Iowa State developed an NIL model in which athletes could receive a full scholarship or the freedom to monetize their NIL rights, but not both
The model would inherently limit how many athletes would profit off their NIL rights, which is kind of the point
In November 2019, Iowa State Athletic Director Jamie Pollard sent Ohio State Athletic Director Gene Smith, who’s also the co-chair of the NCAA Board of Governors Federal and State Legislation Working Group, a document that summarized an NIL model developed by Iowa State, which proposed that when an athlete signs a financial aid agreement, he or she would choose to receive either room, board, books, tuition and cost-of-attendance stipends, or the freedom to monetize his or her NIL – but not both.
Out of Bounds obtained a copy of the document via a public records request. A copy of the document, which Pollard told Smith was written by the Big 12’s representative to the NCAA Division I Council and Iowa State Faculty Athletics Representative Tim Day, is available at the end of this newsletter.
“It still has several questions that would need to be vetted but wanted to give you something on paper,” Pollard wrote in an email to Smith.
“If they chose to monetize NIL,” the document stated, “they will have to pay room, board, books and tuition and will be held to the same academic standards.”
Regardless of which option athletes choose in this hypothetical model, they would receive the same level of coaching, strength and conditioning training, medical care, mental health resources, and academic and career development support, but athletes would have to fund their own college experience if they elect to monetize their NIL rights.
The document noted the value of a scholarship at Iowa State last school year was $21,940 for in-state residents, $37,128 for out-of-state residents and $40,860 for international students, which makes the financial equation even more difficult for out-of-state and international students to solve.
Hypothetically, this model means that a high-profile Iowa State athlete, potentially someone such as four-star center Xavier Foster, who’s an Oskaloosa, Iowa, native who was the Cyclones’s highest-rated men’s basketball recruit in their 2020 class, would have to bet on himself that he could make more than $22,000 from his NIL rights during the 2020-21 school year in order for him to pay for room, board, books, tuition and cost-of-attendance stipends. He could pocket anything he earned beyond that.
Or if you’re Latrell Bankston, a defensive tackle from Hutchinson (Kan.) Community College who was the second-highest rated member of Iowa State football’s 2020 class, per 247Sports, you’d hypothetically have to clear $41,000 in NIL compensation in order to make it worth turning down a full, out-of-state scholarship under this theoretical NIL model.
“This model would mean that we are NOT making a rule [that] prohibits NCAA [student-athletes] from monetizing their NIL – they absolutely CAN do that,” the document stated. “It leaves the [student-athlete] in control of that choice.”
In May, Pollard talked to the Des Moines Register, outwardly promoting market-based NIL legislation. The Des Moines Register wrote this about its conversation with Pollard:
The NCAA is poised to pass legislation that will allow student-athletes to profit off their name, image and likeness for the first time. That means endorsements like appearances, social media posts and sponsorships.
How that legislation is shaped remains to be seen. There have been a number of proposals that would curb the opportunities or levels of financial compensation student athletes-could receive. That conversation will be robust over the next months as the NCAA makes decisions.
“If it’s truly market-based,” Pollard said, “then let the market determine it.”
Except in Iowa State’s NIL model, the only college athletes who would get the chance to reap the benefits of the free market for their NIL rights would be those who think that even after starting somewhere between $10,000 and $70,000 in the red, depending on the school and the cost of attendance, that they could still finish the school year with a net profit through third-party endorsements.
There’s also a socioeconomic angle worth examining, where some athletes could choose to monetize their NIL rights, knowing that if their earnings fall short of covering the cost of attendance, their family could easily make up the difference, while other athletes might also choose to monetize their NIL rights, except the decision would be made because their families need the money that badly, whether or not the market actually says that money is there to be earned.
A study conducted by AthleticDirectorU and Navigate Research estimated that last college football season, LSU quarterback Joe Burrow could’ve earned $700,000, while Alabama’s Tua Tagovailoa had a projected earning potential of $440,000, which was just ahead of Oklahoma’s Jalen Hurts at $390,000.
On the other end of the spectrum of marketable athletes, NIL compensation could be “in the $5K-$30K range for less popular athletes,” according to the study. Depending on the definition and application of “less popular,” as well as variables such as the cost of tuition at a given school and a student’s in-state or out-of-state status, it could be a challenge under Iowa State’s proposed NIL model for anyone short of the absolute stars of college athletics to be able to afford the cost of tuition, room, board and books, and make a significant profit.
On AthleticDirectorU’s list of “some of college sports most valuable student-athletes based on yearly endorsement revenue potential (Instagram Followers x $0.80 Endorsement Value),” which included “a sampling of athletes that are top in their respective sports,” Northwestern volleyball player Alana Walker was listed at No. 18. If she maximized her projected endorsement potential of $61,000, she’d only need an additional $18,000 to cover the rest of the cost of attendance at Northwestern for the 2020-21 school year.
The document developed by Iowa State stated that every year, athletes would have the ability to change their selection from option “A” to option “B,” going from the full-scholarship option to electing to monetize their NIL rights “as the relative value of their NIL may change over their time in college.”
However, a once-a-year declaration may not benefit one-year college sensations, such as former Washington State quarterback Gardner Minshew II, who transferred from East Carolina to Pullman, Washington, only to be among the country’s most prolific passers, finish fifth in the Heisman Trophy voting and lead the Cougars to the outskirts of the College Football Playoff discussion.
At East Carolina, Minshew’s teams had gone 3-14 in the games he played in during the 2016 and 2017 seasons, and he had thrown for more than 250 yards in a game just once in his first 13 games at the FBS level, so it’s not as if Washington State enrolled the nationally known star that Minshew was when he left college.
Heck, even Burrow, who could’ve had the No. 1 earning potential of any college athlete in the country last school year, entered the 2019 season having come off a 2018 campaign in which he ranked seventh in the SEC in passing yards and 11th in completion percentage. Maybe being the starting quarterback in Baton Rouge, regardless of your past performance, grants you a baseline level of marketability and earning potential, but that’s a $40,813 bet for an out-of-state player at LSU in the 2020-21 school year.
Then if you get hurt or benched or the team starts the season with a 2-3 record, like Burrow-less LSU has done this year, does potential revenue start to dry up?
Iowa State’s NIL model could prevent transfers, athletes coming off of a redshirt season and late-blooming stars from capitalizing on their NIL rights if they’re asked to pass up on a full scholarship in hope of performing at a personally unprecedented level, such that they could pay for school and then have enough money left in the bank to make the roll of the dice worth it.
It could potentially be a tough decision for some freshmen who enter college as lower-level, blue-chip prospects, too.
Think for a minute about former Oklahoma point guard Trae Young, who was a five-star recruit but he was ranked No. 23 nationally in the 247Sports Composite rankings for the 2017 recruiting class and he was ranked No. 30 according to 247Sports’s own staff. That made him a prized recruit, sure, but it’s rare for the No. 1 recruit in the country to put up numbers like 27 points, nine assists and four rebounds per game, let alone the 20th or 30th-best prospect.
In a world where Iowa State’s NIL model existed in the 2017-18 school year, Young – as a native of Oklahoma – could’ve bet on his NIL compensation to easily surpass the $6,481.25 in total cost of attendance each semester (as of the 2020-21 school year, according to Oklahoma’s website). But if he was going to college as a non-Oklahoma resident, maybe he would have had to at least stop and think for a moment about how easily he could’ve earned enough in endorsements to clear the $28,000 owed in out-of-state tuition for the school year.
After all, AthleticDirectorU’s projected earning potential for reigning Naismith Award winner Obi Toppin was just $42,000, but he’s also a player with just over 81,000 Instagram followers whose marketability was perhaps limited by Dayton – the school and the market.
If a men’s basketball recruit of Trae Young’s level – a low-end, five-star prospect, or even a high-end, four-star recruit – could exceed the break-even point, then where’s the cutoff line such that the value of a player’s full scholarship is more than the earning potential of his NIL rights in the free market?
Is it a top-40 men’s basketball recruit? Top 75?
And how many college athletes, across all sports, would over-inflate their own marketability in the offseason and then suffer the multi-thousand-dollar consequences months later?
Iowa State’s NIL model would ask athletes to make a financial risk assessment upon enrolling, and then again every offseason after that.
Ambitious athletes who overestimate their market value, only to receive an invoice for next semester’s tuition, could potentially create the kind of locker room discord that is often used as a talking point against granting college athletes their NIL rights. There’s a lot more pressure for a 19-year-old shooting guard to get his share of shots or for a wide receiver to get enough targets when their production is potentially tied to their ability to pay for their room and board for the next four months, plus potentially taking care of family back home on top of that.
While athletes would be able to switch from option “A” to option “B” in between school years under Iowa State’s NIL model, the proposal could make it more difficult for an athlete to switch from option “B” to option “A.”
“Changing designation from (B) to (A) might demand a little more nuance,” the document stated. “We should still create an opportunity for an SA who optimistically over‐estimated the value of the NIL to move back into the scholarship pool — while protecting against attempts to front‐load a large amount of money to a freshman SA, only to have them re‐enter the scholarship pool a year later. [I would propose that SAs who chose NIL monetization would be required to document their income — heck, the IRS will make them do that. If they end up making less than the value of the scholarship that they eschewed, they would be free to move from (B) to (A). This would prevent an SA from getting $500,000 for NIL in year one, then wanting back in the scholarship pool.].”
Athletes who chose option “B” would be allowed “some kind of interaction” with an agent to advise them. The document also noted that this model wouldn’t change scholarship numbers and that it will “take a little more thought” to manage roster numbers in equivalency sports.
For elite programs in sports with smaller roster sizes, it’s fair to wonder how many scholarships schools would actually fund under Iowa State’s hypothetical NIL model. Take Duke or Kentucky men’s basketball, or South Carolina or UConn women’s basketball, for example. You could probably squint at Kentucky’s roster in a given season and see a scenario where seven or eight players elect to monetize their NIL rights, leaving only five or six players on scholarship.
Iowa State believed that the monitoring and regulation of NIL compensation – a task the document called “daunting or impossible” – would become much more manageable under this model because so few athletes would choose option “B.”
“This model also will decrease the noise and monitoring burden associated with many, many farcical ‘autograph signing’ opportunities for a few hundred dollars, and small scale dalliances in this space such as ‘autograph sessions’ and small ‘appearance’ fees,” the document stated. “Only the few SAs with real, significant NIL value will likely enter into this space. Whereas the monitoring of many, many small‐scale dalliances in NIL monetization is daunting or impossible, monitoring the integrity of NIL monetization for a much smaller number of SAs that all approximate a significant financial threshold seems much more manageable.”
Under a headline titled “The Basis and Assumptions,” the Iowa State document explained how California’s “Fair Pay to Play Act” inspired similar bills across the country and that those other bills may go into effect sooner than California Senate Bill 206.
“It would be daunting to try to preserve competitive equity throughout the NCAA in a landscape of differing, patchwork NIL laws from state to state,” the document stated. “It is most likely that current events constitute an ushering in of a new era in which something significant will change in the SA NIL landscape in the new few years; it seems almost inconceivable that the landscape will not deviate from the status quo at some point in the very near future.”
The document acknowledged that while the NCAA could obtain some kind of federal antitrust protection regarding NIL rights, the document said the protection would be “very uncertain” in preserving the status quo regarding athletes’ NIL rights and it could come with salary caps or spending caps that could fundamentally change college athletics.
“Even if we chose to pursue some form of federal antitrust protection,” the Iowa State document stated, “it seems wise to work expeditiously toward a new model in the SA NIL space that significantly protects the collegiate model and the competitive equity which are the backbone of the NCAA and NCAA Championships.”
In a common refrain that has been expressed by many administrators in college athletics, Iowa State’s document expressed that “a very small number of elite [student-athletes] who genuinely have significant value in their NIL,” and the school’s NIL model reflected that.
“Put simply, the laws run the very real risk of being illegitimately abused much more than legitimately used,” the document stated. “Our goal was to conceive an SA NIL monetization model that creates space for the few SAs with real and significant NIL value to benefit, without creating a window for farcical funneling of money to SAs with very little or no real marketable NIL value. We wanted to try to avoid the monitoring burden of assuring that institutions are not arranging for farcical ‘NIL monetization opportunities’ and the associated threat to competitive equity. We also want to protect the ability of less recognizable SAs to continue to pursue legitimate business opportunities unrelated to their NIL related to their sport.”
Separate memos obtained by Out of Bounds that were sent by the conference offices of the Atlantic 10, American Athletic Conference, America East, Big South, Ohio Valley Conference, Southern Conference, Summit League and the WAC acknowledged to varying degrees that “competitive equity,” as Iowa State put it, doesn’t really exist today, even prior to athletes being able to monetize their NIL rights.
After reading about the NIL model, Ohio State Athletic Director Gene Smith passed along Iowa State’s document to be shared on the online portal for the NCAA’s NIL working group.
“Please be sure you share with your colleagues in the Big 12,” Smith wrote back to Pollard. “These need to really emerge with conference support. I will be sure NCAA staff includes it for the feedback part of what we are doing.”
Iowa State’s NIL model would actually increase the margin between the value of what a university provides to a star athlete and the value a star athlete provides his or her university – the latter of which could include anything from increases in ticket revenue, concessions and parking, to performance-based incentives for the coaching staff, to increased donations, to an overall increase in applications to the university at large.
In fact, you could make the case an athlete who pursues option “B,” as outlined by Iowa State, might actually spend more money on the university than the university would spend on the athlete, depending on the cost of attendance.
To go back to Northwestern, which is admittedly an extreme example given its high cost of attendance, would the university be providing more than $79,000 to an athlete in coaching, nutrition, tutors and strength and conditioning programs?
Because that’s what a Northwestern athlete pursuing the monetization of his or her NIL rights would be paying the university for the full cost of attendance.
If Iowa State’s NIL model is the kind of proposal being created by a Power Five athletic department and one that appeared to be received favorably by someone in Smith’s position, then it’s even more clear that many powerbrokers in college athletics are trying to allow NIL rights in name only – no pun intended – without actually allowing a true, free market experience for all athletes.
Iowa State’s NIL model is one where colleges and universities would actually provide less to their best athletes than they do currently – one where those star athletes would have to pay the full cost of attendance, while banking on the hope that they’ll at least break even in their choice to monetize their NIL rights.
It’s a conditional tax levied in exchange for economic freedoms that athletes currently don’t have.
Iowa State’s NIL model
Recap of the last newsletter
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“The Southern Conference, whose memo wasn’t signed by one individual and which may have been the transcription of multiple perspectives from throughout the conference, proved to be an unexpected messenger of some of the most liberal NIL viewpoints of any conference.
In regards to a question about the demarcation between collegiate and professional sports, the Southern Conference’s memo stated, ‘Everything outside of paying student-athletes is already professional at the Power 5 level.’”
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