We’re less than a year into the NIL era of college athletics, and it’s not surprisingly a bit of a mess. Everyone is still learning what the rules are and what they mean, and fans in particular are divided on, well, seemingly everything.
The Supreme Court’s ruling in the Alston case wasn’t about NIL, but it made it pretty clear that the judicial system is not going to back up the traditional amateurism rules. The NCAA therefore isn’t going to fight the various state NIL laws that went into effect last year, so there’s no going back.
Jimbo Fisher had to deny rumors that a $30 million NIL fund helped him sign the highest rated class in 247 Sports Composite history. You can tell he wasn’t just speaking off the cuff because at one point he puts on glasses and reads what presumably is a list of prepared talking points before continuing.
I say he “had to” deny the rumors not just because someone from the press asked him about it but also because there’s no way there was $30 million lined up to pay recruits in this one single cycle. He can’t have current or future recruits getting disillusioned because they think a giant pile of money for them exists when it simply does not.
Compensation for college athletes has been an issue for over a century. The origin of the concept of amateurism came from Britain where the upper classes didn’t want to compete athletically against the working classes. The easiest way to avoid that was to enforce non-compensated play, which meant participation could only come from those rich enough to sink a bunch of time into an activity that didn’t generate income. The NCAA took it and ran with it; the term “student-athlete” was specifically coined to keep colleges from having to provide disability coverage to injured players.
So, the concept of the noble amateur student-athlete is a myth built from an ignoble past. That’s not to say that it didn’t have its true believers who were either unaware of or just not bothered too much by where it came from, but it’s not exactly a gem of civilization worth pulling out all the stops to uphold or restore.
Money has always been a strange matter in college sports because of the somewhat arbitrary mix of the market and non-market, the regulated and unregulated. Players could hang out in $80 million facilities and coaches could get bonuses for high poll finishes, but giving athletes bagels with toppings was once a violation where providing plain bagels with no schmear was not.
NIL brings market activity into the sphere of college athletics, but it’s also not supposed to bring market activity into the sphere of college athletics. If the local buffet restaurant wants to hire the starting offensive line to cut a commercial, that’s fine because it’s an exchange of services for money that’s not directly tied to their play on the field. If the owner of a local car dealership wants to pay players to attend State U without getting anything back in return, that’s against the rules.
Straight up pay-for-play is therefore still verboten. But, a school can still recruit players based on the vibrant NIL scene around their programs, because just look at how many businesses love having Tigers or Bulldogs or whatever selling their product.
It’s not pay-for-play because the athlete will have to render services outside the field of play in exchange for payment. But it’s still kind of pay-for-play because the business owners don’t seem too picky about who does their shilling as long as they’re wearing the right logos on Saturday.
It begins to make your head spin because this is not generally how most areas of the economy work. Businesses spend money as part of operations and expect to make a return on that investment.
Athletic departments aren’t businesses, though. They’re not-for-profit entities, so they don’t have to show a profit. The athletic department does bring in revenue on broadcast rights, sponsorships, ticket sales, and donations, but they can also be run at a loss on the idea they’re a marketing expense for the university. There is some threshold of deficits they probably shouldn’t cross for political reasons, but schools always bail out the sports programs instead of shutting them down.
Plus, success in sports is based on wins and losses, not profits and losses. The 1997 Florida Marlins won the World Series. The 1998 Marlins had the worst record in the league. The former lost $30 million while the latter made $14 million. Which was the more successful year?
Boosters have long donated money even when they knew it wouldn’t directly result in championships. South Carolina fans famously have packed Williams-Brice even when the team is seen as fortunate to make a bowl. Fandom is about emotional, not financial, return on investment.
In a conference or at a school where It Just Means More, plenty of people are prepared to put up money for players who have yet to play in college. It’s been this way for a long time. The famous Trans A&M is over 40 years old and it still far from the first under-the-table benefit. It may sound foolish to you, but it’s the risk-adjusted returns of modern portfolio theory applied to sports. Everyone knows that some recruits will excel while some won’t, but the goal is to have more players succeed than fail.
Remember that in a market economy, what anything is worth is what someone is willing to pay for it. From strawberries to stock shares, knickknacks to NFTs, if a person agrees to a price, that’s the price. If a person with more love for their football team than fiscal sense thinks it’s worth attempting to pay big money for a recruit to go to a particular school, then that’s the price. You’re always allowed to lose money provided you have money to lose.
That fact violates most folks’ sense of competitive fairness, which is why there is a rat’s nest of regulations about recruiting. What those rules have always done, though, is create a black market for inducements. NIL allows for some inducements to come into the light, even as a portion of them feel like they violate the spirit of the rules if not the letter.
Recruiting has above and below board markets. Players have agreements for in-kind (i.e., non-salary) compensation from schools and now monetary compensation with outside entities pursuant to some rules via NIL. They’ve always been able to transfer at any time with no compensation to the player or the school because they can only sign financial aid agreements and not more binding employment deals — though now they won’t have to sit out a year the first time they do.
Meanwhile coaches’ deals have always been standard employment contracts with buyouts, and they can’t be brought in check via a salary cap due to antitrust laws. And not-for-profit athletics departments have no incentive to finish each year substantially in the black. If anything, they have an incentive to been seen as spending freely since people judge sports success based on the pursuit of wins and championships, not strong balance sheets.
I don’t blame anyone for not knowing how to feel about all or this, or fans collectively for not having a coherent belief set. It’s complicated, often on purpose, and the result of a century of ever-changing and sometimes conflicting goals, occasional influence from laws and courts, and the random walk of path dependence.
Over time the current chaos will coalesce into a handful of major belief sets, and fans will all polarize around them, just like any other issue in society these days. As you’re evaluating which camp to settle into, just be sure to think things all the way through. It’s complicated, and there are myriad unintended consequences to any given action.
And, ultimately, you can choose to take no position on it and just root for the team on game days. Non-engagement is always an option.