Redshirt Diaries presented by Cedarbrook Golf Course - Settlement Edition III
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Welcome to the Redshirt Diaries special editions with the settlement. The House vs NCAA as you all know will change the way college athletics is funded, athletes are compensated and what the value of a scholarship is. I have been trying to break it all down into shorter editions focused specifically on certain aspects. I have spent time talking to people who know about this - agents, administrator types etc. - in order to bring you fresh perspectives since I am not an expert on high finance of college athletics.
Please note - I have an agent who is going to join us for a Q&A. I was trying to get him locked in for today but he had to back out so we are going to try and do it next Tuesday. As you might imagine this is a very busy time for guys in his business. I think you will like him, he is smart, direct and pulls no punches.
Today I am going to focus on two things - NIL and how this will all be affected and how are these people realistically going to actually monitor and regulate it all. In short, buckle your seat belts it will be a bumpy. bumpy ride.
OK, let's get started:
* Let's start with NIL. I am going to say it right up front - this is going to turn into a mess and it is because the NCAA has no, zero, zip, self awareness and ability to read the room. The ship has sailed on any of these futile attempts to regulate it or scale it down. It is just not going to happen without a fight and the fight, I think based on everything I have read, is already lost. It isn't quite the same law that will make the enforcement of a salary cap difficult but it is in the same family. The bottom line and underlying question is this - how can the NCAA, the newly formed College Sports Commission (which is charged with monitoring and enforcing things like NIL restrictions) or anyone else tell an athlete what his fair market value is. That is going to be the heart at every one of these challenges and honestly, I just don't know how the College Sports Commission will win in court. A car company wants to pay a kid $1 million for NIL that's his/her fair market value. The second part of it is this - athletes are charged with reporting all of their deals over $600 from third parties to NIL-Go, which is essentially a clearinghouse database. It is not terribly different from the NCAA academic clearinghouse in which all of a student's information is entered and then they must be approved and cleared in order to participate. In this case all of the details are entered, it will be reviewed/audited by Deloitte and then either approved (cleared) or rejected. That is reasonable and guess what - if the NCAA had gone this route initially they would probably have no issues or legal challenges. In other words, when it became clear NIL was a fight they were going to lose, they should have instituted it with this kind of regulation and clearinghouse and got way out ahead of what has become the Wild, Wild West. They didn't, they were not proactive, they were reactive and since they were reactive they are now trying to tell people who already have $1 million deals in place that they need to be reviewed and regulated. It is going to be very, very hard for them to win these fights. That's especially true since the standard the clearinghouse will use when reviewing each deal is does it have "a valid business purpose and fall within a reasonable range of compensation." Again, it is going to be very hard for the CSC, the clearinghouse or anyone else to make that determination without falling into some real legal gray areas. The Supreme Court has already ruled against the NCAA on several huge antitrust cases and I think with that precedent being set, there is no way that players whose deals are rejected by the clearinghouse won't eventually get paid after they win in court. The biggest joke is that the people of Deloitte have said that had this clearinghouse been in place the last few years, as much as 70 percent of the NIL deals would have been rejected. Good luck on that. Again, this is going to be the biggest sticking point of all this settlement stuff because it is another attempt to monitor and/or limit the amount of money an athlete can make in what should be a free market.
The second part of it is this - who is going to monitor and regulate every single athlete to make sure every single deal has been reported to the clearinghouse? The New York Times wrote a great piece "the return of the bag man" and it addressed this very subject. First off, what is going to happen if a kid doesn't report every deal he has? And who is going to report it? Well, the number one and overwhelming thoughts about it all is that this will lead to all kinds of off the record deals, behind the scenes deals, backdoor deals - aka back to the bag men. And what is the penalty going to be if they don't report it? Will the team be penalized and if so will the penalties be as much of a joke as they have been in the past? You look at all the teams that got caught cheating and then look at the success they had and tell me if a few lost scholarships and maybe a lost bowl game or something was worth it. UConn is the poster child for this - Jim Calhoun cheated his ass off, was funneling money to AAU programs through those exhibition games against Marathon Oil and whatnot and yet he built his program into one of the best in the country. Why? Because winning breeds more winning and also because the rewards of cheating were always greater than the risks of getting caught.
Monday there was a press conference of the five league commissioners. Here is the money graph for me from the Associated Press article....
ACC commissioner Jim Phillips, who spoke Monday on a Zoom news conference with fellow commissioners Greg Sankey (SEC), Tony Petitti (Big Ten), Brett Yormark (Big 12) and Teresa Gould (Pac-12), said they've all had ideas (about how to enforce and regulate the NIL), but nothing they're "ready to come forward with." Ultimately, Phillips said, the rules and boundaries will be under Seeley's purview.
"We're in the process of developing some of those rules and structure and overall implementation of that," Phillips said. "Now that we have Bryan (Seely, the new czar of the CSC) on board, I think we'll be able to move a little bit quicker. But we want to get this right. It's one of those areas that until you have somebody leading the College Sports Commission, it's difficult to get together with that individual and start some of that framework that will be in place."
OK, so let's review - you got sued multiple times about a variety of salary/NIL/amateurism type issues, you lost in grand fashion almost every one. There has been a settlement in the works for at least six months now. You just formed the college sports commission and as part of the settlement threw in some rules regarding NIL AND YOU HAVE NO FIRM PLAN ON HOW TO IMPLEMENT THEM AND/OR ENFORCE THEM????
Maybe I am out of line but how in the world is this possible? How can they be this incompetent? How can they STILL be this reactive and way behind the tides that are changing. I just don't understand it but this is where we are. So yes, players must report their NIL deals over $600, or maybe they don't. And if they don't there will be penalties but nobody can tell us what they are so maybe there won't be. I mean, I wish I was writing fiction but I am not, I am telling you like it is.
I had one agent tell me that the "bag man" thing will absolutely begin to happen again but it will be different. It will be through off the record NIL deals and at the end of the day the schools that have always found their way around the rules will be the ones who get ahead. If Heather was still around I could tell you unequivocally that there would be no gray areas at Pitt as she was a compliance person at heart and that made it difficult for the coaches to maneuver around at times. Allen Greene has SEC roots so I am hopeful that he understands the gray areas and why they need to exist.
Either way, this NIL fight is going to be very interesting to watch as agents are chomping at the bit to blow them up. One thing that did happen was NIL agents had about a three-hour window Friday between when the Settlement was signed, sealed and delivered and when it officially became the law so there were a bunch of deals done before this whole regulation by Deloitte clearinghouse started at midnight that night. The deals that are done are done and grandfathered in but every new deal must be reported.
* Tomorrow I am going to tackle the latest craze - the private equity investment into college athletics.
Please note - I have an agent who is going to join us for a Q&A. I was trying to get him locked in for today but he had to back out so we are going to try and do it next Tuesday. As you might imagine this is a very busy time for guys in his business. I think you will like him, he is smart, direct and pulls no punches.
Today I am going to focus on two things - NIL and how this will all be affected and how are these people realistically going to actually monitor and regulate it all. In short, buckle your seat belts it will be a bumpy. bumpy ride.
OK, let's get started:
* Let's start with NIL. I am going to say it right up front - this is going to turn into a mess and it is because the NCAA has no, zero, zip, self awareness and ability to read the room. The ship has sailed on any of these futile attempts to regulate it or scale it down. It is just not going to happen without a fight and the fight, I think based on everything I have read, is already lost. It isn't quite the same law that will make the enforcement of a salary cap difficult but it is in the same family. The bottom line and underlying question is this - how can the NCAA, the newly formed College Sports Commission (which is charged with monitoring and enforcing things like NIL restrictions) or anyone else tell an athlete what his fair market value is. That is going to be the heart at every one of these challenges and honestly, I just don't know how the College Sports Commission will win in court. A car company wants to pay a kid $1 million for NIL that's his/her fair market value. The second part of it is this - athletes are charged with reporting all of their deals over $600 from third parties to NIL-Go, which is essentially a clearinghouse database. It is not terribly different from the NCAA academic clearinghouse in which all of a student's information is entered and then they must be approved and cleared in order to participate. In this case all of the details are entered, it will be reviewed/audited by Deloitte and then either approved (cleared) or rejected. That is reasonable and guess what - if the NCAA had gone this route initially they would probably have no issues or legal challenges. In other words, when it became clear NIL was a fight they were going to lose, they should have instituted it with this kind of regulation and clearinghouse and got way out ahead of what has become the Wild, Wild West. They didn't, they were not proactive, they were reactive and since they were reactive they are now trying to tell people who already have $1 million deals in place that they need to be reviewed and regulated. It is going to be very, very hard for them to win these fights. That's especially true since the standard the clearinghouse will use when reviewing each deal is does it have "a valid business purpose and fall within a reasonable range of compensation." Again, it is going to be very hard for the CSC, the clearinghouse or anyone else to make that determination without falling into some real legal gray areas. The Supreme Court has already ruled against the NCAA on several huge antitrust cases and I think with that precedent being set, there is no way that players whose deals are rejected by the clearinghouse won't eventually get paid after they win in court. The biggest joke is that the people of Deloitte have said that had this clearinghouse been in place the last few years, as much as 70 percent of the NIL deals would have been rejected. Good luck on that. Again, this is going to be the biggest sticking point of all this settlement stuff because it is another attempt to monitor and/or limit the amount of money an athlete can make in what should be a free market.
The second part of it is this - who is going to monitor and regulate every single athlete to make sure every single deal has been reported to the clearinghouse? The New York Times wrote a great piece "the return of the bag man" and it addressed this very subject. First off, what is going to happen if a kid doesn't report every deal he has? And who is going to report it? Well, the number one and overwhelming thoughts about it all is that this will lead to all kinds of off the record deals, behind the scenes deals, backdoor deals - aka back to the bag men. And what is the penalty going to be if they don't report it? Will the team be penalized and if so will the penalties be as much of a joke as they have been in the past? You look at all the teams that got caught cheating and then look at the success they had and tell me if a few lost scholarships and maybe a lost bowl game or something was worth it. UConn is the poster child for this - Jim Calhoun cheated his ass off, was funneling money to AAU programs through those exhibition games against Marathon Oil and whatnot and yet he built his program into one of the best in the country. Why? Because winning breeds more winning and also because the rewards of cheating were always greater than the risks of getting caught.
Monday there was a press conference of the five league commissioners. Here is the money graph for me from the Associated Press article....
ACC commissioner Jim Phillips, who spoke Monday on a Zoom news conference with fellow commissioners Greg Sankey (SEC), Tony Petitti (Big Ten), Brett Yormark (Big 12) and Teresa Gould (Pac-12), said they've all had ideas (about how to enforce and regulate the NIL), but nothing they're "ready to come forward with." Ultimately, Phillips said, the rules and boundaries will be under Seeley's purview.
"We're in the process of developing some of those rules and structure and overall implementation of that," Phillips said. "Now that we have Bryan (Seely, the new czar of the CSC) on board, I think we'll be able to move a little bit quicker. But we want to get this right. It's one of those areas that until you have somebody leading the College Sports Commission, it's difficult to get together with that individual and start some of that framework that will be in place."
OK, so let's review - you got sued multiple times about a variety of salary/NIL/amateurism type issues, you lost in grand fashion almost every one. There has been a settlement in the works for at least six months now. You just formed the college sports commission and as part of the settlement threw in some rules regarding NIL AND YOU HAVE NO FIRM PLAN ON HOW TO IMPLEMENT THEM AND/OR ENFORCE THEM????
Maybe I am out of line but how in the world is this possible? How can they be this incompetent? How can they STILL be this reactive and way behind the tides that are changing. I just don't understand it but this is where we are. So yes, players must report their NIL deals over $600, or maybe they don't. And if they don't there will be penalties but nobody can tell us what they are so maybe there won't be. I mean, I wish I was writing fiction but I am not, I am telling you like it is.
I had one agent tell me that the "bag man" thing will absolutely begin to happen again but it will be different. It will be through off the record NIL deals and at the end of the day the schools that have always found their way around the rules will be the ones who get ahead. If Heather was still around I could tell you unequivocally that there would be no gray areas at Pitt as she was a compliance person at heart and that made it difficult for the coaches to maneuver around at times. Allen Greene has SEC roots so I am hopeful that he understands the gray areas and why they need to exist.
Either way, this NIL fight is going to be very interesting to watch as agents are chomping at the bit to blow them up. One thing that did happen was NIL agents had about a three-hour window Friday between when the Settlement was signed, sealed and delivered and when it officially became the law so there were a bunch of deals done before this whole regulation by Deloitte clearinghouse started at midnight that night. The deals that are done are done and grandfathered in but every new deal must be reported.
* Tomorrow I am going to tackle the latest craze - the private equity investment into college athletics.
