NCAA set to allow direct payments to athletes

[goody2012]

Determining the intent is problematic though, as the intent is to pay to play. Proving it is difficult.

In this situation they're evaluating the market value of the NIL, not pay to play. You have plenty of other comparable situations for just the marketing valuation.

 

[isufbcurt]

Buyer and seller have to both behave in their own best interests, paying $5,000 for $125 worth of services is not a rational decision.

That's not for someone who isn't party to the transaction to decide.

If the W2 for the 10th person is $3 million compared to $50k each for the other 9, then paying $5k for the tax return is no issue for them at all and the FV they are willing to pay.

 

[Jer]

Obviously a lot of nothing unless/until there are more legal clarifications.

The big thing that people keep forgetting is that there can be a CBA or salary cap, but it will be nearly impossible to get any legal ability to limit a player's actual NIL money. They can cap what a school or entity could pay them for going to their school and/or playing the sport, but NIL in it's true form is really sponsorship deals.

The NBA can limit how much Lebron makes with the Lakers, but they can't control how much Nike pays him to represent them. I don't see a legal way to limit that. And while I hate NIL as it stands in every way possible, I think there is going to be a lot of things preventing the progress we really want.

 

[goody2012]

That's not for someone who isn't party to the transaction to decide.

If the W2 for the 10th person is $3 million compared to $50k each for the other 9, then paying $5k for the tax return is no issue for them at all and the FV they are willing to pay.

If the service provided is the same and the 10th person is aware of the others only paying $125, paying $5k is not in the best interest of the 10th person, which makes it not FMV.

This isn't an opinion, look up any definition of fair market value.

 

[cykadelic2]

Obviously a lot of nothing unless/until there are more legal clarifications.

The big thing that people keep forgetting is that there can be a CBA or salary cap, but it will be nearly impossible to get any legal ability to limit a player's actual NIL money. They can cap what a school or entity could pay them for going to their school and/or playing the sport, but NIL in it's true form is really sponsorship deals.

The NBA can limit how much Lebron makes with the Lakers, but they can't control how much Nike pays him to represent them. I don't see a legal way to limit that. And while I hate NIL as it stands in every way possible, I think there is going to be a lot of things preventing the progress we really want.

The House Settlement will not be capping True NIL in the process of attempting to eliminate Pay for Play direct from boosters and collectives.

 

[aeroclone]

Obviously a lot of nothing unless/until there are more legal clarifications.

The big thing that people keep forgetting is that there can be a CBA or salary cap, but it will be nearly impossible to get any legal ability to limit a player's actual NIL money. They can cap what a school or entity could pay them for going to their school and/or playing the sport, but NIL in it's true form is really sponsorship deals.

The NBA can limit how much Lebron makes with the Lakers, but they can't control how much Nike pays him to represent them. I don't see a legal way to limit that. And while I hate NIL as it stands in every way possible, I think there is going to be a lot of things preventing the progress we really want.

The difference is, Nike is a legitimate business and has financial reasons to make sure what they pay LeBron makes sense relative to the value LeBron endorsement provides. NIL collectives don't uave the business need to keep payments in line.

Can you imagine NIL in the pros? The LA collective out there collecting donations from Lakers fans to funnel money to their players above and beyond the team contracts to encourage players to stay in LA or for free agents to join. It sounds really dumb. But that is exactly where college is at.

 

[simply1]

The difference is, Nike is a legitimate business and has financial reasons to make sure what they pay LeBron makes sense relative to the value LeBron endorsement provides. NIL collectives don't uave the business need to keep payments in line.

Can you imagine NIL in the pros? The LA collective out there collecting donations from Lakers fans to funnel money to their players above and beyond the team contracts to encourage players to stay in LA or for free agents to join. It sounds really dumb. But that is exactly where college is at.

It’s interesting, they could offer more to say SGA if he’d move to a bigger market for more exposure I assume.

 

[jbhtexas]

Yes of course. It's an advertising expense.

For example when my CPA business writes my racing business a advertising check, it's an expense for the CPA business and income to the racing business. No different than if I paid for advertising on a billboard or a tv commercial.

At what value does the IRS start to question the amount as a legit expense? Or, from a business perspective, what value would make the business concerned about triggering an audit?

 

[agrabes]

They can manage because no franchise is bigger than the league itself, and are worth much less without the brand of being an NFL or NBA franchise.

There are enough franchises that don’t want Dallas or LA to use their brand advantage to circumvent the salary cap that they can enforce and get what they want in the CBA.

Actual NIL is more valuable for sponsors if a player is on a team like the Dallas Cowboys or Lakers, but the biggest brand is still the NFL and NBA, and the league strong enough to not allow those franchises to gain too much of an advantage. Although EVERYONE benefits from the league doing well in ratings, so finding a tenable compromise possible

Not true in college. There isn’t a greater good, because top schools are the top brands. Until the NIL of the schools themselves is sold in long term contracts to an investor that aggregates, it is a prisoners dilemma, corrupt arms race

In college, a top player is worth more to companies if at big brand schools.

Good luck not allowing companies like Nike or Adidas or ESPN or NBC to protect their interests by helping a Ohio St or ND football, or Duke or KU basketball, or certain conferences, to get the best players in what is kind of a vertically integrated production chain

There's a lot of talk in this thread and (IMO) a lot of bad logic being used, but ultimately this is what's going to be the real issue.

If Jim-Bob's Car Dealership in Columbus, Ohio wants to give the OSU quarterback $100M for appearing in a local commercial while any other local celebrity could get $10k, that's going to be stopped. This idea that there cannot possibly be any regulation of what fair market value is by anyone in any context if there's a willing buyer and seller is ridiculous. If that were the case, think about how easy it would be to launder money or commit any kind of fraud. There is a ton of precedent for this kind of thing.

Now - what will not be possible to stop is as you say the Nike's and the Adidas' of the world. They can pick a small handful of college athletes to advertise for them and the NIL from those deals would legitimately be worth big money. Who are they going to pick? Sure, every once in a while you may have a player like Caitlin Clark who is not from a blueblood that captures the nation's attention. Hate to use her but she's the best recent example. But most of the time, they'll just hand the money to whoever the leading scorer is at KU or Duke or Ohio State. And the rich will get richer, and there's nothing this clearinghouse would do to stop it because the NIL would be legitimate. The only good thing is, there can only be so many of those deals in a year so you probably can't cover all the bluebloods and definitely not the "Tier 2" powerhouses.

 

[WooBadger18]

There's a lot of talk in this thread and (IMO) a lot of bad logic being used, but ultimately this is what's going to be the real issue.

If Jim-Bob's Car Dealership in Columbus, Ohio wants to give the OSU quarterback $100M for appearing in a local commercial while any other local celebrity could get $10k, that's going to be stopped. This idea that there cannot possibly be any regulation of what fair market value is by anyone in any context if there's a willing buyer and seller is ridiculous. If that were the case, think about how easy it would be to launder money or commit any kind of fraud. There is a ton of precedent for this kind of thing.

Now - what will not be possible to stop is as you say the Nike's and the Adidas' of the world. They can pick a small handful of college athletes to advertise for them and the NIL from those deals would legitimately be worth big money. Who are they going to pick? Sure, every once in a while you may have a player like Caitlin Clark who is not from a blueblood that captures the nation's attention. Hate to use her but she's the best recent example. But most of the time, they'll just hand the money to whoever the leading scorer is at KU or Duke or Ohio State. And the rich will get richer, and there's nothing this clearinghouse would do to stop it because the NIL would be legitimate. The only good thing is, there can only be so many of those deals in a year so you probably can't cover all the bluebloods and definitely not the "Tier 2" powerhouses.

I think an issue with the part about the car dealership is that without new legislation, what government entity is going to care?

There definitely are limitations around fair market value, but typically it’s because the government has a reason to step in (e.g. you’re messing with the value to avoid taxes or to launder money). As long as you’re not laundering money and you’re paying your taxes, what does the government care if some rich out-of-touch ******* wants to pay you way more than anyone else to sign autographs and be in a commercial?

 

[Jer]

The difference is, Nike is a legitimate business and has financial reasons to make sure what they pay LeBron makes sense relative to the value LeBron endorsement provides. NIL collectives don't uave the business need to keep payments in line.

Can you imagine NIL in the pros? The LA collective out there collecting donations from Lakers fans to funnel money to their players above and beyond the team contracts to encourage players to stay in LA or for free agents to join. It sounds really dumb. But that is exactly where college is at.

The collectives and school payments are absolutely enforceable with the right structure and governance. Unfortunately, NIL will remain, even if it can’t be from collectives or schools directly. There is no more stopping Bob Brown from endorsing Quarterback Bob Brown from xyz, nor is there capping it. Not saying I like it, but it is the reality unfortunately.

 

[FinalFourCy]

There's a lot of talk in this thread and (IMO) a lot of bad logic being used, but ultimately this is what's going to be the real issue.

If Jim-Bob's Car Dealership in Columbus, Ohio wants to give the OSU quarterback $100M for appearing in a local commercial while any other local celebrity could get $10k, that's going to be stopped. This idea that there cannot possibly be any regulation of what fair market value is by anyone in any context if there's a willing buyer and seller is ridiculous. If that were the case, think about how easy it would be to launder money or commit any kind of fraud. There is a ton of precedent for this kind of thing.

Now - what will not be possible to stop is as you say the Nike's and the Adidas' of the world. They can pick a small handful of college athletes to advertise for them and the NIL from those deals would legitimately be worth big money. Who are they going to pick? Sure, every once in a while you may have a player like Caitlin Clark who is not from a blueblood that captures the nation's attention. Hate to use her but she's the best recent example. But most of the time, they'll just hand the money to whoever the leading scorer is at KU or Duke or Ohio State. And the rich will get richer, and there's nothing this clearinghouse would do to stop it because the NIL would be legitimate. The only good thing is, there can only be so many of those deals in a year so you probably can't cover all the bluebloods and definitely not the "Tier 2" powerhouses.

NFTs and trading cards are basically NIL. It’s going to be very costly to keep out big NIL, which is generally from the most powerful schools.

Plus, if the illegitimate NIL doesn’t push a school above the sharing cap, it likely also won’t be pursued by the Clearinghouse (why eat up that time and costs going after those, when it would be fairly easy to launder those inducement deals as revenue sharing).

Which means the Clearinghouse will be inherently discriminate and inconsistent…which is a slippery slope and legal precedent problem

 

[Mr Janny]

There's a lot of talk in this thread and (IMO) a lot of bad logic being used, but ultimately this is what's going to be the real issue.

If Jim-Bob's Car Dealership in Columbus, Ohio wants to give the OSU quarterback $100M for appearing in a local commercial while any other local celebrity could get $10k, that's going to be stopped. This idea that there cannot possibly be any regulation of what fair market value is by anyone in any context if there's a willing buyer and seller is ridiculous. If that were the case, think about how easy it would be to launder money or commit any kind of fraud. There is a ton of precedent for this kind of thing.

Now - what will not be possible to stop is as you say the Nike's and the Adidas' of the world. They can pick a small handful of college athletes to advertise for them and the NIL from those deals would legitimately be worth big money. Who are they going to pick? Sure, every once in a while you may have a player like Caitlin Clark who is not from a blueblood that captures the nation's attention. Hate to use her but she's the best recent example. But most of the time, they'll just hand the money to whoever the leading scorer is at KU or Duke or Ohio State. And the rich will get richer, and there's nothing this clearinghouse would do to stop it because the NIL would be legitimate. The only good thing is, there can only be so many of those deals in a year so you probably can't cover all the bluebloods and definitely not the "Tier 2" powerhouses.

An Ohio car dealership deciding to pay a quarterback millions of dollars to appear in a commercial doesn't break a single law. And the value of that endorsement is subjective. You or I don't have to agree with it or even understand it. And so long as no laws are broken, (and Uncle Sam gets his cut) there's no legal basis to invalidate that contract. A major tenet of our entire economic system is that the value of goods and services is whatever someone is willing to pay for them.

But even if an anti trust exemption is granted by Congress and the Clearinghouse is given teeth, it's not going to prevent anything. It will just drive it back under the table, and the days of the bag man will return.

The best thing about NIL, as it exists today, is that it has obliterated the argument that players don't have much/any value on their own. The free market has doused that notion in gasoliine and set it ablaze.

 

[Mr Janny]

NFTs and trading cards are basically NIL. It’s going to be very costly to keep out big NIL, which is generally from the most powerful schools.

Plus, if the illegitimate NIL doesn’t push a school above the sharing cap, it likely also won’t be pursued by the Clearinghouse (why eat up that time and costs going after those, when it would be fairly easy to launder those inducement deals as revenue sharing).

Which means the Clearinghouse will be inherently discriminate and inconsistent…which is a slippery slope and legal precedent problem

NFTs are a perfect example of what we're talking about here. Do I think a drawing of an ape is worth millions of dollars? Not even close. Would the average person or even the vast majority of people deem it to be worth that amount of money? Very likely not. But that didn't stop someone from paying $3 million for one.

 

[FinalFourCy]

NFTs are a perfect example of what we're talking about here. Do I think a drawing of an ape is worth millions of dollars? Not even close. Would the average person or even the vast majority of people deem it to be worth that amount of money? Very likely not. But that didn't stop someone from paying $3 million for one.

Exactly. Similar to art and some sports memorabilia, NIL can be highly non-fungible and typically little true comps, with the FMV being whatever a very small amount of buyers are willing to pay

With the advent of something like NFTs, the marketplace is transparent and real, allowing the prideful winning bid to flex amongst his donor friends, albeit not quite as good as naming rights on a building- such flexes typically cost many millions, as the value is in the conspicuous consumption itself

Add a percentage of the sale going to charity, and the NIL is legitimate given that said charity isn’t getting that money without being attached to the NIL of the athlete

You can see why PE wants to control the top of college athletics. Things like FMV NIL isn’t an issue because you don’t have consumers DONATING to pick up the costs of production. They have ways to extract value out of the wealthiest fans, like seat licenses, but the owners generally keep that revenue- you don’t have quite the arms race in which they need to spend on salaries or facilities

 

[agrabes]

An Ohio car dealership deciding to pay a quarterback millions of dollars to appear in a commercial doesn't break a single law. And the value of that endorsement is subjective. You or I don't have to agree with it or even understand it. And so long as no laws are broken, (and Uncle Sam gets his cut) there's no legal basis to invalidate that contract. A major tenet of our entire economic system is that the value of goods and services is whatever someone is willing to pay for them.

But even if an anti trust exemption is granted by Congress and the Clearinghouse is given teeth, it's not going to prevent anything. It will just drive it back under the table, and the days of the bag man will return.

The best thing about NIL, as it exists today, is that it has obliterated the argument that players don't have much/any value on their own. The free market has doused that notion in gasoliine and set it ablaze.

I agree with your premise that paying above market value is not illegal, but disagree with your conclusion.

First, we should assume that some type of law is passed that means an enforceable cap can be implemented. If that doesn't happen, sure it all goes back to you can't collude to limit salaries and everything gets blown up. No point in having any conversations then.

But come on - there are so many areas in which overstating value of goods is fraud. This would be a form of fraud. There are many systems in place to deal with this - insurance claim adjusters being the easiest example. If my house gets hit by a tornado and I get a quote from you to rebuild it for double the real cost, I can't just get that double price in my insurance claim because you and I agreed to it. The insurance adjuster exists to prevent you and I from ripping off the insurance company by agreeing to an unfairly high price.

NFTs are a mix of fraud, moneylaundering, and legitimate quirky people who thought they were going to be the next real thing. And we've seen laws and regulations come in as the market matured to regulate them. Just like people are asking for with NIL.

Probably you will have bag men out there if there do become real rules. But how much? Are we going to have people giving out bags of millions of dollars? From what I've gathered, in most cases the bag men were giving out hundreds or maybe a few thousand dollars here and there. I don't think you'll have the same kind of money flying around as cash under the table. Though you might have the Cam Newton "gave money to my father's church" situation.

 

[cykadelic2]

An Ohio car dealership deciding to pay a quarterback millions of dollars to appear in a commercial doesn't break a single law. And the value of that endorsement is subjective. You or I don't have to agree with it or even understand it. And so long as no laws are broken, (and Uncle Sam gets his cut) there's no legal basis to invalidate that contract. A major tenet of our entire economic system is that the value of goods and services is whatever someone is willing to pay for them.

But even if an anti trust exemption is granted by Congress and the Clearinghouse is given teeth, it's not going to prevent anything. It will just drive it back under the table, and the days of the bag man will return.

The best thing about NIL, as it exists today, is that it has obliterated the argument that players don't have much/any value on their own. The free market has doused that notion in gasoliine and set it ablaze.

Yeah, it may not break a law (until House is codified) but the athlete would be deemed ineligible to play if the athlete/booster lose in Clearinghouse arbitration.

And yes, under the table BS will probably reappear but a potential deterrent will be House codification (don't want to break Fed regulations/laws) and the enforcement arm now having Fed subpoena power (which the NCAA never had).

 

[Mr Janny]

I agree with your premise that paying above market value is not illegal, but disagree with your conclusion.

First, we should assume that some type of law is passed that means an enforceable cap can be implemented. If that doesn't happen, sure it all goes back to you can't collude to limit salaries and everything gets blown up. No point in having any conversations then.

But come on - there are so many areas in which overstating value of goods is fraud. This would be a form of fraud. There are many systems in place to deal with this - insurance claim adjusters being the easiest example. If my house gets hit by a tornado and I get a quote from you to rebuild it for double the real cost, I can't just get that double price in my insurance claim because you and I agreed to it. The insurance adjuster exists to prevent you and I from ripping off the insurance company by agreeing to an unfairly high price.

NFTs are a mix of fraud, moneylaundering, and legitimate quirky people who thought they were going to be the next real thing. And we've seen laws and regulations come in as the market matured to regulate them. Just like people are asking for with NIL.

Probably you will have bag men out there if there do become real rules. But how much? Are we going to have people giving out bags of millions of dollars? From what I've gathered, in most cases the bag men were giving out hundreds or maybe a few thousand dollars here and there. I don't think you'll have the same kind of money flying around as cash under the table. Though you might have the Cam Newton "gave money to my father's church" situation.

Why would we assume that a law will be passed? That is far from a given, despite what some folks would have you believe.

 

[FinalFourCy]

Why would we assume that a law will be passed? That is far from a given, despite what some folks would have you believe.

It doesn’t really matter what construct- enforcement and abidement is only as good as the membership wants it to be. In this case, the P4 (really, the P2)

Just like the NCAA, the P2 isnt going to have the Clearinghouse limit their competitive advantages. NIL will be inconsistently enforced, picking on lower value schools that won’t fight back, and honest minor infractions- the easy wins giving a guise of enforcement

The Clearinghouse isn’t going after the Ohio State’s or the big TV brands. They may go after the Texas Tech and BYU types, further building a gap between the P2 and others

What are the non-P2 going to do about it? Complain to the Clearinghouse? Lol. We’re just hoping the P2 doesn’t lower our CFP and NCAA Tournament shares. Congress? Unlikely there’s much political capital gained from taking on the biggest brands.

 

[simply1]

I agree with your premise that paying above market value is not illegal, but disagree with your conclusion.

First, we should assume that some type of law is passed that means an enforceable cap can be implemented. If that doesn't happen, sure it all goes back to you can't collude to limit salaries and everything gets blown up. No point in having any conversations then.

But come on - there are so many areas in which overstating value of goods is fraud. This would be a form of fraud. There are many systems in place to deal with this - insurance claim adjusters being the easiest example. If my house gets hit by a tornado and I get a quote from you to rebuild it for double the real cost, I can't just get that double price in my insurance claim because you and I agreed to it. The insurance adjuster exists to prevent you and I from ripping off the insurance company by agreeing to an unfairly high price.

NFTs are a mix of fraud, moneylaundering, and legitimate quirky people who thought they were going to be the next real thing. And we've seen laws and regulations come in as the market matured to regulate them. Just like people are asking for with NIL.

Probably you will have bag men out there if there do become real rules. But how much? Are we going to have people giving out bags of millions of dollars? From what I've gathered, in most cases the bag men were giving out hundreds or maybe a few thousand dollars here and there. I don't think you'll have the same kind of money flying around as cash under the table. Though you might have the Cam Newton "gave money to my father's church" situation.

Who is the victim? Those other examples have obvious victims.