The Rules Don’t Matter
NIL is filled with new laws, but it’s more lawless than ever.
The NIL industry reminds me of a bad ChatGPT prompt. You try to define what you want, then the desired result isn’t what you had intended, so you try to add new conditional logic statements that either don’t do enough to correct the mistakes or fundamentally change what you set out to create—whether in a big or small way. And what you’re ultimately left with is a mashed-up hodgepodge of mostly unrecognizable nonsense.
So, as we are hopefully on the brink of eventual, final, last-minute approval of the House Settlement (a court case that the namesake, Grant House, says he’s “not informed” about and is “just the lead plaintiff”), it’s worth noting that all of these rules instituted by the NCAA and its NIL partners are mostly just guidelines—not rules at all.
Transfer Portal
If you’re a student, you can unenroll from one school and enroll at another in whatever way or timing is convenient for you. As long as your academic progress gives you enough credits to be on track for satisfactory progress toward receiving your degree, you can leave a school whenever you want.
Fair Market Value (FMV)
There are countless examples of people paying more than market value for things they want. Especially in the case of company acquisitions, you’ll typically see a premium paid to shareholders of the acquired company. But beyond that, the value of something is always based on what someone is willing to pay for it.
The trading card industry is a great example. If you bought a Jackson Holliday rookie card a couple of years ago, you were betting on him becoming a Hall of Famer. Depending on Holliday’s production and the uniqueness of the card, the FMV could be anywhere from $1 to $100,000.
Antitrust & Price Fixing
Wage fixing through schools (a.k.a. revenue sharing)… is mostly fine… maybe. But not through tax-paying companies that aren’t afforded government protections and can therefore more vigorously advocate for their own best interests.
That’s a long way of saying that while you might not expect fair market value complaints directed at the entities (colleges) saving money through such price-fixing, you can absolutely expect collectives, agencies, athletes, and potentially others to pursue legal action that aligns both with their business prospects and the best interests of their clients.
Revenue Source
There are so many ways to avoid the NCAA’s oversight of deals. What if you want to employ an athlete and pay them $250K as a consultant? Or what if you want to compensate athletes via deferred payments using a split life insurance plan—like many college coaches use to avoid heavy taxation? Or make payments via cryptocurrency, where decentralized platforms make tracking wallet owners difficult or impossible? Or even through less sophisticated means—like funneling money through a friend or family member?
The workarounds are endless.
Bluntly, the incentives to pay athletes as much as possible are enormous for many parties. And the incentives to restrict payment are minimal. So, who is going to behave more aggressively or more proactively? The questions answer themselves.