NIL Collectives, Explained: The Good, The Bad, and The Stupid
Good morning, and thanks for your continued support of Extra Points.
The biggest NIL story of the last few months has unquestionably been the rise of the NIL Collective. I've spent the last few weeks talking to folks who run collectives, who work in the NIL industry, who work as sports lawyers, commentators and administrators, to better understand what these things actually are, how they're set up, what my concerns are, and where opportunities might be.
Let's start with the basics. What is an NIL collective?
Let's pretend you're a college baseball player. You're probably not famous enough or good enough to secure professional representation to help you secure endorsement deals, so any NIL opportunities you get would be ones you track down yourself. There are a ton of NIL marketplaces designed for exactly this purpose, to help athletes get matched with potential brands to do deals.
This works very well for a lot of athletes! But this is still a pretty inefficient marketplace. Athletes have limited information about how much to charge, brands have limited information about how to create a successful campaign, and actually connecting brand to athlete can be a time-intensive process. Since college athletes typically have roughly 26 unscheduled minutes a week, time-intensive processes can be a problem.
A collective attempts to greatly simplify the NIL dealmaking process, while also involving another group of stakeholders, fans. Rather than each athlete trying to set up deals individually, a collective pools money from different brands, fans and boosters, and then allocates it to athletes who opt into the collective, in exchange for brand work and social media appearances. Brands get access to athletes they might not otherwise have, fans can (legally) financially support their favorite athletes, and more athletes get access to NIL and networking opportunities.
On paper, it's a win, win win.
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