What we can learn from the BYU/Built Bar/NIL dustup

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The vast majority of NIL activity, be that brand or collective-based, happens without public complaint. If one party doesn’t fulfill their obligations, generally, the dispute doesn’t hit the newspapers. But last week was an exception.

On May 28, the Salt Lake Tribune published a long story on how many BYU football players were frustrated that multiple NIL opportunities had not turned out how they had expected, with the story centering on a partnership involving Built Bar. Built Bar famously entered into an agreement to pay scholarship athletes $1,000, and the value of full tuition for BYU’s walk-ons, the team-wide NIL deal for a major FBS program. According to multiple press accounts, uBilt followed through and paid the $1,000 and the tuition.

But, via the Tribune:

A few days later, the Deseret News (an outlet owned by the Church of Jesus Christ of Latter-Day Saints, the same church that owns and operates BYU), published a follow-up story, confirming that many players believed they would be earning a percentage of the profits from CougarTail bars. Built CEO Nick Greer said that wasn’t the case. Via the story:

The story also ended with this quote:

Greer is reportedly making good on that promise. According to a Tribune story published on June 2nd, all BYU players who participated in Built NIL activities will be paid an additional $600, which should more than cover the disputed royalty payments.

So over the course of a week, we heard of athletes expressing frustration over a deal, the CEO going on the defense, and then the players getting more money.

Alls well that ends well, right? In this very specific case, sure. But I think there are some other important takeaways from this entire news cycle that everybody, from athletes to schools to brands, ought to keep in mind.

Get everything in writing. No matter what

I understand that contracts can get expensive. Bringing in lawyers and creating five-page PDFs over a $250 deal probably isn’t economical for a lot of NIL activity.

But getting everything in writing is free, and it ought to be mandatory before anybody enters into any sort of NIL agreement. It isn’t a sign of a lack of trust between the parties to insist on having a copy of the mutually agreed upon terms. It’s simply a way for the school, brand, and athlete to be protected.

From talking to a few folks in and around BYU football, and from my reading all of these stories, the entire Built drama seemed to have stemmed not from a desire by the brand to rip off athletes, but a misunderstanding. If every athlete had a copy of the exact terms and the exact payment schedule they agreed on, there wouldn’t have been such hurt feelings and confusion.

Brands need to know what happens if an athlete is unable to fulfill their end of the bargain. Athletes need to know exactly how much they’re being paid, what services they’re being asked to provide, and when the agreement will be fulfilled. Brands (and schools, and collectives) need to err on the side of overcommunicating, given that they’re working with very busy young people who typically do not have extensive experience with contracts and marketing efforts.

Beware of agencies and offers that seem too good to be true

The saga around Built Bar dominated the headlines and social media conversation, but the original Tribune story covered several other NIL deals that didn’t pan out. For example,

Here’s a dirty little secret about a lot of smaller NIL agencies. The math doesn’t work for the firms to stay in business.

Typical sports and marketing agencies typically take a percentage of each marketing deal as a fee (occasionally as high as 35%, but generally around 20%), rather than charging flat rates. That model can work very well if the firm represents a lot of athletes, or is able to broker very lucrative contracts.

But boutique agencies aren’t typically representing college athletes that can command market-driven NIL deals in the high five figures…they’re representing athletes that are unlikely to have long NFL or NBA careers, or whose individual marketability is minimal. You can’t build a business taking cuts from a $500 deal here or an affiliate marketing deal there. It’s why many agents, if they aren’t involved in collective agreements, don’t even bother with college athletes anymore.

Any athlete getting offers from an agency, even if they’re licensed to represent professional athletes, ought to ask tough questions about what happens if the deals don’t come, or if the firm goes out of business, just to make sure the athlete isn’t holding the bag. Athletes and their families also need to have very realistic exceptions about what kind of market-driven money is actually out there….anybody selling huge paydays for athletes that a) don’t have massive social media followings and b) aren’t going to command huge checks from collectives is probably full of crap.

For example, back in August of last year, BYU announced a five-year deal with a company called Ocavu to produce NFTs, a deal the company believed could deliver up to $20 million to athletes in the first year.

I spoke to the Tribune about that story, and I told them that I thought this projection was categorically insane. The NFL and Web3 market had already crashed, and few companies were able to demonstrate that a robust market for “experiences” actually existed. Larger brands in the P5 had already turned down major NFT partnerships, and I worried that entering into and promoting this partnership would expose BYU, and its athletes, to reputational risk.

Lo and behold,

If it walks like a scam, talks like a scam, and issues bold predictions like a scam, it’s probably a scam. Yesterday, it was NFTs and Web3 projects. Today, it might be AI start-ups. I’m sure there will be MLM-like thing tomorrow. Athletes and schools need to be cautious.

For what it’s worth, I actually think BYU has done some pretty forward-thinking things with NIL, from working with Chamber of Commerce organizations to helping athletes get real estate certifications, and I know several BYU athletes have done legitimate and successful NIL deals….but it would appear that not every opportunity in this market is a great one.

Finally, you can’t get too emotional about this business

Reading between the lines, I think Greer and Built were really bothered by the insinuation that they weren’t operating on the up-and-up-with BYU athletes. The company did pay out the tuition money like they said they would, and the company’s relationship with BYU extends far beyond this particular NIL campaign.

In fact, Built went above and beyond their original commitment, since BYU actually raised tuition since the campaign began, and Built covered the new price. The firm has a long relationship with BYU athletics beyond the campaign, and I can understand why negative publicity felt particularly hurtful.

Still, via the Deseret News story,

Respectfully, this isn’t how marketing works!

Let’s say you have a company that makes protein bars. The overwhelming majority of the bars taste great, are packed with nutrients, and do exactly what they’re supposed to do. But let’s say, hypothetically, that a tiny percentage…say, .05%, of all of these protein bars are actually full of toothpaste. Whenever somebody bites into one of those unfortunate bars, they get a mouthful of the worst pre-workout ever.

If that happened, you don’t get to crow about the hundreds of thousands of delicious protein bars that you sold that didn’t have any toothpaste in them. You can’t hide behind all of the other successful workouts you’ve fueled and insinuate that stories about the toothpaste bars are part of some smear campaign. You gotta fix the toothpaste bars.

Remember, it wasn’t just Salt Lake Tribune reporters who were saying that BYU football players felt like their deal wasn’t being honored…it was BYU football players, even players who told the Deseret News the same thing. Those are the very people you’re trying to help!

Doing NIL work can be a very emotional enterprise. Fans, agents, or partisan media try to take things out of context, and not everybody has all the information they might need. But everybody, (athlete, brand, parents, school, fans, etc) needs to try to approach these conversations and agreements as levelheaded as possible.

In business, sometimes agreements don’t work out. Not every NIL deal is going to be profitable for brands, and sometimes, despite best intentions, companies go under.

My hope is everybody involved can use these events as a learning experience, so stories of broken promises, unfulfilled obligations and hurt feelings become more and more rare.

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