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- Who benefits from new NCAA NIL regulations?
Who benefits from new NCAA NIL regulations?
What do new policies about agent registration and deal disclosures actually mean?
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I sadly was unable to attend this year’s NCAA Convention, which just wrapped up in Phoenix, but I’ve been working the phones to better understand what actually happened and where various policies are headed next.
Typically, these conventions are more about hotel bar conversations and conference room debates than they are about hard news, but some actual decisions did get made.
Last Wednesday, the NCAA announced that the “D-I Council unanimously adopted” new NIL policies, effective August 1. While future policy changes are still being discussed and could be implemented before August 1, the accepted proposal is centered on four concepts: a voluntary registration database for NIL service providers, new disclosure requirements for NIL activity, standardized NIL contracts, and new “comprehensive” NIL education.
I’ve seen a lot of debate in the industry about who actually benefits from these new changes, why they were made, and how impactful they’ll actually be. Here’s how I see it.
Voluntary NIL Service Provider Registration
If you want to be an agent that represents professional football or basketball players, or just about any other American professional athlete, you’ll need to be certified by that league’s union. That typically means some combination of having a law or graduate degree, years of professional negotiating experience, passage of an ethics exam, or meeting other specific, professional standards. The union, after all, wants to protect membership from yahoos who have no idea what they’re doing.
While some states do require sports agents to register with some state entity, by and large, there aren’t certification standards for anybody seeking to advise or represent college athletes. I’ve said this a few times, and I am not exaggerating to make a goof… nothing is stopping a college student from deciding he is now a NIL agent and representing his buddy in the neighboring dorm. I have spoken to students doing exactly that.
Absent any enforced regulations or standards, I, along with many college sports professionals, believe there is a real problem with athletes getting bad advice from ethically conflicted, professionally inferior (or both) representatives. Finding quality professional advice can also be a challenge, especially if you’re not a wealthy family that just happens to know a lot of lawyers.
I see the NCAA’s proposal as a potential step in making it easier for athletes to find NIL service providers (agents, marketing support, financial advice, etc), or to create informal professional standards. I think it would be hard to argue that this step hurts or exploits athletes. But how helpful will it be?
I saw Bill Carter, a well-known NIL consultant and lecturer at the University of Vermont, suggest that he might not even bother registering, absent more information about how the NCAA plans to collect and share information. He also doubts that “bad actors”, or the most-connected firms (like the CAAs of the world) will bother registering. I don’t think he’s alone.
If there are no carrots and no sticks, I don’t see how a directory is anything more than a new phone book. And there’s nothing wrong with a phone book when you’re trying to find a specialist that isn’t in your network. But just like how the Yellow Pages alone doesn’t do much to prevent contractors from ripping you off during a home repair, I don’t see how this directory would do much to address problems with “bad actor” service providers.
Standardized NIL contracts
In the release, the NCAA says they will “The NCAA will work with schools to provide student-athletes with robust education on contractual obligations, including developing a template contract and recommended contract terms…”, a talking point that NCAA president Charlie Baker has mentioned several times when discussing NIL reform.
Many NIL compliance software services or marketplace systems also already have boilerplate contract templates. I use the word templates because agents, collective operators, and professors often argue that such a single document is unlikely to be useful because there isn’t such a thing as standard NIL services. A contract for a social media influencer deal should look different from a longer-term collective arrangement, a deal to co-run a sports camp, or write a blog post, or a longer-term collective agreement, to a professional services contract.
If the NCAA is planning to work with schools/industry to create a library of templates, I think that’s actually a pretty useful service…not just for athletes, but for brands to feel more comfortable working with athletes (you think Doug’s Pizza down the street has extensive experience in influencer marketing deals? Cmon). A single document is, in my opinion, likely to just create confusion.
Allow me to deviate from NIL Twitter for a moment with this. I actually don’t think most NIL deals need a contract. The vast majority of NIL activity, by volume, is going to be for small deals worth five hundred bucks or less. Even if you have a contract, it’s not going to be worth going to small claims court over when you have the limited schedule of a college athlete. Paying lawyers to look over or create paperwork for deals that small isn’t worth the time or money.
But everybody should have a written record of what is expected from both parties, when the athlete gets paid, and what happens if there is a dispute. If these documents help facilitate that, all the better.
Comprehensive NIL education
The press release is mostly mum about this, simply stating that “The NCAA will develop a comprehensive plan to provide ongoing education and resources to support student-athletes (and those assisting student-athletes) on policies, rules and best practicesabouto NIL. Education will be provided to other key stakeholders, as well.”
This might seem harsh, but I believe that in most cases, athletes don’t need more education.
Here’s the truth. Every single P5 school is already offering a lot of NIL education. Almost every D-I institution is paying some software firm or consultancy for some sort of NIL education package. There is no shortage of guest speakers, video modules, digital courses, or other education solutions out there on the market, to say nothing of legal, business, and marketing expertise that is already on campus everywhere.
None of that stuff matters if it isn’t relevant or engaging to the athlete. The last thing anybody needs is to ask their athletes to sit through another meeting that isn’t going to be relevant to 80% of them. The important question to ask isn’t about “how much” education, but about “what kind” of education. Is it engaging? Is it relevant? Is the information being retained? If not, who is being held accountable?
I don’t think that’s a problem that is best addressed from the top down of the NCAA. The people who should be experts in how to disseminate information should be the universities, given that this is the entire point of a school to begin with.
And finally, the most controversial concept,
NIL disclosure requirements.
Some state laws currently require athletes to disclose NIL activity to member institutions, and other institutions require student disclosure as part of their own individual policies. Over the last year, despite any requirements on the books, compliance officers at schools large and small have told they believe NIL activity is dramatically under-reported to institutions. Even with many compliance deals executed via software tools that produce automatic disclosure forms, I believe it would not be unreasonable to think half of all NIL activity is not reported correctly to institutions.
There’s no real stick to this requirement either. I’m unaware of any school penalizing an athlete for not properly disclosing deals to compliance, and certainly no state has taken punitive action.
Many agents and economists strongly oppose disclosure obligations or any attempt for the NCAA to compile and aggregate data.
After all, in a marketplace where agents, parents, coaches, schools and everybody else has a strong incentive to lie about offers or going rates, being able to say “no, I actually have the best information” is a powerful marketing tool. If an athlete could theoretically verify whether a potential offer passed the sniff test, well, they wouldn’t need as many expensive agents, would they? A school being able to verify that an agent’s proposal is dramatically out of step with average market activity could also mean lower fees for that agent.
But some economists worry that widespread price disclosure could create something similar to price fixing, which would take money out of the pockets of some athletes. After all, it can be hard to get more money than the Blue Book value of a used car, right?
I understand and have some sympathy for arguments that state that price disclosure would disproportionately benefit schools and collectives, who will now have tools to help them avoid bidding against themselves and overpaying on athletes. High levels of market transparency probably will drive down payments for some athletes.
But I don’t think that’s automatically a bad thing.
I legitimately believe, after talking to many collectives, marketing agents and media buyers for brands, that price transparency would also help more brands, especially smaller and regional companies, feel more confident in engaging in NIL activity. If you have no idea how much is a “reasonable” amount to pay for a particular service, and if you have regulatory concerns, it’s much easier to pay that marketing budget in old standbys like TV, Radio, Print, Google and Facebook. More brands entering the marketplace could then drive up the value of deals, or at least, increase earning potential for more athletes.
Unlike in other marketplaces, oney saved on overpaying for transfers isn’t likely to be turned into profit for collectives or returned to donors…it’s going to be reinvested into other athletes. If collectives, hypothetically, learned they could get the QB they wanted for $800,000 instead of $1.8 million, that extra million bucks is probably going to other athletes in an attempt to build a more balanced roster.
I believe that on balance, price transparency in a turbulent market is more of a good thing than a bad thing for more people…but it’s also probably moot. Without a willingness to actually punish athletes (or third parties) for failing to disclose, many people simply won’t comply with these regulations. State law might also prevent brands, collectives or athletes with complying with the NCAA policy.
My guess is that this aggregated database won’t be effective. If you’re going to impose a policy that many entrenched interests do not want to happen, then you need to dedicate time and resources to enforce that policy.
We’re only just seeing this now with NIL policies at all, and the NCAA is going to need to successfully go after dozens of other groups breaking policies (and defend themselves from lawsuits) if they want to rules to have any teeth.
If they’re not willing to do that over a database, it’s not going to produce the data the NCAA wants. Just like we’ve seen for the rest of the NCAA’s NIL policies so far.
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