The NCAA has tabled the name, image and likeness legislation after politics intervened.
The idea of paying collegiate players is a classic sports fan debate topic. The debate moved from the barroom to the courtroom with the Ed O’Bannon case. And then the issue entered the political realm with 2019 legislation in California and other states.
The states’ legislative actions, especially California, are likely to create an unwieldy and unworkable collegiate sports environment. In response, the NCAA is moving forward with a set of proposals that will create a unified approach to athletes’ rights to benefit from their name, image and likeness (NIL) assets.
It is a confusing situation at the moment.
The NCAA was scheduled to vote this week before it was tabled on a proposal that would have provided increased NIL rights to athletes for this upcoming season.
“The Council remains fully committed to modernizing Division I rules in ways that benefit all student-athletes,” said Council chair M. Grace Calhoun, athletics director at Pennsylvania. “Unfortunately, external factors require this pause and the Council will use this time to enhance the proposals.”
Sports Illustrated reported the proposal would allow athletes to 1. Profit from endorsing products, 2. Conduct lessons and operate camps and 3. Receive compensation for autograph sessions. Athletes would not be able to endorse brands related to gambling or that conflict with the school’s marketing relationships.
The proposal was developed last fall and was an effort to create a unified approach to NIL rights. One of the NCAA problems is that Florida’s legislation is scheduled to go active this coming July.
The NCAA was working against the clock, but opposition quickly formed. USA TODAY quoted Senator Richard Blumenthal response to the NCAA proposal as follows:
Sen. Richard Blumenthal, D-Conn., said in a statement to USA TODAY Sports that the restrictions appear to make the proposal “functionally useless” and, as a result, it “will do little to change the current exploitive state of college athletics.”
Blumenthal and other Senators, including Vice President-Elect Kamala Harris, have also called for an athlete’s bill of rights.
As the NCAA meetings approached, the political storms around the issue intensified. The California legislator who wrote the 2019 bill, introduced new, more aggressive legislation last month. Next, The Georgia state run-offs resulted in a near-future Democratic Senate, which means a legislative environment that is probably more friendly to player compensation.
With increased political activity likely, the NCAA seems to be attempting to offload any decisions regarding NIL rules. Over the weekend, the New York Times reported:
In a letter to the Justice Department on Saturday, the N.C.A.A.’s president, Mark Emmert, said he had “strongly recommended” that the association’s governing bodies wait, effectively stepping back from pledges to lawmakers and others that college sports leaders would act this winter on the issue known as name, image and likeness.
At the moment, it appears that political forces will determine the rules and structures through which collegiate athletes can monetize their NIL assets. With greater athlete rights almost a forgone conclusion, the next question is how the coming changes will transform college sports, especially football and basketball?
Athletes will be able to profit off their brand with name, image and likeness
Exploring the potential impact on competition requires getting into the fundamentals of name, image and likeness rules. Name, image and likeness rights are fundamentally about regulating how athletes’ are allowed to manage their individual brands.
While the current debate and proposals are centered on equity or fairness issues, allowing athletes to build and manage their brands may dramatically alter the competitive landscape of revenue-generating college sports. Allowing athletes to manage their brands while playing college sports is likely to have significant unintended consequences that will alter the balance of power across schools.
The issue is that allowing athletes to build their brands during college changes athletes’ incentive structure. With NIL rights in place, we can expect that current and prospective collegiate athletes will make decisions that maximize individual brand equity.
A quick definition: Brand equity is the value that a brand provides to an organization. In traditional marketing, high equity brands benefit from higher consumer awareness, greater customer loyalty, more pricing power and an easier time getting shelf space. Coca-Cola is a high equity brand that enjoys all sorts of advantages compared to an unknown cola brand.
In sports, an athlete’s brand equity provides value because other companies want to be connected to the player. Nike wants to be associated with Michael Jordan and LeBron James. The goal of sponsoring an athlete is to generate buzz and transfer some of the athlete’s appeal to the product.
LeBron is an illustrative example of brand development. LeBron is a generational talent with a history of winning championships and MVP awards. His success and talent have led to lucrative partnerships with Nike, Sprite, Walmart and Beats Headphones.
The proposed name, image and likeness rules will create similar brand-building incentives for elite High School prospects. College choices already include consideration of a pathway to the pros. Allowing for sponsorships in college will turn the college choice into a decision that directly and explicitly affects the athlete’s income.
When an elite basketball prospect from, say, Wisconsin is choosing between Marquette or Kentucky, that prospect can add potential income differences to the criteria. Likewise, a star quarterback from Indiana choosing between Notre Dame and Purdue will face very different earning prospects for his three or four-year playing career.
A missing issue in discussions of name, image and likeness is that the athlete and the school jointly create an athlete’s brand value. Schools have varying histories of success, operate in different markets and have fan bases that differ in size and intensity. These school differences impact the prospective value of an athlete’s NIL rights.
The rich get richer with NIL rights
The potential winners from name, image and likeness rights are programs with big loyal fan bases. In the case of football, programs like Notre Dame and Georgia are likely to be huge winners. These are already elite programs, but they have some unique marketing advantages. Georgia has a fan base that dominates the nearby Atlanta metropolitan area. Notre Dame has a national following and keeps getting invited to high profile bowls despite a couple of decades of futility.
A simple question: Would Trevor Lawrence (I know Justin Field was part of the equation) earn more at Georgia or Clemson?
In college basketball, the situation might be even more dramatic. Players like Zion Williamson develop national followings while still in high school. Where does Nike steer a future Zion? To a Final Four and ESPN fixture like Duke or the home state school South Carolina?
In general, we can expect elite athletes will increasingly gravitate towards elite programs. The rich will get richer.
The second critical part of the NIL story is the differences in how the competition is regulated in the professional versus the college ranks.
Different professional markets also offer different brand building possibilities. LeBron went to Miami partly to create a “Super Team” to build a championship resume. He then chose the Lakers to win titles, make movies and be connected to an iconic franchise.
Professionals have long had the ability to make moves in free agency that enhance their outside earning options. And just as in the college ranks, there are franchises with systematic advantages. Teams like the Knicks, Lakers, Celtics and Bulls are located in high profile markets. We even have a small trend of star players joining forces to create contenders in the “second” team in LA and New York.
We haven’t seen this type of player movement or team building in the NFL. Likely because it takes more than a core of two-three stars to create a contender.
If we don’t see a collapse in parity in the NBA or the NFL, then why worry about the college ranks?
The complication for the colleges is that, unlike the pros, the college leagues have few mechanisms for maintaining competitive balance or parity. Colleges do not have a reverse order draft whereby struggling programs get the first pick of the next generation of prospects. The University of Illinois does not get the top QB prospect in the Midwest when they finish last in the Big Ten West. Colleges do not have salary caps that limit a program’s ability to acquire elite talent. An NFL champion can’t afford a roster of all-pros. But Alabama can fill their roster with 5-star talent.
Revamping transfer rules is a long-overdue move for the NCAA
The lack of competitive balance mechanisms means that we may see feedback effects where the dominant reap further advantages from winning.
The relaxation of transfer rules is another wild card in the evolution of college sports. If NIL opportunities create incentives to play for leading programs, then transfer rules could usher in an era of “marketing or branding oriented” transfers.
Player freedom is a good thing. But, again, we can anticipate the consequences: an endless stream of athletes towards more lucrative markets.
Everything is set up for a shift towards less parity. There may be some changes in some relative positions in the hierarchy. Some of this is complicated to assess. Does USC gain from the LA market, or are college stars irrelevant in the star-filled metropolis? Do schools that dominate secondary markets without pro teams like Louisville become attractive based on local endorsements, or will the traditional elites provide more lucrative national-level deals?
How about the relative effects on basketball versus football?
Basketball is likely to see the biggest deals. The basketball recruiting system identifies and tests recruits at a very early age. Basketball stars also become true international mega-stars with massive social media presence.
Shoe companies and other popular culture-oriented businesses have every incentive to invest in building relationships with future stars. We can expect to see big public deals for “sure-thing” prospects and probably behind the scenes pushes to place players in high profile programs. Do we see efforts to create high-profile “Fab 5” like teams as high school stars band together to create marketing hype by joining forces at the collegiate level? The impact of marketing dollars on transfers and player movement may be small as the marketing power players will quickly move to the pros.
Football may see smaller effects at the transition between high school and college but more significant effects across player careers. There has already been an acceleration in high profile QB transfers. name, image and likeness opportunities will add to the incentive to switch programs. While most of the movement has been based on playing time, potential marketing dollars’ power is unknown.
The changes that NIL rights have on player incentives may have dramatic effects on how schools run their athletic programs. North Carolina made some waves by bringing in a brand consultant this past fall. This is a harbinger of what is to come. Recruiting pitches will expand from a path to the pros and educational benefits to include plans for building the athlete’s brand.
Theory and logic guide the preceding discussion and speculation. It is tough to make an analytical or evidence-based case until we have several years of data. But there are a few insights we can glean by being creative with available data. In my day job, I’m a professor specializing in sports and marketing analytics.
I did a small analysis using social media following data. I looked at the top 25 high school prospects for the class of 2019. Using Instagram Followers as a proxy for marketing appeal, I created a statistical model that related IG Followers to a player’s recruiting rank, school prestige (measured by 2018 attendance) and player performance (PPG for freshman year). Social media followers were collected about a month before the NBA draft. Interestingly, school attendance and recruiting rank were significant predictors of Followers, while collegiate scoring was not. Many caveats for this analysis, but it is a data-based demonstration of how school popularity has a more significant effect on player popularity than player performance.
As a final point, the goal of the article is to predict the likely consequences of allowing players to profit from NIL rights. The issue of fairness is neglected. If NIL rights are likely to decrease competitive balance, then what is the right approach? The right place to look is probably additional regulation of the stakeholders that are currently compensated and generating revenue. The right path to preserving parity is in creating additional revenue sharing across schools and placing caps on the coaches’ and athletic directors’ earning potential.