Why NIL has been good for college sports ... and the hurdles that remain

July 1st marks the one-year anniversary of college athletes finally being allowed to monetize their name, image and likeness (NIL), something that literally every other person in America is allowed to do without regulation or restriction. Until a year ago, college athletes were limited to a scholarship and stipend due to the NCAA's "principle of amateurism." Their sports were to be pursued for the "love of the game" and nothing more, even while the administrators of the game turned college sports into a multibillion dollar entertainment industry that generates over $19 billion per year.

A year ago, the NCAA was forced to give up on amateurism -- a principle that has never been defined -- due to numerous state laws being passed allowing athletes NIL rights and a devastating, unanimous loss before the United States Supreme Court in the Alston case in which the NCAA was again ruled to be a federal antitrust violator. Conceptually, NIL means that college athletes can now earn and accept money doing commercial endorsements, appearances and social media posts, writing books, hosting camps, giving lessons and performing various other commercial activities outside of their schools, all without running afoul of NCAA rules. Even though the NCAA was essentially forced to allow such outside compensation to athletes, after decades of spending millions upon millions of dollars in legal fees to deny athletes any economic rights, the NCAA heralded this change as a good and welcome thing ... as long as it remained limited and did not become "pay for play."

The mental gymnastics it takes to deconstruct the NCAA's arguments over what is "pay for play" and what is not will be left for another day. Here, let's examine some of the many positives NIL has brought, along with some of the ongoing challenges and perceived negatives, and determine whether those stated negatives and complaints are really so bad.

The positives

  • A wide swath of athletes are making money, and not just in the high-revenue sports

Critics of NIL predicted that only the top 1% of athletes would make any money. It was said that the star quarterback would benefit while the linemen blocking for him would be penniless and upset at the disparity. Coaches said that differing levels of compensation would lead to fights and dissension in the locker room because it just wasn't fair unless everyone was getting the same amount in the NIL space. Of course, none of that was really true.

Athletes, from star players in high-revenue sports to walk-ons to charismatic athletes in lesser-viewed sports, have found the NIL space to be quite lucrative. While there is no way to have NIL opportunities evenly apportioned among all athletes and all sports, it is clear that there have been far more athletes taking advantage of NIL than predicted by its early critics.

While there were and are questions about "fairness," whether it is truly fair for some athletes to make big money while others may not, there has never been such fairness in college athletics. In Division I athletics, less than 60% of athletes get scholarship money, and most sports have strict scholarship restrictions that do not allow the number of scholarships to approach roster limits. The very idea that the NCAA and its members really care about fairness is undercut by this undeniable fact.

  • Women's college athletes are benefiting, not being left behind

It was said early on that NIL would be unfair to female athletes and actually hurt women's sports. Early returns indicate such concerns were without merit. Paige Bueckers, the UConn star basketball player, has NIL deals with companies as varied as Gatorade and StockX. Olivia Dunne, an LSU gymnast with over 6 million social media followers, was reported to have earned over $1 million representing a clothing company. Women have thrived in the NIL space, not only earning money, but gaining a platform to advance gender equity in college sports and beyond.

Women have been active and creative in the social media sphere, and there is no indication that NIL has damaged women's sports in any way. To the contrary, all evidence indicates that NIL has enhanced women's sports and brought more attention to its best and most charismatic athletes. In addition, it has empowered female athletes and allowed some to earn money to start businesses and pay for graduate school.

  • Questions about sources of money to athletes have mostly ended... thankfully

In years past, when amateurism restrictions were the order of the day, uncomfortable questions would arise around athletes. Where did he get the money for that car? How could he afford that watch? Who paid for those tattoos? How did she pay for the plane ticket for that workout with a WNBA player that we saw on social media? Too many times in the past, such questions were asked, and compliance and NCAA inquiries would follow. And, there was the appearance of a racial component to many of the questions and inquiries. With NIL, such questions have largely gone away, and that is a major positive. Nobody cares anymore, nor should they. It is not their business, and it never was.

  • More athletes seem to be opting to stay in school

Before NIL, the choice to remain in college or join the true "pay for play" professional ranks was a black and white, all or nothing decision. An athlete could choose to stay in school and earn no money, or leave school to earn money. With NIL, players now have the option to continue their education and earn money, and many have chosen to do so. The full numbers are unclear at this stage, but the examples are many.

For those that champion education, this is a major positive. To have any athlete choose to continue his or her education, for whatever reason, can only be seen as a positive if one truly believes in education. In addition, the school benefits by having the athlete for another year.

  • Talent might be more spread out -- not concentrated

An early fear among critics of NIL was that talent would be concentrated among the best and richest programs, and that competitive balance would be compromised. Early returns seem to show that is not the case. Principles of economics dictate that compensation for athletes is more likely to spread talent out among more schools than to concentrate talent among the very few. In fact, talent was more concentrated when athletes' decisions were limited to best coach, best facilities, most exposure and the like. Now, just like for everyone else, money can be a factor in an athlete's decision -- but it is not the only factor.

Nick Saban's recent comments about Texas A&M were revealing in this area. Saban suggested that Texas A&M and even Jackson State may have "bought" recruits, implying that, without money as a factor, some of those players would have been at Alabama. What that indicates is top recruits are in play for more destinations rather than fewer. If we really believe in competitive balance, isn't that a positive?

The truth is, limiting athletes always benefited the chosen few schools and meant that the highest-spending schools were in better position to attract top recruits than the lesser-spending schools. NIL helps level that very uneven playing field. College sports has never had parity or competitive balance in any real way, and likely never will. The very idea that the only thing that leads to competitive balance is athletes remaining unpaid was, and is, absurd.

If the NCAA and its members really cared about competitive balance, they would have revenue-sharing. They don't. College sports is about a lot of different things to a lot of different people. But, it is undeniable that one of the things college sports is really about is money.

  • NIL helps athletes with financial literacy

One of the clear positives of NIL is the financial literacy for athletes that comes with the business of college sports. Now, athletes can engage in commercial activity, sign contracts, pay taxes, make financial decisions whether to save or invest, and learn important lessons about how the business world really works. It is a great opportunity for athletes to learn and for schools to educate.

In addition, since NIL, we have seen examples of athletes donating money earned to charitable causes they believe in. Such donations should not be seen as a requirement, but they are most certainly a positive of NIL.

The negatives

  • The NCAA has been diminished in the NIL saga, creating instability

Due to stunning leadership failures and a sorry lack of vision, the NCAA was caught flat-footed and without a plan for NIL. The NCAA miscalculated its position in the Alston case and was eviscerated before the United States Supreme Court. It was not just that the NCAA lost on the issue of whether it could deny athletes certain compensation tethered to education, which it did lose, it was risking the positive protections and deference it received from a 1984 Supreme Court loss in the Board of Regents case. The most recent loss in the Supreme Court obliterated some very beneficial protections the NCAA had from courts, and made it very difficult for the NCAA to act in the NIL space without running afoul of federal antitrust law, of which the NCAA has been found to be a serial violator.

The NCAA seems to be held in the lowest regard in its history at this moment. It is seen as directionless, ineffective and powerless, and it is difficult to argue otherwise. Going forward, more decisions will be made by the schools and conferences, the market competitors themselves, and the NCAA's power and autonomy in the industry will be further diminished. While there were fair criticisms of the leadership, structure and policies of the NCAA, nobody could have predicted how swiftly and unceremoniously the NCAA would fall from grace and from authority. To have a governing body and leadership held in such low regard is a negative, and it will take far more than leadership change to turn that clear negative into a positive.

  • Differing state laws help NCAA obscure the NIL message

One of the narratives heard from NCAA administrators from member institutions is that differing state laws on NIL hinder the ability to effectively compete in the college sports space, and conduct fair competition. If that were true, it would be a negative. But is it really true, or just a talking point to get Congress involved?

I believe it is the latter. Right now, NIL rules are governed by state law, or if a state does not have an NIL law on the books, it is governed by individual school or conference NIL policy. While several states have NIL laws, and they are all a bit different, is it really unworkable to have competition among schools in states with differing laws? After all, each state has differing tax laws, employment laws, building codes, laws regarding alcohol sales and consumption, and nobody in the college sports space complained that they couldn't conduct fair competition under those circumstances. It seems odd that the only thing limiting fair competition are some minor differences in state laws regarding athlete compensation. So odd that it is likely untrue. If any state feels its institutions are not as competitive due to its NIL law, it can work to change its NIL law.

  • The threat of congressional intervention and NCAA litigation is bad for college sports

The NCAA is currently lobbying Congress for legislation to preempt those differing state laws, and provide a national standard. Essentially, the NCAA is begging Congress to bail it out and provide it with an antitrust exemption to limit athletes without running afoul of federal antitrust law. Whether Congress wades into that area remains unclear. However, it is difficult to imagine any federal law structure that will ultimately be a good thing for college sports. It is seen more as a last gasp from an organization that has mismanaged and miscalculated, and sees no other viable option other than to deregulate and admit is it running a multi-billion dollar entertainment industry off of its campuses.

While the NCAA is on Capitol Hill begging, it is also continuing to litigate cases regarding athlete rights and compensation. The NCAA has spent hundreds of millions of dollars in legal fees, indicating it will pay any amount of money to keep from allowing athletes any, which is quite galling when you really think about it. The NCAA's current legal position and its position on Capitol Hill are most certainly negatives in the NIL space.

  • NIL and recruiting: the ongoing confusion over "collectives"

In finally allowing NIL rights to athletes, the stated concern was that it would find its way into recruiting, the lifeblood of any college program's success. Without question, the most valuable assets in winning are the athletes themselves. That is why recruiting is so important, and why it is so regulated by the NCAA.

The rapid rise of collectives (including what are being called "booster collectives") in the college sports space has been interesting and revealing. A collective is an organized corporation that is structurally unaffiliated with the school, yet operates to provide money and NIL opportunities to the school's athletes. Currently, NCAA guidelines of NIL prohibit boosters or collectives from offering NIL opportunities or other compensation for athletes to enroll or remain at a particular school. But some say that is exactly what is happening. From a strict rules perspective, that is a negative because it is against the current rules.

However, as a practical matter, there is no way to avoid it. The NCAA cannot stop the flow of money to where it rightfully should be. Clearly, these schools and collectives want to pay these athletes to attract them and retain their services in order to win. Will this lead to schools offering contracts to athletes someday? That is one outcome I see as not only possible, but preferable.

Some have opined that there needs to be a limit to what an athlete can by paid, citing salary caps in other major professional sports. While the NBA and the NFL have salary caps, they also have salary minimums that are collectively bargained with the players. And, a fact most often ignored, the players in those salary cap sports are able to split around 50% of league revenues. When you think about that, college sports is getting off cheap. NIL might feel quite different and represent a tectonic shift for college sports, but it is a far cry from athletes getting half of revenues.

Whether one sees NIL and the future of athlete compensation as a positive or negative, one thing is certain -- NIL is here to stay. Get used to it.