NIL is not meant to generate a business return...
I see some posts stating that they can't believe that a business would give an athlete tens or hundreds of thousands of dollars, especially when that athlete is just a recruit that has never played. Where is the return on investment?
I think that what people are not understanding with this line of thought is that these boosters / businesses are clearly not looking for a financial return for their enterprises. Sure, maybe they get a boost and that's great, but that's not the main goal. The main goal is to make their football team - which is part of their personal identity - better and more competitive. It's an emotional purchase with an emotional return, not a pure, hard numbers logical one. Many of these people personally have a ton of money, so it's not as if they can't afford it.
Why do I think this? Well just look at the vast sums of money already given "illegally" (in quotations because it's not actually illegal other than with a sham organization that is the NCAA) back before NIL. Technically a lot of those payments couldn't even be associated with a business or individual etc. since it was supposed to be hidden. Yet that did not stop top recruits and benchwarmers waiting their turn from getting hundreds of thousands already. Of course making payments legal now through NIL will only bring more of these payments now that they are above board.
My point is, these payments weren't "financial return seeking investments" before and there is no reason to think that they will be now. It is just a way to get money from rich people who want their football team to win into the hands of highly ranked kids. Seems fairly obvious and logical, but I admit I've been puzzled by posts questioning the return on investment. It was never about that. The football team getting better IS the return.
August 10th, 2021 at 8:44 AM ^
Of course.
August 10th, 2021 at 8:50 AM ^
However, now, they can be written off as a legit expense and reduce NPBBT. Win win.
August 10th, 2021 at 10:02 AM ^
Yeah, I mean, it's not charity or even just boosting. It's a tax write off, albeit for a good cause if you're a college football fan.
August 10th, 2021 at 8:52 AM ^
I like the finkle is einhorn revelation at the end.
August 10th, 2021 at 9:15 AM ^
The first time I ever saw a woman in a bra was when Ace stripped off Einhorn/Finkle's shirt. Due to the nature of that scene, it was also my first time learning about sex reassignment surgeries. I was 7.
August 10th, 2021 at 10:02 AM ^
You've recovered nicely, Blau.
August 10th, 2021 at 8:59 AM ^
I just wanted to see if this was the exact same thread from The Fort on the Rivals website.
It is, carry on.
August 10th, 2021 at 9:12 AM ^
I post at 24/7 as well.
August 10th, 2021 at 9:10 AM ^
Sounds like you have it all figured out. What other business wisdom can you provide us with?
August 10th, 2021 at 9:13 AM ^
What do you want to know?
EDIT: to be fair, I re-read my original post and the wording was certainly strong. I don't want to make it seem like I'm presenting facts or mine's the only viewpoint that matters. Apologies if it came off that way. It is a topic I'm passionate about (Michigan winning through using the one fucking lifeline we've been given basically in our history) and I have a lot of conviction on the topic. But of course it's only my opinion in the end, and we'll have to wait for a few years to see if it's any more or less valid than anyone else's.
August 10th, 2021 at 2:26 PM ^
Just giving you a hard time...
I think you are mostly right but I don't see why NIL can't give you a return on investment like any other marketing / business development investments.
I was thinking of looking into talks with a couple of the players, just to kick the tires on how the process works. Been too busy to get it set up though.
August 10th, 2021 at 10:04 AM ^
Buy low, sell high.
You're welcome.
August 10th, 2021 at 10:48 AM ^
How very capitalistic of you….quite shocking that it’s coming from you though, honestly…..
August 10th, 2021 at 11:08 AM ^
When the pig is dead, pork bellies are up.
August 10th, 2021 at 9:13 AM ^
It’s obviously somewhat a mixture of both but the big ones you hear about on the news are absolutely designed to return in a business sense. The confusion is just coming from people who have no knowledge or understanding of the Instagram, tik tok, twitch influencer market. The fact that these recruits have never played in college is meaningless because the value isn’t tied fo their on field performance but the potential reach of their social media. If a company thinks a high profile recruit is likely to wind up with 100k followers on Instagram, sponsorships worth tens of thousands are about what the market is.
August 10th, 2021 at 9:16 AM ^
I don't necessarily disagree with pieces of this but then what do you think about SEC recruits already getting close to $1M before NIL? My view is that the big "deals" are just legal money pumping e.g., the JTs and Quinn Ewers and Bryce Youngs. Again, certainly not saying that it's going to be unhelpful to the business necessarily - just that it's not close to the main objective.
August 10th, 2021 at 9:39 AM ^
If a business was paying cash to recruits before, quietly, they can now pay the same amount above board and get the publicity that comes with it. Huge win for them relatively.
Also, I'd like to see the contracts b/c I'm assuming they are paid over a few years and likely related to some degree of production or games played or starts. It's like saying an NFL player has a 70 million dollar contract when only 10 million is guaranteed. It's irrelevant UNLESS they sustain their current level of production.
August 10th, 2021 at 10:21 AM ^
"Also, I'd like to see the contracts b/c I'm assuming they are paid over a few years and likely related to some degree of production or games played or starts"
This is explicitly against NIL rules. Every single policy I've seen has a clause that athletes may not receive compensation that is contingent upon enrolling at or staying at a specific institution or specific athletic performance.
Now that doesn't mean a Company would have to continue their relationship with Cade if he were to lose his starting job or something. It just won't be specifically laid out that way in any of their contracts or agreements.
August 10th, 2021 at 10:41 AM ^
Touche I didn't know that. Could the payments be over 10 years or something though?
August 10th, 2021 at 11:09 AM ^
I don't think there's anything that would explicitly prohibit payments being over time. But unless we are talking about major stacks of cash, I'm not sure why it would be worth it to the business or player to not just get paid monthly or quarterly depending on the nature of their agreement.
August 10th, 2021 at 9:47 AM ^
Bryce Young is making 1 million because he has a six figure deal from cash app, to my knowledge Jack Dorsey is not an Alabama football fan looking for personal benefits from their success and cash app isn't just randomly investing. The Ewers and Youngs of the world have reaches of over 100k people on their social media between instagram, snapchat, tik tok, etc. People with those kinds of followings you have never heard of because they are just former bachelor contestants or some random teenager that dances with mediocre skill also are making hundreds of thousands of dollars. The money you are talking about that was just cash from boosters is still going to flow under the table and you'll never hear about it (it also happens at Michigan).
Your ignorance is just coming from a lack of understanding of how lucrative the influencer market is. Someone 10,000 followers can make 100k a year on instagram posts. These guys have tens of thousands of followers and the potential to add significantly more as they continue to play. No real company is paying tens of thousands of dollars because their founder is a football fan, the deals you are hearing about in the news and the Bryce Youngs of the world are almost entirely driven by businesses doing entirely business based deals. Some of it might be speculative that Bryce Young or Quinn Ewers will continue to grow their profile from being at large institutions, but speculation is 100% part of a business decision. This is entirely business driven and just goes to show how crap it is these athletes were prevented from accessing these opportunities before. With his follower numbers Zion Williamson could have probably cleared a million dollars before committing to Duke, just like teenagers like Addison Rae and Charli D'Amelio made 4-5 million
August 10th, 2021 at 9:57 AM ^
Again, I don't think that you are wrong. There will certainly be situations where perhaps it is primarily business-driven. Some athletes like Zion are absolutely worth it from a business return standpoint - I am not doubting that, or saying categorically it doesn't happen. I just don't think it's in the majority of cases, or even close. E.g., how much influencing does a 4-star lineman ranked 157 in the country do, and is that worth what he will likely get paid from Alabama in NIL now?
How many Instagram followers did Leonard Fournette have before he was paid nearly $1M (sources for this are from the premium sites)? And remember this was over a decade ago... the well-oiled machines have only gotten more efficient since then.
Also, I disagree with your statement "no real company is paying tens of thousands because their founder is a football fan." That's just empirically not true. Look no further than Michigan, where Bobby Kotick is paying millions for the team's overseas travels. Sure it might not be his company itself paying, but his company generated him the wealth to be able to do so. It's these huge donors / boosters that are funneling the money to kids. It's just that at Alabama OSU etc. these donors aren't paying the overseas travels but the kids directly.
August 10th, 2021 at 10:26 AM ^
Bobby Kotick the individual making a donation with his own personal money is in no way proof that a legitimate business is making these deals because the founder or president is a football fan. And how much money are you hearing about a 4 star linemen getting? Its not like there are reports of all of them getting big deals. Not to mention, once again, its not really ranking or production, if that 4 star lineman has 250k followers he's going to get a good deal. Adrien Nunez is likely the guy on the Michigan basketball team who will make the most money this year due to NIL and its not because he's the best player or boosters think he will make the team better.
The examples of guys like Fournette pre NIL have literally no bearing on this from NIL and the decisions being made by businesses. The boosters using their own money to buy houses for families of recruits are going to still be doing that and it will still be all under the table. The big NIL deals you read about in the news are just businesses entering a new market. My guess is within a year the vast majority of NIL deals will be business based decisions and not boosters finding loopholes.
Also lastly, because its always important to point out on this blog where everyone thinks Michigan is above the fray, we absolutely have boosters giving money directly to kids under the table and have for decades (and has been cheating in other ways for as long as the football program has existed, just like basically every program). I had friends on the football team that had credit cards that boosters just paid the bills on as just one easy example. The interesting thing NIL could do the illegal benefits is push them more to second tier athletes, the guys at the top will probably make enough that its not worth it to do under the table deals, so the money will be best spent on those guys with 5k followers ranked 90th and from Maine. That is probably where the booster money will start ending up that was going to the Ewers of the world who don't need to play that game anymore.
August 10th, 2021 at 9:13 AM ^
To quote body pump instructor KG: The work is the reward
August 10th, 2021 at 9:19 AM ^
Any thoughts on bird law?
August 10th, 2021 at 9:27 AM ^
You are 100 percent correct on this. I would not mind having this site collect money to target recruits under NIL. I personally would contribute a large sum if it means we got Walter Nolan. I think it will be interesting because many players are going to be taking pay cuts after they finish college. Think about how much Kain Colter would have been worth in college yet he did not make any money playing profession.
August 10th, 2021 at 9:32 AM ^
If someone wants to organize I would absolutely contribute. By the way I love your Kain Colter example... wish that kid were able to have made some money, he put it on the line for sure. Certainly deserving.
August 10th, 2021 at 9:44 AM ^
Sometimes this money is used to 'clean' the money, ie money laundering.
August 10th, 2021 at 9:51 AM ^
I'm just here to watch the football games, man.
August 10th, 2021 at 9:58 AM ^
Haha, fair... me too brother. But unfortunately these things are completely intertwined.
August 10th, 2021 at 10:13 AM ^
I think people who think NIL deals are bad business are themselves incompetent at business. Having your company be associated with the most popular people in hosts of communities around America is smart business. Companies spend tons of money on online influencers with a fraction of the reach of college athletes at major programs.
August 10th, 2021 at 10:21 AM ^
What happens when all this money is shelled out to kids/players and the team still does not win? (not just for Michigan but all of college sports).
At what point to wealthy supporters/alums say "why the heck am I doing this anymore?"
THEN what happens to recruiting?
Go Blue.
August 10th, 2021 at 10:40 AM ^
I don't think we have to wonder here. Ask Tennessee, Ole Miss, LSU (other than Burrow year), etc. They are still getting plenty of money and buying plenty of players.
August 10th, 2021 at 10:55 AM ^
I’m curious to see how all this plays out in regards to the coaching carousel.
You get enough businesses involved in your recruiting pitches, how long until they dictate who is coaching their investments.
August 10th, 2021 at 12:21 PM ^
This is a really weird question, Boyo. They'll fire the coach, obviously.
August 10th, 2021 at 10:28 AM ^
Well - yeah. Seems pretty obvious.
August 10th, 2021 at 11:36 AM ^
Will have to see how this plays out
August 10th, 2021 at 11:56 AM ^
Sure, not everyone is looking for an ROI. But its also true that wealthy people generally didn't get wealthy by not ever considering the ROI of the things they are investing in/spending money on.
August 10th, 2021 at 12:27 PM ^
You are missing my point. They got wealthy because they were seeking money with their investments. Here they are seeking better football performance. They absolutely will get what they are investing in... it's just not a financial return.
August 10th, 2021 at 1:21 PM ^
One big impact I haven't seen discussed is that by going above board, recruits will now have to pay taxes. 1099's are required for large payments (it used to be a little below $1K but I don't know the current threshold for reporting now.) 1099's are reported by the payer which means you can't hide the income if the payer is making it above board and taking it as an expense for tax purposes. As a result, I wouldn't be surprised if a fair amount of unreported payments continue.
With respect to the fact paying recruits/players isn't illegal, well it is if it doesn't get reported as income by the recipients.
August 10th, 2021 at 1:54 PM ^
I thought the point of NIL was for players to be able to earn money based on their commercial value. So what you are saying is they have very little commercial value but rather emotional value to boosters. We all know its true but ripping off the band aid this early to expose the wound isnt nice....at least the boosters can now write off their vice.
August 10th, 2021 at 1:55 PM ^
It does provide a positive return for the business. It associates the business with the university in the minds of the consumer. The university makes an investment in the student even though half of the scholarship players will not make a play and yet they’re not changing the scholarship model to only players who play. If the football team does well, the local business community does very well. I bet if you studied the local economy of Tuscaloosa prior to nick saban and every year after he arrived you will notice they probably owe the players more money than they handed them under the table.
August 10th, 2021 at 2:02 PM ^
yes this is true
August 10th, 2021 at 2:52 PM ^
Posted this in another thread, but UM seems behind the curve here. OSU is doing more. Freshman DE Jack Sawyer just posted a picture of his new truck as he's being sponsored by Wahlberg Chevy in Columubs. Mark Wahlberg's business partner at the dealership is Jay Feldman. Feldman owns 9 GM dealerships in the Detroit area. These two became acquaintances when Mark wanted to bring his burger franchise Wahlbergers into MI and they partnered up. The two went onto to buy out Bobby Layman Chevy in Columbus and renamed it. These two own significantly more dealerships and restaurant food chains in MI than OH, yet they are endorsing an OSU athlete and as of yet are not endorsing any UM athletes. We know they aren't OSU fans. This begs to question, who contacted who first? I can't help but wonder if OSU is doing the searching while UM is not. I'd post the pic, but we don't seem to have the availability to link to Twitter any longer and our system doesn't suport jpeg files, which it is. Here's the Twitter link though.
https://twitter.com/jacksawyer40/status/1424896269068165128/photo/1
August 10th, 2021 at 3:33 PM ^
Nic Satan is already bragging that an incoming freshman QB has a million dollar contract and hasn't even played a game yet.... that's the new recruiting tool
I was talking to a Div. II head coach over the weekend, he said 'this thing is going to be a huge mess and is going to take years to clean up, but the toothpaste is already out of the tube'.
August 10th, 2021 at 4:02 PM ^
agree
wonder what tax ramifications are for "business/donor's"
August 10th, 2021 at 4:29 PM ^
I had a buddy right after college who quit his high paying job to sell "musical art." He wanted people to pay $20-$100k for something that was clever, but didn't really impress me. I thought he was insane. What I didn't realize was that he came from a very wealthy family and people he knew would drop tens of thousands of dollars on impulse buys. It was a status symbol.
I don't run in these circles, but if you're in your box at Michigan stadium and you get to brag to your buddies that you "bought" the services of X, Y or Z player(s), you're the mac daddy. It is all about status.
August 10th, 2021 at 5:42 PM ^
Tell that to Fedex. I nailed that per Jalen Rose today!