Hey there,

Welcome to the first installment of NIL Wire All-Access. Today, we’re talking about NIL and the stock market — exploring whether there are publicly traded companies that could benefit from the booming NIL industry enough for us to invest in.

In other words, we’re creating a little NIL-driven stock portfolio. It’ll be a fun exercise — you won’t want to miss which companies made our list.

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— Cole, Justin and Collin

How’s your NIL Stock Market Exposure?

If you follow the financial sector to any degree, you know there are a few assets really “popping off” right now (or were, before August 5^th). They’re artificial intelligence-related stocks – companies like Nvidia, Taiwan Semiconductor, and Super Micro Computer.

The future is AI, so they say, and so these stocks have delivered comfortable gains over the past few years. In fact, if you got in early, these companies have delivered massive gains.

At this point, you’re probably wondering if you opened the right email. Why is NIL Wire talking about the AI stock market right now? Let me explain.

When we first started NIL Wire nearly a year ago, we knew we were ahead of the game. NIL was still in its infancy, but if you looked closely enough, you could tell that NIL was about to completely take over the college sports world. A year later, and it’s bigger than ever – and still growing rapidly.

In 2023, we got the idea to capitalize on the coming NIL boom by starting a newsletter. This time around, however, we’re thinking even bigger: The stock market. 

Is there any real way to “get in” on the NIL business early, like so many did with AI? What would it look like if you built a stock portfolio that tracked the exploding NIL market? What companies would even be worth investing in to gain NIL-sector exposure?

Those are the questions we’re exploring today as we try to build an NIL-sector stock portfolio.

(Before we get started, I need to mention for legal reasons: This is not financial advice. This is for entertainment purposes only.)

Where to start…

The first question I needed to ask myself here was pretty obvious: Are there any publicly tradeable companies that deal directly with NIL? To my knowledge, the answer is no.  

The entire NIL service provider industry is private, meaning the companies that deal directly with NIL are non-investable from a stock-market perspective. Of course, schools, collectives, and other entities directly related to NIL aren’t publicly tradeable either.

 We’re going to have to build our portfolio on exposure – investing in companies that either benefit from the widespread expansion of NIL or utilize NIL as a marketing strategy. The logic goes as such: If NIL works, then these companies should see a pretty good return on investment from their NIL marketing.

Company #1: Celsius Holdings Inc. (Nasdaq: CELH)

Celsius Holdings Inc. produces Celsius, the wildly popular energy drink that’s seemingly taken over (at least my) world in the past year. A massive portion of Celsius’ marketing money has gone to NIL, and the company even entered into a deal with Learfield last year to expand its college sports footprint.

The company has seen success with its Celsius University campaign, which also includes a paid student ambassador program to expand the company’s reach on college campuses. They’ve also been more aggressive with their NIL spend since receiving a $550 million investment from PepsiCo in 2022, which also helped the company’s distribution issues.

Some notable athletes Celsius has signed include former Michigan running back Blake Corum, recent NBA draft picks Jared McCain and Cody Williams, and USC’s freshman basketball phenom JuJu Watkins.

Their financials are solid – tons of investors are high on Celsius right now as a high-upside stock. The problem is, well, the volatility. The stock has been all over the place in 2024 after steady growth the two years prior. It’s a bit risky, but the payoff on Celsius could be big for our NIL stock portfolio.

Company #2: Crocs Inc. (Nasdaq: CROX)

Crocs Inc. is more than just Crocs by now – as of 2022, the company now owns HEYDUDE, the wildly popular shoe brand that’s been the most aggressive NIL investor to date. I’m serious – in terms of total deals, they’ve inked the most NIL partnerships of any company to date, with 78 as of May.

HEYDUDE is going beyond athlete investment, too. The company has been aggressive in forging partnerships with big-brand universities. Earlier this year they signed deals with Duke, Kentucky, North Carolina, Miami, and Texas A&M to produce a “collegiate collection” for each school.

Their partnerships with individual athletes have been equally powerhouse-heavy. A few of 2023’s best college QBs – Jalen Milroe, Quinn Ewers, and Jordan Travis – repped the brand last season, and Heisman winner Jayden Daniels even gifted the shoes to LSU staffers as an early Christmas present.

The financials for HEYDUDE are a bit harder to decipher. Most experts are bullish on Crocs itself, but it’s hard to tell whether HEYDUDE has upside, or if the brand has stagnated a bit. Their earnings report saw a significant sales slowdown for Q2.

If you want to take the hardline NIL case, maybe the slow sales have something to do with the offseason? But all of those factors are priced into the projections. Crocs still makes the cut because of HEYDUDE’s commitment to NIL, but we may need a bit more time to tell if their spend is really paying off.

Company #3: Disney (Nasdaq: DIS)

With Celsius, we’ve had NIL exposure in the beverage industry, and with HEYDUDE, we’re now in the apparel industry, too. Let’s round out the portfolio a bit by taking Disney, which owns ESPN.

No, ESPN does not sign players to NIL deals like our other two holdings. Instead, ESPN broadcasts those NIL deals to the whole world. They currently own the College Football Playoff’s broadcasting rights until 2031, which is without question the most valuable media real estate in all of college sports.

If college football keeps growing in popularity (it will), and if those players are monetizing their NIL (they will), and if NIL is an effective marketing strategy (it is!), then companies will be tearing down the door to get that ad space. There’s nothing more valuable to NIL advertisers than college sports fans, who will almost by definition be tuning into the biggest games. 

The principle we’re getting at applies to all of ESPN’s media rights, too. They broadcast basically all of the ACC’s biggest games, alongside select other conference games. As long as they’re buying the most valuable ad space in the college sports world, they’re in the NIL game.

Like Crocs, Disney’s stock is tough to place precisely in relation to NIL. Sure, they’re invested in NIL, but that’s only a fraction of the stock’s market exposure. With Disney, you’re investing in NIL… but also a lot of other stuff. Keep that in mind.

Conclusions

Like I said above, I’m not a financial advisor. This was a fun exercise more than anything – one that we’ll probably do again because it reveals how wide-ranging the NIL market is.

Just three years ago, it was ridiculous to talk about “NIL exposure” in a stock portfolio. Now, it kind of makes sense. It will likely make even more sense as time goes on, because the NIL marketplace is just getting started. But for now, maybe we’ll stick with Artificial Intelligence. 

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