🏅 The TikTok Ban, Non-Competes, and NIL

Hey there,

We’ve got a business-heavy edition for y’all today. There’s been two massive developments in Washington this week, both of which have NIL ramifications. The first is the federal ban on TikTok; the second is the FTC outlawing non-competes. Each one touches NIL in a crucial way – keep scrolling down to see precisely how.

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— Cole, Justin and Collin

KICK-OFF

The TikTok Ban is a Nightmare for NIL Athletes

Earlier this week, President Biden signed a bill that will force ByteDance, the parent company of TikTok, to sell the social media platform to an American-based company. If ByteDance can’t find a buyer or refuses to sell within 90 days, the app will be banned from the United States.

Now, why am I telling you this? Because the rise of NIL has coincided with, and benefitted greatly from, TikTok. Many of the college sports world’s biggest NIL sensations have built million-person followings on the app – like Livvy Dunne, LSU’s gymnastics superstar who boasts eight million followers on the app.

So what potential NIL consequences could develop from a TikTok ban? Well, banning TikTok would hurt many athletes’ NIL value significantly – especially the ones who built their platform on the app. Expect content-creating athletes to actively funnel TikTok followers toward other social media platforms, like Instagram, for the next 90 days. (More)

Texas A&M Layoffs Signals Change on the Horizon

Texas A&M laid off significant staff from their athletic department this week, including some NIL-specific personnel. In all, over a dozen officials, including high-ranking staff, were let go by the university, which cited “reorganization related to existing and emerging threats to our business model” as their reasoning.

“We are on the cusp of unprecedented change in the world of intercollegiate athletics,” the school’s newly minted athletic director Trev Alberts said, “As a department, we have to adapt and become more efficient and effective so that we are best positioned for the changes to come.” 

What are those changes? Well, it seems like Alberts is prepping for House v. NCAA to side with the athletes, meaning billions could be owed across the NCAA for violating antitrust law. In his introductory press conference, he also cited a potential $15M to $20M annual cost could be in play for athlete revenue sharing in the future. (More) 

Educational Priorities Erode as NIL Expands

The NIL/transfer portal combination has some college sports stakeholders wondering how much “college” is actually involved in college sports nowadays. With the NIL business taking the main stage, school itself has never been less of a priority.

“Quite frankly, they don't care,” one AD said about athletes prioritizing education, “They care, but [athlete] mobility and money is more important than graduation right now.”

Another piece of the puzzle involves transfer credits. With more transfers taking place, there are added complications when trying to get classes to count at the next school. Take former college QB JT Daniels as an example, who said that 60-70% of his credits didn’t transfer over from school to school. (More)

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BEST PRACTICES

Delloite Reports on University Presidents and NIL

Consulting giant Delloite just released a report on trends in Higher Education, and the changing college athletics landscape garnered an entire section of interest. Specifically, the role of university presidents and NIL was discussed at length. If you’re a university official, perhaps their guidance could be useful.

Delloite’s first recommendation was to actively include the university president in discussions around NIL, college athletics, and potential employment issues. By doing this, the school’s leadership can get a head-start on potential legal fallout from student employment, which seems to be what they’re expecting.

Another recommendation they made is to “clearly define the president’s role in collegiate athletic programs.” This helps as an accountability measure. If a school’s administrators have clearly defined roles, then accountability should be easier to target.

There’s more good stuff here – click this link to check out the full report.

DOWN TO BUSINESS

How the FTC Non-Compete Ruling Effects NIL

The TikTok ban wasn’t the only important change in Washington this week. On Tuesday, the Federal Trade Commission (FTC) ruled that non-compete employment agreements are outlawed in the US economy. According to Sportico’s Michael McCann, that ruling also has NIL ramifications. 

When athletes sign endorsement deals, non-compete clauses are almost always included to ensure the athlete doesn’t actively help the company’s competition with other endorsement partnerships. Now the FTC is saying these agreements restrict business opportunities, though, which means athletes will gain much more freedom in signing endorsement deals.

The main advantage here is that an athlete can sign with one brand in college, and it doesn’t limit their opportunities afterwords. An athlete can strike a deal with, say, Nike in college, but then Adidas in the pros. (More)

• According to Klutch’s Fara Leff, one of the biggest challenges in NIL is athletes “over-saturating their media presence.” Apparently, being in the spotlight too much is a harder concept for young people to grasp.

• A Group of Five playoff is being proposed after the mid-major conferences saw a percentage decrease in media rights money. The potential playoff would likely be backed with private equity money.

COLLECTIVE 101

Texas One Fund Partners with Ouro

The Texas One Fund – the University of Texas’ charitable NIL collective – announced a groundbreaking multi-year partnership with Ouro, a financial services and technology company founded by UT students in 1999. In addition to the monetary compensation other Texas One Fund partners offer, Ouro will provide UT student-athletes with programs designed to impart financial literacy skills.

“This is an incredible opportunity for all of our student-athletes,” said University of Texas Athletics Director Chris Del Conte. “Like all young people, they need to build financial skills and judgment, and their unique circumstances make the need especially critical.”

The program is set to launch this spring before expanding in the fall of 2024 with the start of other sports seasons. Ouro co-founder Bertrand Sosa highlighted the importance of the announcement, saying “Our collaboration with Texas One Fund is an immense source of pride and inspiration because we know first-hand the power of ‘what starts here changes the world.’” (More)

• Eli Manning is partnering with Ole Miss’ collective for what promises to be a legendary fundraising night. Tables for the event are starting at $5,000.

• Washington State’s NIL collective founder calls the entity a “labor of love.” The collective is kept afloat by unpaid volunteers, meaning basically every penny goes toward the athletes.

ATHLETE SPOTLIGHT

Rachel Glenn

Rachel Glenn is a successful sprinter from Arkansas who is preparing to make her mark on the global stage at the Paris Olympics. Rachel, alongside her savvy branding team at The Network Advisory, is not only focused on podium finishes but also on strategically navigating the realm of NIL endorsements. As the anticipation builds for her Olympic debut, Rachel is keenly aware of the unparalleled opportunity the Games offer to catapult her career to new heights. 

Rachel has already put in work in the endorsement’s arena successfully securing NIL deals with companies like Premier Sea Moss, Nova Beauty by Fashion Nova, Ryl tea and many more!

NIL BLITZ

♦️ Arkansas’ collective director lifts up the hood on his operation after the school hires John Calipari

♦️ ICON launches a business initiative to streamline Illinois’  local NIL efforts

♦️ Saint Joseph’s is ramping up their technological NIL infrastructure

♦️ In the past, NFL teams have seen multiple-time transfers as bad news — That’s not true anymore

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BATTER UP

Today’s Poll Question:

Last Edition’s Poll Results:

Could Cal Poly’s marketing program work at other schools?

• Yes - 59%

• No - 41%