Good morning, and thanks for your continued support of Extra Points.
I hope you've all had a relaxing and meaningful holiday season. I certainly have! I'll resume my traditional four-days-a-week publishing schedule next week, after Chicago Public Schools Winter Break ends.
But my kids are distracted enough by their new Princess Lego Castle for me to fire off one newsletter this week, with some predictions for next year.
I've done one of these every year I've launched Extra Points. You can take a look at my 2022 predictions here, and while I think I was a year early on a lot of the NIL stuff, I got a decent number of predictions right. Of course, as I've said multiple times, if I had a working crystal ball, Extra Points would cost a hell of a lot more than eight bucks a month.
If you'd prefer to listen to predictions, Bryan and I recorded our final Going For Two, which digs into many of these. You can also listen to it on Apple Podcasts.
But if you want to read my #hot #takes, well friend, I'm happy to oblige.
Let's start with some political/legal predictions
- The conventional wisdom, especially among my academic/antitrust/labor friends, is that there is zero chance that congress passes any sort of federal NIL bill, or any legislation that gives the NCAA an antitrust exemption. There were a few halfhearted attempts at NIL legislation last year, but nothing came close to happening, and there isn't an obvious political constituency for changing that in 2023. But my prediction is that the odds of something getting passed are going to dramatically increase this year. It might not actually happen, and any antitrust remedy the NCAA secures will unquestionably come with significant strings attached, but I'm calling my shot now. This is going to be a real debate.
- Why do I think that will change? Because I believe 'amateurism' is going to be on legal life support in 2023. The National Labor Relations Board will begin hearings against USC, the Pac-12 and the NCAA in 2023, and it is likely that NCAA V Johnson will reach some sort of initial resolution as well, (although I imagine the result will be appealed no matter what). The odds are not good that the NCAA will be victorious on both counts. Another potentially significant case, House v NCAA, will not go to trial until 2024.
- Amateurism as we know it isn't likely to be completely vanquished by the courts in 2023, but the odds are good that somebody lands a very serious blow. I predict that Charlie Baker will seize on that loss to drive a sense of urgency into the brains of lawmakers...if we don't get legislative relief and fast, college athletes WILL become employees, and college sports as we know it will end. Whether this is a good policy or not is a subject for a different newsletter...but I believe that will end up being the framework for the next debate. This is going to be a dominant storyline in 2023, one that could render everything we've written about NIL to become completely moot.
- In non-congressional news, I predict that the IRS will not attempt to investigate whether any NIL collectives are actually operating as honest-to-God nonprofits, even if they're pretty flagrantly operating against the spirit of the federal tax code. I don't think any state AG office gets involved, either. To the extent the IRS gets involved in NIL stuff in 2023, I think it's more likely they take a whack at a student who failed to pay taxes than they go after any rich booster types.
Speaking of NIL, here are a few high-level NIL predictions:
- I predicted this last year and was wrong, but I'm going to try it again this year...the NIL 'industry' is headed for contraction and consolidation. There are, like, seven different NIL marketplaces, and I do not believe there will be enough deal volume to justify that many for 2023. Look for Opendorse, INFLCR or a large agency to try to buy up smaller firms, or for those firms to radically change their business models in order to survive.
- On that note, 2023 is not looking to be a good year for the digital ad marketplace. NIL spending from AAA, national-type brands is going to remain flat, or grow very slowly, as fears of a recession push larger firms to either cut marketing budgets or reallocate money into more traditional and predictable campaigns. The growth of the NIL market will come primarily through fan fundraising, boosters and collectives. The real money in this world, especially for FB and MBB recruiting, will be increasingly divorced from anything to do with corporate marketing.
- In 2022, a lot of schools ended up spending money on NIL education and consulting services that they really didn't need, and that they knew they didn't need, because they felt pressure to demonstrate that by God we're serious about NIL. In 2023, that pressure will continue, only it will be about collectives. Most G5 programs, and a surprising number of low-major I-AAA schools, will have at least one collective in 2023, perhaps one run by a growing number of NIL Collective Management companies. Most of these will not secure meaningful numbers of deals or return real money to athletes, but they will exist, and to many ADs, that will be enough.
- I really think at some point this year, some athlete is going to sue a collective over unpaid money or a broken contract...and the athlete is going to lose.
Conference realignment predictions!
- After years of flirting with leaving, Gonzaga finally decides to leave the WCC. In a bit of a surprise, both Bryan and I think that they ultimately end up joining the Pac-12 instead of the Big 12. I also think San Diego State ends up announcing a Pac-12 move in 2023.
- I don't think this is going to be a big year for other P5 realignment. After striking out on San Diego State and Gonzaga, the Big 12 will sniff around other potential PST options before deciding to wait another year. The Big Ten doesn't add any Pac-12 schools in 2023, and the SEC and ACC stand pat. We'll get a few good rumor news cycles, maybe even some smoke, but no real fires at this level.
- I do believe we'll have another robust year of realignment at the FCS and I-AAA level, though. If I want to maybe go out on a limb a bit here... I'll say that the WAC ends up having to merge with another league by the end of 2023, as Grand Canyon and Cal Baptist leave for the WCC, and the league is unable to replace them. Other D-II reclassifications will happen in both the northeast and southeast.
- The Pac-12 will announce a media contract that will, on average, pay slightly more than the Big-12 will, but will have less linear television exposure. I imagine that ESPN and Amazon will share the package, with Fox capturing a small basketball-centric component. Pac-12 and Big-12 partisans will bicker over their respective deals for the next four years.
Here are a few other college sports industry predictions:
- Look for a significant pullback from NFTs and other Web3 related projects from MMR companies, collectives, etc. The projects launched in 2022 were (mostly) not very successful, and with Crypto winter, the FTX fallout, potential new federal regulations, and a cratering of marketing spending from Crypto firms, the juice simply won't be worth the squeeze.
- Somebody is going to figure out a group license-related product that has nothing to do with jerseys or t-shirts, and it's going to completely blow up. It could be a consumable (athlete-branded hot sauces? Salsas? Condiments?), it could be a physical collectible, it could be a unique clothing item like socks or something. The firm that figures out that product is going to end up making way more money than the myriad firms trying to squeeze money out of t-shirts.
- If TikTok isn't sold to a US firm by August 2023, almost no athletic department will be using it for promotional purposes, as the political pushback, especially at the state level, will be too strong to justify running the accounts.
- I don't think the NCAA Transformation Committee will end up recommending anything good and truly transformative, including new recommendations for D-I membership standards. I'd set the over/under on schools that decide to leave D-I over new spending requirements at something around 2.5. There will be at least one....but not many more than that.
- Georgia football is gonna be pretty good next year. Just a hunch.
I'll see y'all again next week. Thanks for reading, everybody.
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