The previous nomenclature for the letters NIL meant “Zero” and was reserved for describing a zero-point total in sports such as Soccer. “Times they are a-changing.”
Today, the same letters represent the acronym NIL meaning Name, Image, and Likeness, which refers to the recent change in rules by the NCAA in how it will now allow amateur Student/Athletes to profit from their own Name, Image, and Likeness on the open market, rather than simply forfeiting those profits to the NCAA, and the colleges and universities they attend.
This recent change of heart by the NCAA is triggered by many factors, not least of which is the Supreme Court’s ruling on June 21, 2021 that the NCAA’s rules restricting education related benefits were illegal and they emphasized the point with a unanimous decision. As voiced by Judge Brett Kavanaugh, “Nowhere else in America can business get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate”. Judge Kavanaugh further expounded by saying, “Under ordinary principles of antitrust law, it is not evident why college sports should be any different. The NCAA is not above the law.”
A Few Points to Consider:
- The original defined purpose of the restrictions on Student/Athletes from profiting from their Name, Image, and Likeness was that it might unduly influence amateur sports and was based upon the prevailing belief that “college athletes are not professionals and therefore do not need to be compensated as such.”
- The NCAA, seeing the writing on the wall, have lobbied congress to pass a nationwide NIL law, to avoid a state-by-state patchwork of rules and laws. Fearing this could create an imbalance in recruiting advantages between competing colleges simply based on the state in which they reside.
- Congress has failed to pass this nationwide law. To compound this, the recent ruling by the Supreme Court forced the NCAA’s hand to enact this rule change on July 1st, 2021.
- On June 30, 2021, the governance bodies of all three divisions adopted a uniform interim policy suspending the NCAA Name, Image, and Likeness rules for all incoming and current student-athletes in all sports. This was done in hopes to avoid conflicts created by a patchwork of rules and laws being passed by the states, since Congress failed to act.
These policy changes are:
- Individuals can engage in NIL activities that are consistent with the law of the state where the school is located. Colleges and universities may be a resource for state law questions.
- College athletes who attend a school in a state without an NIL Law can engage in this type of activity without violating NCAA rules relating to Name, Image, and Likeness.
- Individuals can use a professional services provider (agent), for NIL activities.
- Student-athletes should report NIL activities consistent with state law or school and conference requirements to their school.
What Does this Mean to Student-Athletes?
If they live in a state where NIL legislation has been passed, they can profit from their Name, Image, and Likeness. If you live in a state where there are no laws on the books defining the NIL situation, it is up to the college or university to come up with a policy for the student-athletes to follow.
In the past, only the very top 1% of 1% of all athletes may have garnered attention coming out of high school. With the rules change, more student athletes in all divisions, will be seeking more regional sponsorships. Arrangements which not only make the amateur-athletes regionally and locally famous, but that will also boost the reputation of colleges these players attend, which will excite and grow their fan base.
Professional teams need stars to create buzz and excitement by signing well known and popular athletes, to put fans in the stands. They need star players to drive sales of the revenue generating items like jerseys, hats and everything that goes with it.
I suggest professional teams will begin to consider what intangible benefits a popular athlete can bring to their program, attributes beyond those of simply their physical abilities. It might be enough to tip the balance in favor of one player vs an equally qualified other player at the same position. That difference may be the reason one athlete will get a chance at the pros, while an equally talented athlete may not get that opportunity.
What Opportunities does the NIL change bring to the different Media Channels?
- Broadcast TV: It is great for mass visibility, but traditionally has been and most likely will continue to be the realm of only the very top athletes in amateur and professional sports because of the costs.
- Cable: Cable may see some additional spends for product sponsorships in regional telecasts of regional sports. Again, for most athletes outside those at the very top, most companies will not likely invest heavily in the player sponsored ads due to the cost.
- Radio: Radio is another great mass media medium and can be affordable but has the drawback of no visual image. This limits its value to the sponsoring company to the simple audio connection to the athletes in Name only while forgoing the value of their Image and Likeness. It’s not really maximizing the three elements of NIL.
- OTT & Streaming: Much like cable, these mediums will likely be utilized to promote the NIL elements and adopted early. Advertisers will be able to measure ROI for these types of investments, very quickly. Additionally, with the increase in the number of regionally streamed sporting events, that might be the key to spur growth for the medium thanks to the NIL changes.
- Direct Digital Displays: Direct On-Line and Mobile ads may see a boost from the rule change, but the challenge of the One-to-One delivery methodology of the ads, might not be the most cost-effective vehicle to deliver the broad reach many players will desire. On the other hand, 97% of adults own a cellphone and that number pushes to almost 99% for millennials with smart phones. The targeting capabilities might work to drive growth in social media followers, which if used judiciously, might even be more important for developing a player’s brand and social media presence.
- Social Media & Influencer Marketing: Both mediums should be getting a bump from the new NIL policies and laws. Especially since companies like AthleticdirectorU have started to try and figure out valuations for athletic sponsorships. In one example they relate the CPM to the number of Instagram followers an amateur athlete has. By analyzing what the world’s top 100 professional athletes make from endorsements, consisting of multiple brands, they came up with an average of .80 cents per Instagram follower. If applied in the same way to college athletes, this could be a basis for determining how much college athletes are compensated and at what rate. Both mediums deliver on the Name, Image, and Likeness aspects and additional support of Influencers this should benefit the sponsors and the sponsored by leveraging all three elements for the mutual benefit of both.
- OOH: Out of Home has some unique advantages that suit it for garnering media investment from the NIL changes. It is a great vehicle to deliver on the Name, Image, and Likeness elements. It can be regional and local (like most of the A- to B+ level athletic stars and the colleges they attend). It can reach a broad range of potential clients in an area, combining advertiser’s messages or branding along with delivering a visual image of the athlete, their name and potentially their likeness in uniform (where not restricted by the college). From a CPM basis, this medium delivers. Broad reach, frequency, and the ability not to be skipped should deliver better results than many other advertising mediums and at an overall lower cost. Since the athlete is getting their name and image out in front of not just the local fans, but in front of others outside the typical targeted demo it creates value for the athletes as well as the advertiser by casting a wider net. The players are recognized and known to a wider audience, which in turn can help grow their social media following. That following may someday contribute to getting signed when the pro’s come calling. Additionally, because of the lower entry cost to sponsor players with an OOH campaign this can bring in more local advertisers that typically never dreamed they would be able to afford a sponsorship arrangement.
The jury is still out whether this will help amateur sports or hurt it. It seems likely to be a benefit to many student athletes as they play the sports they love and will further compensate them for their time and effort, while also reducing the stranglehold held for so long by a handful of controlling institutions.
One undeniable fact is advertisers should get out ahead of this sea of change on how sponsorships are handled and proactively sign a larger number of more regional “star athletes” to sponsorship agreements. If they do, many advertising mediums should see a boost for their business. The opportunity is there, and every local sports hero with talent, drive, and dreams of playing professional sports will likely be eager to see their Name, Image, and Likeness on the big screens (billboards) or the little screens (their friend’s phones).