Behold, a cautious Hot Take: I think "NIL" is basically dead

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

Extra Points is not typically a Hot Takes sort of publication. I’m certainly not shy about giving my opinion about stuff, but when I do, I at least try to have that backed up with receipts and research. That’s part of why I do so much FOIA-based reporting.

But over the last year, I’ve got a hunch that I can’t quite completely quantify. I’ve certainly heard enough anecdotally over the course of my reporting conversations to build a suspicion, but I want to admit right from this jump that what I am offering here is an I think statement, not an I know statement.

What I know is that when we talk about NIL, we’re really talking about two different things, right? There’s an NIL marketplace where athletes are compensated directly by their schools, collectives or assorted pass-throughs because of their athletic skills and performance. When a school pays $700,000 to a right tackle, they’re not doing it because they really want that guy on a billboard, no matter what the contract formally says. That’s a payment for athletic performance.

Then you have another market, where athletes are paid to participate in some sort of promotional or educational activity to support a brand. The brand isn’t doing it to win games or recruit athletes, they’re doing it because they think it’s an efficient use of their marketing dollars.

For the sake of this newsletter, when I talk about NIL, it’s the latter group that I’m talking about…people getting paid to promote energy drinks on Instagram.

Now, I’m speaking a little hyperbolically. I know that there still are athletes who are participating in honest-to-goodness marketing activities, and that there are brands, non-profits, political campaigns and other entities who are excited to partner with those athletes. That marketplace is not zero by any stretch of the imagination.

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Here’s what is informing my hunch:

When NIL first became a thing back in 2021, the idea of college athletes as marketing partners was completely novel. A brand that partnered with a college athlete on nearly anything would benefit from some measure of earned media, which would enhance the value of those partnerships. That new interest also helped launch a slew of software platforms, educational tools, marketing consultancies, and vendors that I sometimes call the NIL Industrial Complex.

But a few things have changed since 2021. The novelty around athlete marketing deals has completely vanished, which has changed the value proposition for brands and for media outlets (like this one!) that cover those deals. And many athletes, either via collectives, or most recently, directly from the school via House payments, are earning way more money for their athletic participation than they are from marketing activity.

I’d argue that the existence of “Bagman NIL” (pay-for-play, athletic salaries, whatever you want to call it) has actually introduced a chilling impact on true marketing activity. I’ve heard from so many school officials, agents, marketing reps and brands that getting athletes to actually do marketing work has become much harder. If you’re getting $500,000 for “nothing” (i.e. just playing football at a high level), why would you be interested in getting $2,000 for a marketing activation that actually requires some level of work?

Even early in the NIL era, I’d commonly hear from ADs (of large and small schools) that typically less than 20% of their athletes would engage in any sort of marketing-based NIL activity. My hunch is that those participation rates have not grown (or even perhaps shrunk).

Those House rev-share payments, I suspect, have also made a fan backlash to the NIL era more politically palpible. The SCORE Act may be dead, but not for want of trying from Congressional Republicans. Bipartisan legislation that would, on some level, restrict and regulate athlete compensation has some support in the US Senate, and rolling back athlete pay has been endorsed by the President.

So you have a world where many elite college athletes no longer have the incentive to pursue NIL activity, where brands (especially very large ones) are cautious about making huge spends in this world, and where fan interest in the marketplace has cooled.

Combine that with the fact that most of the tech companies that were launched around NIL in 2021-2022 have either folded or dramatically changed how they do business, and the decline in NIL programming activity at college sports industry events, and I think you have meaningful evidence to suggest that there has been significant change.

The new industry shiny object is about growing revenue for payroll. To the extent that there’s more demand for marketing-based deals, it’s because schools (and MMR companies) are desperate for funding that they don’t have to count against the House Cap…not because brands are beating down the doors of ol’ State U, demanding to hire baseball players for affiliate marketing and appearances.

That, in my opinion, isn’t really so much about NIL as outsiders understood it in 2021.

I could be wrong! I’m not saying you need to close your Opendorse account or that no athletes are marketable or that nobody is looking for brand-based opportunities to help further their future career. And if you feel differently about any of this, by all means, please leave a comment or shoot me an email. I’m happy to print those!

But I do think that anybody…lawyer, agent, AD, startup founder or professor, who thinks the assumptions of 2022-2023 apply today…is probably mistaken.

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Thanks for reading! I’ll see you on the internet, and then shortly thereafter, at NACDA! Let me know if you’re going to be there and want meet up.

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