Rashada, NIL and the Gators

Let’s talk about NIL and the Gators.

Jaden Rashada’s recent recruitment has cast a somewhat negative light on NIL and the Gators. The quesiton then is why does it seem like Florida can’t keep up in those sorts of recruiting battles? That’s a question that’s been thrown my way a lot lately.

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Given the rumors flying around after the commitment of Rashada to Miami, those questions have intensified considerably. There is a lot of talk about violations, NCAA rules and dollar amounts (that can’t possibly be true) so I think it might make some sense to talk through some of these issues and see if we can’t bring some sanity to a situation that currently has precious little.

Why isn’t the NCAA enforcing its NIL rules? – Part 1

The NCAA issued a memo to member institutions in May that third-party entities (often called collectives) that broker NIL deals would not be allowed to promise those NIL deals in exchange for enrolling and playing at a particular school. At the time, the NCAA gave its enforcement staff permission to go after egregious violations.

If egregious violations sounds vague, it is. And I suspect that lack of clarity is intentional.

The reason is that the NCAA recently got blasted by the U.S. Supreme Court in NCAA vs. Alston. The case had to do with antitrust rules as applied to college sports, and Justice Brett Kavanaugh had this to say:

“Nowhere else in America can businesses 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. And under ordinary principles of antitrust law, it is not evident why college sports should be any different.”

“The NCAA is not above the law.”

The entire opinion is a useful read if you’re trying to predict what might come next with college athletics. The court didn’t remove the NCAA’s amateurism model, but it made it clear that the next time a case comes before it (or lower courts who read Kavanaugh’s opinion) that they wouldn’t get any special antitrust exemptions.

That means that it behooves the NCAA to stay out of the court system. NIL was an attempt to do just that. By allowing players to receive compensation for their name, image and likenesses, the hope was that players would be happy enough to keep out of the courts because there is a much bigger prize out there than booster dollars.

Television

The SEC generated revenue in excess of $770 million in its 2020-2021 fiscal year. That equated to $54.6 million for each school. That also was with a television contract that paid the SEC “only” $55 million annually compared to the ESPN deal that is set to kick-in in 2024 that will pay out $300 million per year.

None of that money is currently being touched by NIL.

This is the thing I’ve heard very few people talking about (though I’ve been writing about it over at Gator Country for a while). There’s something unseemly about asking your fans and/or boosters to pay for recruits when the only reason that television deal exists is because of those recruits. But so long as collectives are paying these recruits, there is zero incentive for programs to get involved. To do so would put their other revenue at risk.

On3 Sports reported that Rashada’s NIL deal with Miami was $9.5 million. Now, there’s a lot of wiggle room in those numbers for a few reasons.

One, there is zero incentive for someone who negotiated the deal to actually give out real numbers. Inflate these numbers and you hopefully inflate the next ones as well. And second, the deal highlighted by The Athletic previously this offseason had incentives to keep the player in school, which I’m sure were tiered towards the back end. In many ways it’s like the NFL where someone signs a $100 million contract but is only really guaranteed $15 million.

But let’s take that $9.5 million as gospel. Over a 4-year period, that means Rashada cost the Miami NIL coffers $2.4 million per year. That would equate to more than 4 percent of the total payout to each team for a given year. At those prices, there wouldn’t be enough money to secure a full team, but the beauty of the current system is that the conferences and programs don’t have to worry about that.

Where does the NIL money come from?

It’s clear that significant money is coming in for NIL from boosters, but the question then is how big is each team’s war chest?

Stat guru Bud Davis broke this down in the following tweet, plotting athletic profit against booster donations. Perhaps unsurprisingly, Texas A&M absolutely dominates his chart (followed by Georgia) while Alabama is middle of the pack.

📊Which CFB programs will thrive in the NIL era?

▫️Programs need to shift Booster $ from the Ath Dept to NIL
▫️X-Axis decent proxy for hypothetical NIL war chest size
▫️Y-Axis decent proxy for current war chest size
▫️Lots of Bama $ might be in Ath Dept-specific endowments😬 pic.twitter.com/KJGeep3m7r

— Joshua "Bud" Davis, PhD (@JBudDavis) April 29, 2022

But Bud’s bullet point about programs needing to shift booster dollars from the athletic department to NIL and that lots of money may be tied up in athletic department-specific endowments is a really important insight. The result is that Alabama had all of its money tied up in places where it can’t be given to a player while A&M can divert booster giving quickly to NIL applications.

That’s as good a reason as I can think of for why Lord Saban’s been squealing so much lately about Jimbo. It’s the first time his arsenal is depleted compared to his opponent since he was the head coach of the Dolphins (and we know how that ended up).

Scott Stricklin went all-in on securing donations for facilities improvements and the like, along with significant buy-outs for McElwain and Mullen. I suspect that many of those being approached for NIL at this point feel like they’ve done their part. I kind-of agree with them.

The problem is that the university can’t kick in dollars into a collective so they end up with the same problem, a lesser warchest than their rivals. It’s basically the New York Yankees and the Oakland A’s payroll out there (or perhaps the Yankees and the Red Sox since this is still the SEC).

Why isn’t the NCAA enforcing its NIL rules? – Part 2

So this gets back to why the NCAA isn’t likely to enforce its rules when it comes to inducing players to commit given some sort of agreement on NIL dollars.

“The NCAA is not above the law,” should be ringing through every college football decision-maker’s ears. That statement from Justice Kavanaugh means that the NCAA is likely to lose any lawsuit where they are found to be restricting an athlete’s earnings intentionally.

I always assumed that the Supreme Court decision was eventually going to bring about a significant coalescence of the major powers into a league separate from what we currently call FBS. That seemed on the horizon when Texas and Oklahoma decided to commit to the SEC just prior to last season and maybe it’s even closer now that USC and UCLA are headed to the Big Ten. But as I take a closer look at the incentive structures, I’m not sure major powers are going to be incentivized to break away, not when they’re not paying their own bills.

Under the current NIL system, schools are going to get the exact same payouts, but they’ve managed to convince their boosters to get into an arms race for players. The dollar amounts are high enough that the players aren’t going to risk their deals to buck the system, so the NCAA is less likely to get taken to court and open up their other revenue to the players. Coaches at various schools might complain, but their actual school administration would be foolish to do anything much given that their revenues are going to go up with essentially zero change to personnel costs.

So everyone in this endeavor is incentivized to maintain the status quo, other than just doing things that makes TV deals bigger, thus the addition of the major powers to the SEC and Big Ten. The only thing that screws it up (for the people making the big dollars) is a lawsuit.

If the rules were enforced and a hammer was dropped on a program for acting outside of those rules in a way that tamped down the NIL market for other players, I think there’s a good case to be made that they are engaging in restraint of trade. Given the precedent, that likely would be frowned upon by the courts. Perhaps more importantly, it would likely open up the other revenue sources to negotiations with the players.

And since the NIL money comes from outside the school, it doesn’t significantly impact the bottom line. Maybe that’s not true if the money that is donated to a collective would have been donated to the program prior to NIL, but compared to the TV money, it’s a fairly small deal.

So what that means is that college football is left in a weird situation where  the rules exist but there is zero enforcement mechanism.  The money is unequal because where it comes from and through what entity is just as important as how much. And you have schools that have decided to overpay early, expecting at some point for the NCAA and/or conferences to come in and essentially remove the rule separating NIL from actual playing inducement in a “clarification” after they’ve already gained that edge in recruiting.

We already saw this with the May memo from the NCAA. It was supposed to tamp this sort of thing down, but instead we’ve only seen it accelerate. I’m sure that some schools took it as a signal that thumbing their nose at the rules would just result in another sternly-worded memo and decided to take the edge while it’s there.

Takeaway

What this means for Florida is that they’re in a tough spot if they want to work within the rules. You’re not technically allowed to offer NIL benefits as an inducement to come to a school, but that pretty clearly is happening. However, because those rules are unenforceable, are you really breaking the rules if you decide to participate?

But the Gators are also in a tough spot considering their position in the SEC. More than any other, the SEC is the conference that benefits most by having the current NIL structure in place. They have the most tradition and the most rabid fan bases, along with a ton of booster money to be pointed towards NIL. It’s also the conference that gets hurt the most should TV money have to get shared with the players.

The hope in some circles was that bringing the money to the surface through NIL would eliminate the need to break the rules. We all know that college sports have been filled with black market money used for player acquisition prior to NIL, but since the NCAA says you’re not allowed to use NIL to induce players to play at your school, it essentially set up another black market.

I say this because if Anthony Richardson didn’t play football for Florida, he wouldn’t be marketable to a Gainesville, Florida audience. It is his ability to play football that makes his name and image valuable, and to ignore the connection between the two sets up the conundrum programs that want to play within the rules now find themselves.

The pressure is intense to win and recruit in college football. I suspect that Florida is going to make the decision to ignore the NCAA’s memo just like other institutions have done. That doesn’t make the Gators dirty. It is what is necessary given the constraints placed upon college football programs at the present time and weighing a cost/benefit analysis that really has no cost associated with it.

After all, the same On3 article that referenced the $9.5 million for Rashada said that he turned down $11 million from Florida. If true, that means the Gators have already decided to play the game.

They just lost this particular battle.

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