How NIL Collectives can not suck at NIL

Good morning, and thanks for spending part of your day with Extra Points.

Last week, I wrote a newsletter that gave advice for how schools could more effectively support NIL activities, based on conversations I’ve had with schools, agents, athletes, brands, and others who are operating in the NIL Industrial Complex over the last several months.

What schools do is very important, since they’re the entity best equipped to serve all athletes, not just top 300 recruits or visible transfers in football or basketball. But they’re also only one component of the NIL ecosystem…and depending on the athlete, maybe only a very small component.

Since the feedback from that initial post was so positive, today, I’d like to share some advice for collectives.

Before I get into the weeds, though, a quick clarification of terms and a caveat.

Like I’ve written before, there’s essentially three sources of “NIL” money. You have brand activity, where some business or organization enters into a commercial relationship with an athlete with the intent to benefit their business interests. You have low-level collective donors…folks who will kick in $10-25 bucks a month, but will want something in return for that spend beyond wins and losses. And then you have the whales…a handful of very rich donors who are willing to drop $50,000 and more without really expecting anything more than wins and losses as a return on their “investment.”

The truth is, the bulk of most collective activity comes from whales, not regular people. I freely admit, I do not have great advice for how to hit up mega-rich people for bagman money. This newsletter will focus on engaging brands and mass donors.

So with that in mind, let’s remember,

You actually have to give people something worth paying for

Even though most NIL collectives are heavily dependent on a small number of major donors, everybody wants to be more balanced in how they raise money. If you can’t meet your “payroll” without a dozen specific people making their contributions, then you are reliant on the whims, business fortunes and opinions of a dozen people. The broader your donor base, the more resilient your operations.

So essentially, everybody is trying to find more ways to convince lots and lots of fans to essentially purchase subscriptions to a collective.

Based on what I have seen over the last two years, I do not believe it is possible for a collective to say “give us money, it’s tax-deductible and critical to helping our team win” and have that be enough. For one, that tax deduction status doesn’t even matter for most donors who are taking the standard deductive, and the IRS is probably going to close that loophole eventually.

And two, it isn’t enough of a reason to hook subscribers. The collective will need to actually provide value independent of just helping recruits.

Yea Alabama, for example, provides online content, invitations to autograph events with athletes, a car decal, and a discount card for Tuscaloosa area businesses. Crimson and Cream, an Oklahoma NIL collective, also includes a cash back/discount offer package, along with monthly giveaways, trading cards, and other merch. Dam Nation, (a great name for an Oregon State NIL collective), offers unique merch options, decals, and other events. There are plenty of other examples.

I think the local business discount card concept is a really good one. It gives businesses an opportunity to engage in supporting athletes without having to potentially commit to an expensive (and maybe risky) athlete endorsement campaign. It also gives fans legitimate value and can push them into doing something they kinda wanted to do anyway.

If a collective created a strong enough local discount card package, that could be a lead magnet that could even encourage lukewarm fans to donate.

It’s important for collectives to be relentlessly focused on adding value to support athletes. But if they don’t bring a similar level of energy into supporting their own members, they won’t be able to broaden their subscription base.

There’s one popular lead magnet that I actually think more collectives should ditch, though…

Unless you can make REALLY good content, don’t focus on content

I sell ads, but I make the vast, the vast majority of my revenue from subscriptions. I am in the business of getting people to pay to read stuff.

There’s a reason almost all other newsletters on the internet do not follow that business model. It is very, VERY hard to get people to pay you to read or watch something.

The digital media publications that are the absolute best at user conversion are able to get about 10% of their engaged users to pay for content. I’m in the 7-9% range, and many professional publications are under 6%.

Why are these conversion rates so low? Because the internet is full of completely free content. Generally, the only effective way to convince users to pay for content is if that content cannot be easily found anywhere else on the internet. Whatever you’re charging people for has to be deeply unique.

The dirty little secret is…that doesn’t describe most of the editorial content produced by NIL collectives. Providing athlete-led interviews, behind-the-scenes content, deep, team-centric analysis…none of that particularly matters if that content isn’t amazing, and that’s very hard to do, since being great on camera and being great at sports are two different things.

If a collective wants to make content a lead-magnet for their service, then they need to make sure they have the professional expertise to really make that content stand above everything else a consumer could find in that market. A few collectives have hired ex-sportswriters in their market…and that could be a start, but isn’t required. A videographer, PR team and experienced social media specialists (either in-house or via vendors) would probably be better.

If a collective only had the budget, talent, and experience to produce B+ level content…I legitimately don’t think it’s worth the effort. I think a group would earn more money by scrapping newsletters, videos, podcasts, etc and spending it on business development or events, unless that group was prepared to spend what it takes to go toe-to-toe with the message boards, and even newspapers, in their market.

Another potential alternative to making their own content could be offering discounts (or bundles) to other content providers, such as recruiting message boards, local media outlets, etc.

Figure out a post-employment backup plan

In the next two or three years, and perhaps even sooner, at least some college athletes will be designated as employees. In the near future, it is highly likely that at least some athletic departments will also seek to move some, if not all, of their NIL activity completely in-house, rather than via third-party collectives.

In a post-employment model, it may be impossible to operate a donor-focused NIL collective effort…either because such transactions would be prohibited under a CBA, or because donors would balk at the prospect of subsidizing someone’s salary.

I believe that absent a compelling backup plan, most NIL collectives will simply shut down in a post-employment model.

So if the folks running a collective care about being involved in a post-employment model, they need to figure out what their backup plan looks like, ASAP. Does the collective have the skills and capacity to pivot to a more traditional marketing agency, rather than a fundraising group? Is it prepared to pivot to support Olympic Sports athletes, rather than just football and basketball? Does it provide meaningful services to athletes besides cash distribution that could be co-opted by a school or maintained independently?

These are not hyperbolic hypotheticals from an over-caffeinated reporter. The Dartmouth NLRB case was only the start of what will be a multi-year run of legal challenges to the current amateurism model. Collectives thrive in a world where the market demands athlete compensation that the schools cannot directly provide. But what happens when that model changes?

And finally, this might get me in trouble with some of my readers, but…

I don’t think everybody actually needs a collective

I know why every school thinks they need a collective. A coach is terrified of being at a program that doesn’t have an official collective if a few conference peers begin to form them. Fans and boosters might interpret a lack of collective as being against NIL, or not taking athletics seriously. And hey, everybody in D-I (or hell, beyond) is at risk of a better-funded collective offering cash to poach one of your athletes.

But it isn’t a collective that actually improves athlete retention. It’s a collective that has enough resources to actually do anything. And I do not believe that every low-major D-1 program has the fanbase, donor base or resources to support a collective enough to actually provide real value. Hell, there are dozens of D-I programs that aren’t served enough by donors to function.

If a lower resourced program wanted to provide direct, meaningful financial support to college athletes, I believe the best way would be to provide fully funded Alston awards first. That money comes directly from the institution, is predictable, and can be funded by donors. It will also (often) be a bigger paycheck for each athlete than they could hope to earn from a collective.

If a school doesn’t have the donor support to pay for Alston awards, I struggle to see how a collective would be able to finagle enough donor money to make a competitive difference. I’d recommend walking before running, even if that makes coaches and message boards nervous.

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