College football is America’s second most popular sport, trailing only the National Football League. The massive amounts of money it raises have brought into focus important questions about the limits of unregulated markets and the rights of labor.
Last week, hundreds of high-school athletes signed paperwork to formalize their commitment to college football programs. Ostensibly, these are amateur athletes. But many put their names to paper after receiving promises—more or less explicit—of compensation under the relatively new system of “name, image, and likeness,” or NIL, which allows college athletes to earn money without losing their college eligibility.
College coaches have complained about NIL, echoing a long tradition of opposition to athlete compensation.** **For more than 100 years, big-time college athletics have clung to the idea that athletes must be amateurs, rather than professionals. Not only could the schools not directly compensate athletes, but athletes were barred from receiving financial compensation from third parties.
These rules have been skirted since the days of leather helmets, well before college sports became a modern, big-time business. A report from the Carnegie Foundation for the Advancement of Teaching decried the influence of big money in college recruiting … in 1929.
But over the last 30 years, the business of college football has become unquestionably larger, thanks to the deregulation of television broadcasting after NCAA v. Board of Regents. Bobby Bowden became the first million-dollar college football coach in 1995. Now, thanks to skyrocketing TV rights fees, even lousy coaches are making north of $5 million. Jimbo Fisher, the head coach at Texas A&M who didn’t make a bowl game last season, has a fully-guaranteed contract worth more than $70 million.
Everybody in college sports, from the coaches to the broadcasters to the administrators, to the construction companies, was getting rich—except for the athletes. Something had to give. In 2019, California passed a law that would prohibit the NCAA from penalizing athletes who took advantage of NIL deals. Florida soon followed, then dozens of other states. Then, the Supreme Court ruled 9-0 in Alston that the NCAA was breaking antitrust law by trying to limit what schools could spend on academic spending.
By 2020, it became clear the NCAA couldn’t prohibit athletes from engaging in promotional activity without getting sued again. On July 1, 2020, the organization changed its policy, throwing open the NIL floodgates. Schools still couldn’t directly pay athletes, but athletes could now earn outside money without losing their eligibility.
In practice, there are now two kinds of NIL deals. One is centered around athletes starting businesses, teaching at camps, and engaging in promotional activities with a business that is trying to make money. The other is part of what I would call the Bagman Market. That market has absolutely nothing to do with an athlete’s marketability, and everything to do with his athletic skill. The Athletic, for example, reported that one elite high-school quarterback signed an NIL deal with a group supporting athletes at the University of Tennessee that would pay out $2 million a year, with $350,000 paid out “immediately.”
There is no high-school football player whose marketing rights are worth two million bucks, especially not one unlikely to play his first year of college. But if he lives up to his five-star billing, he could certainly provide two-million bucks’ worth of value to the Tennessee athletic department. This is a salary, disguised as a marketing deal.
These deals now run rampant in college football and basketball recruiting. Groups of boosters and donors are organizing themselves into groups called collectives, who in turn offer guaranteed payments to athletes in order to induce them to play at one school, or remain at that school. The payments are laundered through charities or autograph appearances to remain nominally compliant with NCAA guidelines, but make no mistake about it: These are talent-acquisition and -retention fees, not marketing deals.
Why act as if there’s anything wrong with a quarterback making a million bucks? After all, his head coach is making six million bucks, and his offensive coordinator is making a million. He should get some money, too.
“College sports shows what happens when markets go unregulated.”
But that doesn’t mean there aren’t problems with this current system. In fact, college sports shows what happens when markets go unregulated.
The endorsement market in professional sports is relatively formalized. If you want to be an agent that represents an athlete in the NFL or NBA, for example, you need to be certified by his union. That usually means the agent needs to have a graduate degree, pass an exam, have multiple years of negotiating experience, or otherwise prove that he is competent and trustworthy.
The salary negotiation process in the pros is also highly regulated. Player salaries are public, so athletes can have a good idea about what their labor is “worth” heading into a negotiation. The collective-bargaining agreements spell out exactly what management and labor can and can’t do. There is a process for managing disputes and a list of things that must be included in a contract. There are rules, which offer predictability and structure
The college NIL world has none of those rules. There are virtually no rules on who can serve as an agent for college athletes, meaning that there is no way to ensure that an athlete has legitimate, professional representation. Further, agents typically earn a much smaller commission on salary negotiations than they do for marketing contracts. Since college NIL deals are all technically marketing deals, even if they are functioning as salaries, college agents can collect fees north of 20 percent on all arrangements.
This new system gives enormous new power to agents, collective operators, consultants, and third parties, all at the potential expense of teenagers. The information and power imbalance is massive, which creates an incentive structure for nearly everybody, at every level, to be dishonest.
But there isn’t much the NCAA can do about it given the Supreme Court’s ruling in Alston. Any attempt to regulate the marketplace—even for the benefit of college athletes—would be seen as an illegal restriction on their market power.
The NCAA has asked the federal government for help. A national NIL bill could overrule a patchwork of state NIL laws that all differ slightly from each other, providing a national standard for what schools can and can’t do. An antitrust exemption would also allow the NCAA to enforce some of its guidelines without being sued. But multiple attempts at NIL legislation, from Republicans and Democrats, have already failed. There is no guarantee that will change in the next Congress.
It would be more honest for schools to simply pay athletes directly for their labor, just like the professionals do. It would acknowledge what has been understood by most sports fans and serious analysts: that big-time college sports are professional sports, and have been for decades. Such an admission would cut back on the power that agents and boosters have on the talent marketplace. It would also open the door to players unionizing, which would bring its own benefits.
For now though, we are left with a highly imperfect system—though better than what came before. Coaches can complain all they want. Barring outside legislative or legal challenges, this NIL world is the one we’ve got.