Author’s note: This posting is not targeted to making my friends laugh. It is my rant against the NCAA’s handling of the Name, Image and Likeness program. However, some may find it funny that I am upset at the NCAA and others may find it funny that the NCAA is doing their best impression of the three stooges. So there is a decent chance that this posting will make my friends laugh anyway. All of the statistics in this article have come from reliable sources and I believe they are very accurate. MJS.
A few years ago, the Name Image and Likeness solution was created by the NCAA to provide the legal right for college athletes to profit from their fame. They were required to implement such a program because they lost a class action suit undertaken by college athletes. The NCAA’s design and implementation of NIL may have been the worst business deal since the native Americans sold Manhattan Island to the European settlers for $24.
Whether or not you believe college athletes should be paid is not the issue. They must be paid because they won the lawsuit. However, the solution designed by the NCAA brings chaos to college sports, destroys fair competition among the 364 Division One schools and opens the door for savvy businessmen, totally unrelated to the Universities, to plunder sports revenues.
Let’s look at what has happened and what is likely to happen. Most of the following statistics come from NIL-NCAA.com.
Compensation to the athletes. 91% of the NIL payouts go to the football and men’s basketball programs. Average compensation to basketball players is $218,611. Average compensation to football players is $146,151. Men’s hockey ranks third and the average compensation drops to $21,262. If you are on the rowing team you reap a robust $315. That money is not spread evenly over the athletes in each sport. When Michigan’s Bryce Underwood receives $12.5 million, the 105th compensated player on the team, perhaps the third string holder for field goal attempts, is getting a lot less. Maybe, he could make more on the rowing team. Suffice to say, less than 50 of Michigan’s 1,100 varsity players have real significant compensation from the NIL distributions.
How has this changed the game? The athlete’s primary focus is on who will pay them the most money. The NCAA has created the world’s largest “pick up” game. You throw all the players into the pot every year and pick new teams. This is costing me a lot of money in team jersey’s. My Harbaugh jersey was good for four years. Underwood is only 18 years old and he has had an LSU jersey and a Michigan jersey. If he gets a better offer from Oklahoma State next year, I am going to have to buy a new quarterback jersey. I may switch to TBA for the name and $ for the number.
Sadly, from the players perspective, the NCAA changes have really diminished allegiance to the school the athlete represents. If you’re an athlete, representing the school is far less important than optimizing next year’s NIL contract. When you have good year, you look forward to returning to the player pool for next year and making more money. World class agents will help you through the entire process.
How has the NCAA NIL program destroyed competition? The Power Four conferences (SEC, ACC, Big 10 and Big 12) will payout $20.5 million in NIL money. These conferences comprise 68 of the 364 college sports programs in the NCAA. The Group of Six conferences (Pac 12, Mountain West, American, Sun Belt, Mid-American, Conference USA) will payout an average of $3.23 million. $20.5 million vs $3.2 million. Who can buy the most and best players at the annual player auction? It’ going to be really difficult for James Madison and other Group of Six teams to compete with the big boys anymore.
So we narrowed the pool that can realistically compete for a national championship to 68 Power Four teams.
Within the Power Four Group, the NCAA NIL solution further limits competition. Let’s say that Vanderbilt’s pedestrian quarterback blossoms, in his sophomore year, to one of the best QB’s in the country. He is motivated to enter the annual player pool to move to a top tier Power Four school. He is likely to make a lot more endorsement and service money as the number one player at Alabama than he would at Vandy. So the top half of the Power Four waits for the bottom half to develop great players and the elite schools pick off the outstanding talent. In football, the scale is really tipped to benefit 20 to 30 “elites”.
The NCAA has changed college sports from an amateur enterprise to a professional enterprise for it’s 364 members. Unfortunately, they did a lousy job of setting the terms and structure for the new Association. They opened up paying for players but they did nothing to ensure a level playing field . All of the classic professional sports (NFL, NBA, MLB, and NHL) have rules regarding team salary caps and player contracts. These rules block the rich franchises from garnering the most talented players and they ensure that players under contract will stay with a team for a reasonable period of time. The NCAA did none of this. If someone pays their quarterback $10 million this year and someone else offers him $15 million next year, he is gone.
The world’s richest man offers Bryce Underwood $10 million to go to Michigan as a present to his new bride. If Bryce has a great year and a different millionaire comes up with more money to play for Acme University, Bryce can leave. If Bryce only has a decent year, he will probably stay at Michigan because no one wants to pay him more money.
The guys who pay the most money are going to win the championships. Half the teams in the Power Four don’t stand a chance and there is no hope for anyone outside the Power Four.
An interesting change in competition is well documented in the football bowl games each year. In the past, I really looked forward to bowl season. Based on the stature of the bowl game and the payout to the two competing teams, most games were played by evenly matched competitors. A lot of great intersectional contests. Both teams welcomed the opportunity to stretch out six more weeks of practice and improvement. Barring injury, the entire squad that finished the regular season played in the bowl. In the NIL environment, bowl games for anyone not in the playoffs are feeble exhibition events. A great example is the Florida State fiasco of 2023. FSU was undefeated and justifiably complained that they should have been in the four team playoff. More than half of their starters and more than 20 players sat out the Orange Bowl game. The second and third team players were trounced by Georgia with a final score of 63 to 3.
Under NIL, if your team is not in the (now) 12 team playoff, a high percentage of your players don’t participate in a bowl game. Those heading to the NFL draft sit out the contest because they do not want to risk a last minute injury. Those entering the portal to make themselves eligible for next years auction bail out as well. In essence, the bowl team is nothing like the regular season team. What should have been an interesting game between LSU and Iowa becomes an exhibition game, even less interesting than the inter squad spring game. I love my Wolverines and I have been to a lot of bowl games in the past. I am not disrupting my holidays to pay top hotel prices and $350 for tickets to see a practice game. Neither side is fielding a team of players who will see much action next fall. If 20 first and second teamers bail, I won’t bother watching the game on TV. The non playoff bowls have to be feeling the effects of hosting exhibition games. In 2024, the attendance at the bowl game in venerable Fenway Park was less than 15,000. That’s an embarrassing number for mediocre high school game in Texas.
Bottom line. Before the first kick off in late August, less than 34 teams have an opportunity to play for the national championship. All of the other teams are “farm” teams. They bubble up talent for the elites.
What about the money? NIL has definitely moved college football and basketball to professional sport status. Before NIL, the athletic departments of the 364 schools were the primary beneficiaries of the dollars generated by their athletic programs. Dollars were shuffled off to the conference management staff and the NCAA but the model sent the residuals back to the schools’ athletic departments.
With the wide open rules established by the NCAA, a lot of additional businesses have their fingers in the pot. When you set aside $2.2 billion every year for distribution to the players and establish few rules for endorsement and service compensation, you have created a vast new industry. So we have player agents, advertising and promotional firms, and the NCAA itself seeking a share of the largesse. At this point, most of the financing for the new industry comes from the University Athletic Departments. They are paying $1.7 billion to the players. In 2024, operating losses for the Power Four Group averaged $58.4 million per school. These losses were offset by contributions, school support and student fees. However, with the advent of NIL, a lot of schools were scrambling to recover the increased operating costs. The conference realignments were very much the result of seeking to establish the most attractive offering for TV rights in order to recover some of the operating losses.
No doubt the business model has changed. College football and basketball are professional sports and they have shifted from “not for profit” to capitalistic enterprises. There are indicators that there is a lot of room for improvement of revenues if the pool of participating teams is narrowed. Let’s assume that college football is at least as popular as professional football. The current Big Ten media distribution is $75 million per school. The current NFL media distribution is $433 million per team. We can expect the successful businessmen at the top 34 teams to kick up future media distributions FOR THE TOP 34 TEAMS.
We already have strong evidence that successful business people see the fantastic opportunity for professional college football. A private equity firm that manages the University of California’s retirement fund has offered the Big Ten a $2.4 billion private equity deal to share in the future profitability of the conference’s athletic program. No doubt the business driver here is optimizing media revenues at a lot more than $75 million. Cal State’s retirement program wants to buy the Big Ten. Since the NCAA has made the athletic programs for their 364 members professional sports, we can expect a lot more equity offerings.
So what has the NCAA design of NIL done for us?
It has transitioned amateur college athletics into professional sports. Only a few of the NCAA member schools will have an opportunity to win national championships in football and basketball. Every year, we will toss most of the college athletes into a big pool and they will end up playing for the highest bidder. Perhaps, the importance of a great college education for athletes has been waning for a long time. The NCAA has put a stake in the heart of school allegiance and the goal of a great education for most students.
Schools have the increased burden to fund the athletic programs. Financial and, very quickly, operational control of the programs are shifting to private, for profit, enterprises totally unrelated to the conferences or Universities and solely driven to maximizing the bottom line.
Where will we be in a few years?
There will be a small number of teams competing for national championships in football and basketball. I can see an elite league with the top eight teams in the current Power Four conferences. We could have the SEC Division, Big 12 Division, ACC Division and Big Ten Division. They won’t play any other teams. They will be stand alone professional football and basketball leagues. Very likely, when the real businessmen takeover, the ludicrous practice of no compensation caps, annual bidding for players, and portals will be abandoned to enhance competition and make it more difficult to simply buy the best team
They will play in the home stadium of the their sponsoring schools. The sponsoring schools will share in the total profits of their affiliated teams but the equity owners will perform all of the management and business functions.
Since we have started down this road, I am no longer referring to Michigan’s football or basketball teams as “The University of Michigan”. It is simply “Michigan”.
What happens to the remaining 332 NCAA schools?
Ideally, they will vote to scrap the NCAA and form a rational organization that actually acts on behalf of their members. They can set new rules for college sports. Hey, we may even see a return to amateur college sports with modest compensation to varsity players that are primarily interested in a great college education at the University of their choice.
I’d love to see the NCAA Nil and Void.
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