1?

Two separate revenue streams have emerged from the same spring since the largely unregulated marketplace for college athletes was established last July. One follows the initial intention and spirit of the new NIL rules, allowing athletes to cash in on their fame. The other follows the inevitable forces of a competitive market and the letter of the law, allowing athletes to cash in more directly on their athletic ability.

The first stream, which includes social media campaigns, traditional advertising, hosting camps, starting businesses and more, has grown steadily since last summer. Companies that help athletes and schools find and track endorsement deals say the number and value of deals continues to increase as brands get more comfortable with investing their marketing budgets in college athletes.

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On INFLCR, a software platform used by more than 200 colleges, the average dollar amount of a transaction is 51% higher in the first half of 2022 than it was in the first six months after NIL rules changed in 2021. There have been more transactions completed by users on the platform in the past three months than in any other quarter of the NIL era. According to the founders of MOGL, a similar software company used by 3,000 athletes and more than 1,200 brands, their average deal size has tripled since March — growing from $124 per deal to nearly $400.

Baker said he and other athletes he knows had to figure out the right prices to charge for social media posts or appearances by trial and error, and that those numbers have grown since last July.

While no NIL data set is comprehensive, and industry experts doubt that all athletes are reporting all of their deals to schools, information from NIL-centric companies helps paint a picture of who is making money and how. On Opendorse, a tech platform that works with more than 80 Division I schools, football players account for 49.9% of the money changing hands and 29.3% of deals. Men’s and women’s basketball players are next in line in terms of money earned on the platform (17% and 15.7%, respectively). No other sport tops 5% of the total money earned.

This doesn’t mean that individual athletes from other sports, especially women, aren’t finding lucrative ways to benefit from the new rules. INFLCR says women gymnasts have signed the most lucrative average deals of any sport at $6,000 per transaction. Women in softball, swimming, track and field, and soccer are outearning their male counterparts, according to data collected by Opendorse.

The second stream of NIL opportunities, in which deep-pocketed boosters are spending money with the goal of attracting talent to help their favorite teams succeed on the field or court, is one the NCAA and its members had tried to avoid. The idea that boosters from one school could join forces and find ways to use NIL money as a selling point on the recruiting trail first surfaced within a week of the rules changing last July. It did not really start to reshape the business of acquiring talent in college sports until this past January, when competition prompted the creation of dozens of organizations commonly referred to as collectives.

Opendorse CEO Blake Lawrence says there are currently more than 100 groups pooling money (usually amounting to millions of dollars) in an effort to help athletes at their favorite school. Those groups account for roughly 35% of the money reported on Opendorse’s platform, and Lawrence expects that to grow to more than 50% in the near future. He said that the collectives — which largely focus on football and basketball teams on campus — typically lead to a tenfold increase in the amount of money an average player on one of those teams is making.

Collectives and wealthy individual boosters have rankled many coaches and administrators, who worry about the outsized control over rosters those groups could obtain by providing athletes at some schools with what amounts to a de facto outsourced salary.

According to NIL data collected by Opendorse, women in softball, swimming, track and field, and soccer are out-earning their male counterparts. Brian Bahr/Getty Images

What’s changing now?

The concern about losing control over their enterprise is one of several factors convincing schools, coaches and athletic directors to be more proactive and involved in the NIL market moving forward. After a year without any NCAA or legal enforcement combined with increased pressure to help athletes navigate the business world, more athletic departments are starting to decide that the benefits of helping their athletes (both in maximizing their value and avoiding pitfalls) outweigh the risk of stumbling over unclear regulations that previously dissuaded many of them from taking a hands-on approach.

Several prominent athletic departments such as Duke and Ohio State have hired new employees to help athletes find opportunities to make money and answer questions about what they’re allowed to do. Baker is one of several athletes who told ESPN that they wish their school had a person on campus who could field questions and point players in the right direction to find answers.

“Schools are going to continue to add staff with NIL-labeled roles,” said INFLCR CEO Jim Cavale. “Helping athletes with contract negotiations, with fulfilling contracts and business management, our system is a great back office for that, but the schools are now adding resources to give human help with all that. That’s where I think NIL is going.”

Cavale said schools are also investing in ways to host online marketplaces where fans, companies and collectives can find ways to strike deals with athletes. Cavale said 40 of the 220 Division I schools his company works with have created school-specific sites for the public to use to connect with athletes to request autographs, video shoutouts, local appearances or more formal endorsement deals. Opendorse says it plans to launch 75 similar sites by this fall.

For fans, that means they’re likely to see their favorite schools trying to drive people to those marketplaces at games and events this fall. Lawrence says he expects schools will display QR codes around their stadiums and on video boards that lead fans to a marketplace where they can pay players for autographs, social media posts and more. At least one school, Lawrence said, is considering using QR codes on video boards to direct fans to spend money on deals with a specific player right after he or she makes a big play during a game: Throw a touchdown pass, and fans can immediately be served a way to provide you with some money.

“Last year this all happened so fast most schools didn’t have time to educate their coaches on what is going on, let alone their fans,” Lawrence said. “This is the year everyone finds out NIL is here. Here’s where you go, here’s what you do, here’s what it costs.”

Schools are also actively working to improve the NIL-related education their players receive in order to help them make the most of their opportunities and avoid exploitative contracts. While many schools outsourced some training courses in the past year, consensus among athletes at a recent NIL summit in Atlanta was that schools were too removed from individual deals to provide useful help. According to Ayden Syal, CEO of MOGL, that change is largely the result of schools listening to what their athletes want.

“There was a rush to keep up with the Joneses, providing baseline services to make sure you looked like you were supportive of maximizing NIL opportunities,” said Syal, whose company plans to sell an e-learning course for athletes this year. “A year ago, universities thought they knew what was best and prescribed solutions. Now, universities are having an open dialogue with their students to team up and find the best solutions.”

Online marketplaces where fans, companies and collectives can find ways to strike deals with athletes could be the next thing to hit the NIL scene. Ben McKeown/AP Photo

What will change in the future?

Last March, in the months before NIL rule changes were officially in place, Geo Baker was one of several athletes who made a public stance to ask for better treatment from the NCAA during March Madness. Using the hashtag #NotNCAAProperty as a rallying cry, Baker and his peers made enough waves to garner a meeting with NCAA president Mark Emmert to discuss their concerns.

The meeting didn’t amount to tangible change, but it served as a reminder that if college athletes are able to organize they hold an increasingly large amount of leverage in reshaping the industry that they fuel. Baker said the mechanisms for getting organized and the volume of the players’ voices are both growing thanks to an NIL era that has more players seeing themselves as part of a business.

“I think we did a good job of showing how much power athletes have, and NIL has only boosted that,” Baker said. “Now you’re not only speaking for yourself, but now you’ve got [large brands] boosting your message, whatever it is you believe in. You get this boost from bigger companies that can use your voice or your ideas to create something better. I think athletes are starting to see that and they’re taking advantage of it.”

Baker offered no specific predictions on where a louder voice might lead. Trying to predict how a complicated web of legal challenges, leadership changes and economic forces will change the broad and diverse industry remains a fool’s errand. But several of the efforts that could end up reshaping college sports are already in motion.

Several lawyers and college athlete advocates view the NIL rule changes of the past year as a gateway to pushing for bigger change — namely to have college athletes viewed as employees along with being students. Two groups have filed complaints with the National Labor Relations Board that seek employee status for college athletes. Other groups, like the newly formed College Football Players Association, are trying to build political power by organizing players now rather than waiting until they can be viewed as employees.

A separate federal lawsuit — Johnson v. NCAA — argues that college athletes should be treated like work study employees on college campuses who earn hourly wages from the school they attend. Paul McDonald, the lead attorney for the plaintiffs in the case, said he thinks the burgeoning NIL market is making it harder for the NCAA to argue in court that athletes should not be treated as valuable workers.

Those legal battles could eventually force the NCAA to fully change its business model. They could also serve as the catalyst for a schism — splitting the richest schools from the rest of the NCAA, or perhaps splitting off the richest sport, football, into its own self-governed entity.

For now, the NCAA and its members are stuck between a rock and a hard place: Trying to manage the emerging market for athlete talent in order to maintain their argument that amateurism is necessary for their industry to thrive, while also treading softly while creating or enforcing rules that could lead to allegations that they are restricting opportunities for players and violating antitrust law.

“It’s not clear how much control the NCAA still has over its destiny because of all these lawsuits,” said Tulane sports law professor Gabe Feldman, who thinks the association needs to weigh the risk of litigation versus the consequences of sitting on its hands. “I think if they continue the status quo, then it seems like it may only be a matter of time before another lawsuit goes against them and that amateurism model is pulled from under them rather than them having the ability to modify and transform the amateurism model.”

While the NCAA has yet to enforce any restrictions on the NIL marketplace, the NCAA’s Division I Council said this May that the organization intends to start policing the market more proactively in the future to attempt to stop boosters from using payments as inducements for athletes to transfer or commit to a school. Any attempt to hand out penalties to boosters, players or schools for engaging in NIL activities will likely result in lawsuits as well. If that happens, judges in those cases will have a large role in determining the future control that schools and the NCAA can have over how their athletes are paid.

The path forward for college sports is far from clear now, but it almost certainly will make several pit stops in court in the years to come. As players get more involved in making money and advocating for a bigger piece of the massive pie they’ve helped to create, legal battles are becoming harder for the NCAA members to fight in courtrooms and in the court of public opinion.