Deloitte hired to determine fair market value of NIL deals

[Sean Miller Fan]

I have been saying this for several years and it's finally happening. The Power 4 will police NIL outside of the NCAA. NIL deals affiliated with a booster or booster group have to be reported to Deloitte to determine fair market value. And the fair market value for the marketability of these players, and not their on-field performance, is pretty close to 0. Legitimate NIL deals from real businesses don't have to be reported. If Nike or Verizon or the local restaurant (which doesn't have an booster-owner) want to do an NIL deals then it doesn't have to be reported. I am sure the thought is that real companies are only going to pay fair market value (except maybe FedEx???). The ones paying far more than that are the Booster NIL funds.

Monumental shift: Power conferences, not NCAA, to control policing athlete compensation

A committee of power conference administrators took significant steps this week toward the creation of a new entity that will govern the evolving professionalized aspects of college sports.

sports.yahoo.com

 

[Upg bobcat]

I have been saying this for several years and it's finally happening. The Power 4 will police NIL outside of the NCAA. NIL deals affiliated with a booster or booster group have to be reported to Deloitte to determine fair market value. And the fair market value for the marketability of these players, and not their on-field performance, is pretty close to 0. Legitimate NIL deals from real businesses don't have to be reported. If Nike or Verizon or the local restaurant (which doesn't have an booster-owner) want to do an NIL deals then it doesn't have to be reported. I am sure the thought is that real companies are only going to pay fair market value (except maybe FedEx???). The ones paying far more than that are the Booster NIL funds.

Monumental shift: Power conferences, not NCAA, to control policing athlete compensation

A committee of power conference administrators took significant steps this week toward the creation of a new entity that will govern the evolving professionalized aspects of college sports.

sports.yahoo.com

You mentioned FedEx. I am pretty sure Miami's booster pays all those players through his company LifeWallet, and makes the kids do commercials. Of course, I'm sure those ads do next to nothing to drum up business.

In all seriousness though, if it is just the Power 4, what's the stop say UCONN or other Big East schools from keeping their boosters' NIL collective and overpaying for a few basketball players. Won't they out-compete the Power 4 pretty quickly, at least in that sport?

 

[Sean Miller Fan]

You mentioned FedEx. I am pretty sure Miami's booster pays all those players through his company LifeWallet, and makes the kids do commercials. Of course, I'm sure those ads do next to nothing to drum up business.

In all seriousness though, if it is just the Power 4, what's the stop say UCONN or other Big East schools from keeping their boosters' NIL collective and overpaying for a few basketball players. Won't they out-compete the Power 4 pretty quickly, at least in that sport?

Life Wallet would be a booster-affiliated business so paying a player $1 million to do a commercial isnt going to work. The fair market value of even a fairly recognizable player like Carson Beck doing an internet commercial for a small obscure company is probably like $5000.

As for Big East basketball schools, I dont know that answer.

 

[pittchagg]

This should work well and won’t at all be an incompetent disaster.

 

[Ski11585]

Who cares?

Will this suddenly stop SMU or other SEC boosters from overpaying to win?

 

[PittAU]

This should work well and won’t at all be an incompetent disaster.

They are all just throwing crap against the wall and seeing what sticks. Nobody has an idea of what to do now that Pandora's box has been opened.

 

[Sean Miller Fan]

This should work well and won’t at all be an incompetent disaster.

Its extremely easy to determine fair market value. These college athletes have almost no value at all, which is why you see very few "real" NIL deals. The question becomes, who sues, saying that if a booster wants to pay them $5 million to show up at his car dealership one time for 30 minutes, he should be allowed? And will they win? They will indeed win but this is the last step before fully pro

 

[Sean Miller Fan]

Who cares?

Will this suddenly stop SMU or other SEC boosters from overpaying to win?

The SEC will come down on SMU pretty hard, don't you think? They are going to policing schools like that more strictly, I'd think.

 

[pafootballguy]

This won't even last a month, it will be challenged in court and tossed out.

 

[TheWerewolfFromTwilight]

Yeah, not going to matter at all. There is no rule against paying above FMV, and these nerdy NIL fanboys love feeling like they're part of an endeavor that utilizes testosterone.

 

[pittdan77]

The people who break the rules and always angle for favoritism will be in charge of enforcing the rules. No way this goes sideways.

Also sounds a lot like collusion but what do I know.

 

[happjack]

A judge will rightfully strike this down in a heartbeat. The only way something like this can happen is if the schools let the athletes unionize and they negotiate an agreement, there's zero chance of that happening.

 

[S.R.M.]

I have been saying this for several years and it's finally happening. The Power 4 will police NIL outside of the NCAA. NIL deals affiliated with a booster or booster group have to be reported to Deloitte to determine fair market value. And the fair market value for the marketability of these players, and not their on-field performance, is pretty close to 0. Legitimate NIL deals from real businesses don't have to be reported. If Nike or Verizon or the local restaurant (which doesn't have an booster-owner) want to do an NIL deals then it doesn't have to be reported. I am sure the thought is that real companies are only going to pay fair market value (except maybe FedEx???). The ones paying far more than that are the Booster NIL funds.

Monumental shift: Power conferences, not NCAA, to control policing athlete compensation

A committee of power conference administrators took significant steps this week toward the creation of a new entity that will govern the evolving professionalized aspects of college sports.

sports.yahoo.com

Fair market value is what someone is willing to pay you. If you really want a house you can offer a lot more to ensure that you get it and not someone else. Just because an appraiser says a house is worth $350K doesn't mean that is what you pay for it. Same thing with stocks, if someone wants to pay $500 for a share of GameStop even though it has no intrinsic value the fair market value is $500. This is an exercise in futility. In a capitalist society fair market value is set by the market not an accounting firm (and I'm a CPA so nothing against Deloitte).

 

[Las Panteras]

Fair market value is what someone is willing to pay you. If you really want a house you can offer a lot more to ensure that you get it and not someone else. Just because an appraiser says a house is worth $350K doesn't mean that is what you pay for it. Same thing with stocks, if someone wants to pay $500 for a share of GameStop even though it has no intrinsic value the fair market value is $500. This is an exercise in futility. In a capitalist society fair market value is set by the market not an accounting firm (and I'm a CPA so nothing against Deloitte).

While i dont disagree, i suppose an argument can be made that like a buyer overpaying for a home (at least more than an independent appraiser reports), there would be "comps" to support a more market based value?

If Carson Beck's body of work compares to other NIL QB's who make say 200K, would that suggest Beck is worth near 200 and not 4 Mill?

In the end, my argument, as sensible as it seems will likely fall flat.

But IF some regulations came on board describing "comps" that may help.

 

[Joe the Panther Fan]

Nobody has an idea of what to do now that Pandora's box has been opened.

This is completely untrue. They know EXACTLY what they could do fix things. The problem is that the schools are trying with every fiber of their being to avoid doing what needs to be done. So they will continue to come up with schemes to avoid what needs to be done, and those will continue to get thrown out, and eventually they will get to where they need to go.

Of course when the finally get there, they will be in a much weaker position to negotiate, so they will get a much worse deal than what they could have. But hey, these people are academics. They are really smart. Just ask them.

 

[Sean Miller Fan]

Fair market value is what someone is willing to pay you. If you really want a house you can offer a lot more to ensure that you get it and not someone else. Just because an appraiser says a house is worth $350K doesn't mean that is what you pay for it. Same thing with stocks, if someone wants to pay $500 for a share of GameStop even though it has no intrinsic value the fair market value is $500. This is an exercise in futility. In a capitalist society fair market value is set by the market not an accounting firm (and I'm a CPA so nothing against Deloitte).

You are incorrect, my friend.

If a home is listed for 500K and someone bids 600K for it, the fair market value of the home is 600K because there was something about THAT house that made a reasonable buyer pay that. Now, if it was listed for 500K and they bid $1 million, then $1 million wouldn't be the fair market value because the buyer wasn't reasonable.

And the stock example is terrible because their prices are determined by demand at that time. You pay what the market says it is worth at that moment.

If Deloitte says that Carson Beck is worth $20K to local Miami businesses (where he is like the 85th most famous athlete in the city) but is being paid $4 million, then $3,880,000 is pay for play and he'd be ineligible. The P4 Police can't tell him they can't accept the money but remember, Beck would argue it's not pay for play so he can accept the $4 million and show up at Animal Shelter for 30 minutes but then the P4 Police would rule him ineligible. Just using Beck as a hypothetical because I don't even know when this goes into effect.

The P4 Police are saying you are still amateur athletes. We are giving you a portion of the revenue you generate as an amateur athlete. If you are able to sell your name, image, and likeness to a business, have at it. But if you are selling to a booster or booster-affiliated business, you are risking giving up your amateurism.

 

[pafootballguy]

You are incorrect, my friend.

If a home is listed for 500K and someone bids 600K for it, the fair market value of the home is 600K because there was something about THAT house that made a reasonable buyer pay that. Now, if it was listed for 500K and they bid $1 million, then $1 million wouldn't be the fair market value because the buyer wasn't reasonable.

And the stock example is terrible because their prices are determined by demand at that time. You pay what the market says it is worth at that moment.

If Deloitte says that Carson Beck is worth $20K to local Miami businesses (where he is like the 85th most famous athlete in the city) but is being paid $4 million, then $3,880,000 is pay for play and he'd be ineligible. The P4 Police can't tell him they can't accept the money but remember, Beck would argue it's not pay for play so he can accept the $4 million and show up at Animal Shelter for 30 minutes but then the P4 Police would rule him ineligible. Just using Beck as a hypothetical because I don't even know when this goes into effect.

The P4 Police are saying you are still amateur athletes. We are giving you a portion of the revenue you generate as an amateur athlete. If you are able to sell your name, image, and likeness to a business, have at it. But if you are selling to a booster or booster-affiliated business, you are risking giving up your amateurism.

Do you understand that this will be done the first time they try to enforce it via a massive lawsuit? The courts have already said the NCAA cannot limit NIL.

 

[Sean Miller Fan]

Do you understand that this will be done the first time they try to enforce it via a massive lawsuit? The courts have already said the NCAA cannot limit NIL.

Yes but the P4's argument is that a booster paying a kid isn't NIL. It's pay for play and they are an amateur organization which doesn't allow pay for play.

 

[cashisking884]

A judge will rightfully strike this down in a heartbeat. The only way something like this can happen is if the schools let the athletes unionize and they negotiate an agreement, there's zero chance of that happening.

It’s not really even the schools that need to let them unionize.

The problem with collective bargaining is that it’s illegal for the government to do it in many states. Especially the southern states that move the college football needle.

Collective bargaining is how we get there. But even if schools want to allow it, it’s not going to be easy for them to actually allow it.

 

[cashisking884]

Yes but the P4's argument is that a booster paying a kid isn't NIL. It's pay for play and they are an amateur organization which doesn't allow pay for play.

And not a single judge will care about that argument.

The Supreme Court has made it crystal clear: schools have no right to get together and limit the movement and benefits of players.

That isn’t an NIL vs pay to play argument.

 

[Sean Miller Fan]

And not a single judge will care about that argument.

The Supreme Court has made it crystal clear: schools have no right to get together and limit the movement and benefits of players.

That isn’t an NIL vs pay to play argument.

I believe the NCAA will lose the lawsuit to come. But a court siding with the player who brings the suit would officially make the NCAA a professional organization as pay for play would officially be legal. Could a court essentially change an organization from amateur to professional with a ruling?

 

[PittPharm2002]

This should work well and won’t at all be an incompetent disaster.

Yep
I love these consultants-
Take a huge fee to tell you things you already know .

 

[PittPharm2002]

Yes but the P4's argument is that a booster paying a kid isn't NIL. It's pay for play and they are an amateur organization which doesn't allow pay for play.

The courts have disagreed
Honestly , correctly .
Athletes trade can’t be restricted by colleges !

 

[Sean Miller Fan]

Yep
I love these consultants-
Take a huge fee to tell you things you already know .

Yea, it isn't hard to determine that a starting DT's marketability value to businesses is very close to $0.

 

[PittPharm2002]

Yea, it isn't hard to determine that a starting DT's marketability value to businesses is very close to $0.

The market rate is what he’s paid .
Same as your house , analogy .

 

[Sean Miller Fan]

The market rate is what he’s paid .
Same as your house , analogy .

If I was a billionaire and decided to pay some player $5 million to come to my kid's birthday party, that is NOT the market rate for that player's appearance fee. That is me paying him to win games for my favorite team.

 

[S.R.M.]

If I was a billionaire and decided to pay some player $5 million to come to my kid's birthday party, that is NOT the market rate for that player's appearance fee. That is me paying him to win games for my favorite team.

That is the literally the definition of fair market value "Fair market value (FMV) is the price at which an asset could be sold today between a willing buyer and seller. " A willing buyer (you) paying a willing seller (the player)

 

[Sean Miller Fan]

That is the literally the definition of fair market value "Fair market value (FMV) is the price at which an asset could be sold today between a willing buyer and seller. " A willing buyer (you) paying a willing seller (the player)

Under normal circumstances, yes but if a reasonable person or business would pay the player 10K for an appearance and you pay him $5 million, that isn't fair market value. That's you paying him 10K for the appearance and $4,990,000 to help your favorite team win. What is so difficult to understand?

 

[Upg bobcat]

Under normal circumstances, yes but if a reasonable person or business would pay the player 10K for an appearance and you pay him $5 million, that isn't fair market value. That's you paying him 10K for the appearance and $4,990,000 to help your favorite team win. What is so difficult to understand?

In terms of "fair market value," doesn't it depend on how you define the market? If Miami's booster pays that guy $5,000,001 for a birthday appearance, so more than what your booster paid, doesn't that become the new fair market value for birthday appearances of that college football player?

 

[PittPharm2002]

If I was a billionaire and decided to pay some player $5 million to come to my kid's birthday party, that is NOT the market rate for that player's appearance fee. That is me paying him to win games for my favorite team.

Except it is
Because it’s what the market saya
Same way if he offers you $5mil for your house - it’s now the market value .
that’s literally how markets operate.

 

[S.R.M.]

Under normal circumstances, yes but if a reasonable person or business would pay the player 10K for an appearance and you pay him $5 million, that isn't fair market value. That's you paying him 10K for the appearance and $4,990,000 to help your favorite team win. What is so difficult to understand?

I understand that you are paying them to play for your team and that is the primary reason for paying more than they would get from another buyer but your motivating factor doesn't negate the fact that two adults with adequate mental capacity to make decisions engaged in an arms length transaction at an agreed upon price. That is the definition of a free market. The United States still operates with free market capitalism as it's guiding economic philosophy and any attempts to infringe upon that are not likely to be allowed. Think about two waitresses, one gorgeous and personable and the other ugly and miserable. Both bring you your food and drinks but you leave the attractive personable one a bigger tip. Why you choose to pay someone an agreed upon price is irrelevant. You are conflating "amateurism" and fair market value.

 

[cashisking884]

I believe the NCAA will lose the lawsuit to come. But a court siding with the player who brings the suit would officially make the NCAA a professional organization as pay for play would officially be legal. Could a court essentially change an organization from amateur to professional with a ruling?

Maybe.
Courts can make an employment determination. It happens a lot here in Texas because Texas allows for businesses to not subscribe to WC. So sometimes I might get a case that is potentially really good (I do personal injury law). The employer might argue the person was an employee so they can’t be sued. And I might argue they weren’t, so they can be sued. And a Court will rule on it.

But I don’t know to what extent SCOTUS would do anything like that just because we’re really talking about state governments. There’s only a few Miamis and SMUs out there.
A federal court telling the state of Florida, “these people you are stating aren’t state employees, actually are.” That would be a hell of a ruling.

It makes more sense to let states not recognize them on the condition that that means they can’t regulate them.

 

[Sean Miller Fan]

In terms of "fair market value," doesn't it depend on how you define the market? If Miami's booster pays that guy $5,000,001 for a birthday appearance, so more than what your booster paid, doesn't that become the new fair market value for birthday appearances of that college football player?

No. It becomes the value of his performance on the field because to any reasonable unaffiliated business, his value is like nothing.

I dont know why this is so hard to understand. Let's say you are some ordinary employee in the job market for a 100K/year job. Company A offers you 100K, Company B offers you 95K, Company C offers you 110K. Company D offers you $10 million because your childhood best friend is the CEO. Is your fair market value $10 million or is it $110K and the extra $9,890,000 amounts to basically a gift from a lifelong friend who is helping you out?

 

[PittPharm2002]

No. It becomes the value of his performance on the field because to any reasonable unaffiliated business, his value is like nothing.

I dont know why this is so hard to understand. Let's say you are some ordinary employee in the job market for a 100K/year job. Company A offers you 100K, Company B offers you 95K, Company C offers you 110K. Company D offers you $10 million because your childhood best friend is the CEO. Is your fair market value $10 million or is it $110K and the extra $9,890,000 amounts to basically a gift from a lifelong friend who is helping you out?

Buddy -
You are twisting yourself in pretzels to attempt to believe you are the arbiter of assigning value .

To answer - if you get a job offer for 100x more - that’s your value . If you take the job , because now you have leverage.
Your value is determined by your options

 

[Sean Miller Fan]

Buddy -
You are twisting yourself in pretzels to attempt to believe you are the arbiter of assigning value .

To answer - if you get a job offer for 100x more - that’s your value . If you take the job , because now you have leverage.
Your value is determined by your options

In ordinary circumstances, I'd agree. Everyone hear is confusing fair market value with what are essentially gifts.

Let me ask you this:

If you start a company and hire your recent college grad son for $10 million/year when on the open market, maybe he can get jobs of $75K, is his fair market value $10 million or did you just give him a gift of $9,925,000 because he is your son?

 

[Rupart33]

Buddy -
You are twisting yourself in pretzels to attempt to believe you are the arbiter of assigning value .

To answer - if you get a job offer for 100x more - that’s your value . If you take the job , because now you have leverage.
Your value is determined by your options

Right, sometimes people get "above Market Value", sometimes lower. Fair market value isn't based off of just one transaction in a market.