A promising college football recruit could be paid up to $US8 million ($A10.96m) for three years in school, in a sign of the sport entering a new era it has long needed.
The Athletic reports a five-star recruit in the class of 2023 – a high school junior, or what we’d call a Year 11 student – has signed an agreement that will see him paid $US350,000 ($A483k) immediately, with monthly payments that rise to more than $US2 million a year.
All of that will come in return for the player making public appearances and appearing in promotions on social media.
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It’s all part of a generational change in college sports, with athletes now able to sell their name, image and likeness (NIL) rights.
For decades college sport has been one of the last bastions of amateurism – much like tennis before the grand slam era. Players could be compensated with scholarships, and some minor cost-of-living payments, but that was it.
A growing consensus agreed that this was unfair. After all, college football players in particular are part of a multi-billion dollar enterprise, yet weren’t receiving those profits. Top schools rake in tens of millions of dollars and are engaged in a never-ending facilities arms race, building utterly ridiculous locker rooms because, well, what else are they going to spend the money on? Paying the players? Of course not.
College sport itself, represented by the NCAA governing body, argued allowing players to be paid was an “existential threat”. That if athletes weren’t just in it for the love of the game, it could destroy the very core of the industry.
Few agreed with this argument, and in the major sports it was an argument belied by the truth, which is that top athletes already found ways to get paid under the table. Much like legalising fringe activities in society, it turns out that when you regulate it, it’s healthier for both those engaged in it and for the governing body.
NIL doesn’t permit direct player payments, but it does allow popular athletes to profit off their fame; gymnasts with huge TikTok followings getting on billboards, unknown footballers who make game-winning plays earning a quick buck a week later.
On the whole, this has been a positive. Only the very best college athletes get to cash in on their fame at the professional level, and in many sports it’s not possible even if you’re at championship level, because there just isn’t any money in rowing, or amateur wrestling, or whatever your code is.
There is always a grey area – as you’d expect when you’re relying on the free market.
In the unnamed $11 million high schooler’s case, there are questions over how exactly the money will get to him.
Typically college boosters – rich donors – give money directly to the school, which is considered a charitable donation because the schools are designated as non-profits. As you may be aware, rich people love finding ways to minimise their tax burden, and this is one of them.
But an NIL deal is supposed to be a business expense; you are hiring your school’s star quarterback to promote your energy drink on Instagram, or whatever it may be. That payment is therefore not tax deductible.
There are concerns about schools creating NIL collectives which identify themselves as charities; these organisations raise money and give it to the athletes, who then do work with charities. So the money goes from the donor to the athlete, but is that a charitable donation, or just an NIL deal with a different shirt on?
“I guess the big catch here is…directly funding students, by itself, isn’t a charitable purpose. You can raise money for student scholarships, and that could be a charitable purpose…but you couldn’t exist as a charity with only the function of funding students,” Ohio State university professor Brian Mittendorf told newsletter Extra Points.
“In order to keep a 501c3 status, you, as a charity, have to have a charitable purpose. Doing an NIL deal, almost by definition, isn’t a charitable purpose; that’s a market exchange.”
With the NIL industry not even a year old, there are questions over whether US tax agency the IRS will end up getting involved, both with organisations and with the players themselves.
It’s all very complicated, and probably needs a clean-up. But in the end, it’s allowing players to finally be compensated for their work, in a way most of them never were.