By Matthew Jewell

The Impact of NIL

Every sports enthusiast has a moment in college sports they will never forget. For me, this moment was when BYU beat Gonzaga—the number two ranked team in the nation for college basketball—on February 22nd, 2020, breaking Gonzaga’s 40-game win streak. For others, that moment may have been when the unranked Texas A&M football team took down Alabama, the most feared team in college football.

For many, the most anticipated time in college sports is the NCAA basketball tournament. Every year, 68 teams compete in a bracket for the national title. In 2021, within the first round of the NCAA tournament, Oral Roberts University—a small, unknown evangelical school in Oklahoma seeded number 15—shocked viewers across the nation when it defeated the number two seed, Ohio State, during an improbable run to the Sweet Sixteen.

Thrilling events happen in college athletics every day. Moments when the seemingly unstoppable champion is brought to heel by an underdog. Plays that seem too good to be true, yet the replays prove otherwise. There are so many elements to college sports that keep viewers constantly wanting more, but the recent changes in the NCAA leave us wondering if we will still see these Cinderella stories twenty or thirty years from now?

Recent NCAA decisions allowing collegiate athletes to monetize their names, images, and likenesses (NIL) will forever impact college athletics. It is crucial that athletic administrators take this transition as an opportunity to promote fairness and equity. This article will look at how revenues are generated and distributed in college athletics, the discrepancy in earning potential that exists between athletes, and how the new NIL rules must motivate further change.

Revenue

Student athletes generate enormous revenues for their schools. Researchers Custis, Hoben, and Larsen looked at the revenue produced by men’s college football and basketball programs across the nation and performed a scaled, shared revenue calculation based on NFL and NBA pay scales. In simpler terms, they looked at how much revenue professional athletes generated and converted that into a hypothetical salary for collegiate players. Per their analysis from the 2016–2017 sports season, Texas generated the most revenue in football; using NFL pay scales, each Texas collegiate player would receive a payout of $704,808.¹ The numbers for basketball are even higher since there are less players on each team.

Based on these findings, this group of researchers asserted that the NCAA is “intentionally using amateurism as an anti-competitive tool.”² Student athletes generate enormous profits for their universities, often far exceeding the cost of all their educational expenses combined. Student athletes may not merit, or even need, enormous salaries, but they do deserve some compensation for the enormous profits they generate for their schools.

The Social Divide

Athletes’ social media profiles have enormous potential to generate revenue. One group of researchers looked at this earning potential and described college athletic teams as brands, working in the framework where “universities . . . represent the master brand and individual student-athletes are subbrands.”³ Within this framework, student athletes are brand ambassadors for their universities, and more popular athletes at larger universities have greater earning potential.

This group of researchers also evaluated the monetary potential of student athletes’ Instagram profiles. Using that information, they calculated annual audience value per post. In 2017, they found that “Clemson Football’s Trevor Lawrence ([with] 327,957 followers) would have the highest valued Instagram account of male athletes with an annual value of 331,272 USD,” highlighting the possibilities of NIL.⁴

The researchers compared student athletes across different sports and universities and found that female athletes and those competing for smaller universities had lower earning potential due to less social media popularity, creating a deep rift between Division I male athletes and all others.

A New Era

While this divide between college athletics is not new, it has become more prominent. Sports economist David J. Berri says “[t]here is a tendency to think the commercialization of college sports is something that has only recently happened . . . [but] college sports have been commercialized for more than a century.”⁵

However, this new opportunity student athletes have been given to monetize their NIL is just the beginning. In 2021, in the case NCAA v. Alston et al., the US Supreme Court unanimously ruled that the NCAA’s limits to athlete compensation for academic-related costs were in direct violation of the Sherman Antitrust Act, ultimately changing the NIL rules. Justice Kavanaugh asserted that “labels cannot disguise the reality: the NCAA’s business model would be flatly illegal in almost any other industry in America.”⁶ Student athletes deserve compensation, and further change is still needed.

The effects of allowing student athletes to profit from monetizing their NIL, especially on social media, are now beginning to appear. The Alabama football coach, Nick Sabin, said in July that the team’s starting quarterback, Bryce Young, who had yet to start “already approached ungodly numbers . . . It’s almost seven figures.”⁷ Male athletes in other Division I football and basketball programs will soon see similar revenues, especially if they play in prominent positions, such as quarterback.

Going Forward

This leaves us with the question: twenty years from now, when student athletes have discovered the best ways to monetize their NIL rights, will a small evangelical university still be able to defeat a nationally ranked team in a basketball tournament? These NIL changes may funnel all talent into those schools with the highest earning potential.

As the monetary divide continues to widen between mid-tier college athletes and those competing for nationally recognized programs, athletes and administrators will need to work together to ensure that college athletics does not lose its magic. Without competition, no small Oklahoma evangelical university could dream of making it to the last stages of the Big Dance—the NCAA tournament.

The changes in student athletes’ ability to monetize their NIL present unprecedented opportunities. For example, Utah-based Built Brands paid the tuition for all of BYU’s walk-on football players, letting several non-scholarship athletes focus on their studies and sports without added financial burdens.⁸ However, these changes also put smaller programs at higher risk of losing potential recruits, effectively erasing the underdog stories beloved by so many fans.

To prevent this from happening, NIL endorsements need a limit. While limiting this will prove difficult, the first regulation that must be introduced to prevent this system from becoming more polarized than it already is in an endorsement cap for all college athletes. Just as the NFL, the NBA, and other similar organizations have salary caps for their teams to remain competitive, the NCAA must require reporting of endorsement money and set a cap for players to maintain eligibility, thus keeping the system fair and competitive. Without any supervision, college sports will lose their magic. With proper rules and regulations in place, however, college athletes can earn the money that is rightfully theirs while still gratifying the everyday sports enthusiast.

Notes

1. Tyler Custis, et al. 2019. “Big Money, Corruption, and Black Markets: A Closer Look at the Legal and Economic Effects of Amateurism in Division I NCAA College Athletics” Sport, Business and Management 9 (4): 399–415. doi:http://dx.doi.org/10.1108/SBM-09-2018-0070. http://erl.lib.byu.edu/login/?url=https://www.proquest.com/scholarly-journals/big-money-corruption-black-markets-closer-look-at/docview/2295960383/se-2?accountid=4488.
2. Custis, et al, “Big Money, Corruption, and Black Markets: A Closer Look at the Legal and Economic Effects of Amateurism in Division I NCAA College Athletics,” 14.
3. Thilo Kunkel et al., “There is no nil in NIL: examining the social media value of student-athletes’ names, images, and likenesses,” Sport Management Review, June 3, 2021: 6. https://doi.org/10.1080/14413523.2021.1880154
4. Thilo Kunkel et al., “There is no nil in NIL: examining the social media value of student-athletes’ names, images, and likenesses,” 6.
5. David J. Berri, “Paying NCAA Athletes,” Marquette Sports Law Review, 2016. https://scholarship.law.marquette.edu/sportslaw/vol26/iss2/11/
6. National Collegiate Athletic Association v. Alston et al, 20–512 (2021).
7. Dies Bieler, “Nick Saban reveals Alabama QB Bryce Young is already making ‘ungodly’ profits off NIL rights,” The Washington Post, Jul. 20, 2021. https://www.washingtonpost.com/sports/2021/07/20/nick-saban-bryce-young-ungodly-nil-profits/.
8. Lorenzo Reyes, “BYU helped broker NIL deal with Built Bar company that will pay tuition for football walk-ons,” USA Today, Aug. 13, 2021. https://www.usatoday.com/story/sports/ncaaf/independents/2021/08/13/nil-deal-pay-tuition-byu-football-players/8120059002/.