Wolferetti: Who is benefitting most from these NIL jersey sales? The players or the 3rd parties?

WRAL investigative journalist (yes, those still exist), Brian Murphy, wrote a really great piece for WRALSportsfan.com a few days ago.

In this piece, Murphy investigates the deals signed to have players make money off of their jersey sales, and I found it interesting. I figured you might too.

First off, let’s take a step back and realize how we got here.

The NIL (Name, Image, Likeness) laws pass prior to this season and most college sports fans either agreed with the rulings or understood the argument for them. Universities are making a killing off of college athletics, and the players aren’t seeing a dime. To be fair, they are getting a free education, however, while tuition rates are rising, they aren’t keeping up with the influx of profits that major college programs have seen thanks to these new TV/Streaming deals that have been getting signed (ie. ACC/ESPN’s deal worth $1.86 BILLION over 12 years.)

So most fans were fine with players getting a cut. However, as these rules were passed, I don’t think there was enough scrutiny on how they were structured.

For instance, they insisted that schools could not directly pay players. Which on its face, seems smart, as schools and conferences argued that it would create corruption and have schools bidding for players.

What is legal, however, is 3rd party companies (which could be companies of boosters) can pay unlimited funds to a player for ‘their services.’ And sometimes those services don’t seem to match the compensation.

Here’s one example: QB Jadan Rashada was paid a reported $9.5 million for an NIL contract associated with Miami University (note the use of associated). Sure, Rashada wasn’t paid BY Miami Univeristy. That would be illegal. However, he is being paid by a company/booster whose deal almost certainly had a stipulation that he attend Miami. And what does he have to do for the $9.5 million? It’s not fully disclosed, but by the looks of it, he’ll be doing social media ads, appearances, autograph sessions, and some marketing.

For reference, note that Tom Brady, who is arguably the best quarterback in the history of the NFL previously held a deal with Under Armor that paid him around $10 million per year.

The point is, while the schools aren’t ‘paying players to attend their schools, a lot of times someone is (but in a roundabout way). And we’re supposed to pretend that the schools/coaches don’t really have a say in this? What if a company offers a huge NIL deal to a recruit that the coach doesn’t want? How are companies targeting un-committed recruits with these NIL deals? So, we’re being asked to pretend that these major NIL deals are happening without input from the coaches or the schools? Hmm. Hard for me to believe, but it’s possible.

Either way, it is convenient for the schools, no doubt, since they aren’t on the hook for the accusations of ‘buying players.’ But it’s even more convenient that they can’t pay players because it shields players from cutting into the REAL place that name and likeness are being exploited for HUGE money, and that’s in these cash cow TV deals (which, to be fair, were signed prior to NIL ruels).

Ok. That was both a little backstory and a little ranting. But hey, this is my opinion column and that is my opinion.

But anyways, back to the jersey sales.

The way they are doing this is that players are signing licensing agreements with a 3rd party licensing company to have their names and numbers listed on the product page for a custom team jersey.

Here is what the product page looks like.

Now, before we get into NC State’s deal. Let’s see what Murphy said about UNC’s deal, which has a little more transparency in the numbers.

UNC players sign with a 3rd party company called OneTeam, which deals with NIL licensing.

“The players will receive some money, likely around $4, from each jersey sold with their name and number.” writes Murphy. He goes on to explain…

“UNC is charging Fanatics a 12% royalty fee for use of its trademarks and logos. That portion is split evenly between the university and athlete. The 12% comes from the wholesale price, not the retail figure. And of that 12%, OneTeam keeps 30%. On its website, it calls that figure customary “on the professional side” and says its for services such as managing the group licensing program, negotiating licensing deals, managing NIL approvals and protecting athlete NIL.

So if Fanatics has a wholesale price of $100 for a UNC jersey, the school’s royalty fee is $12. Of that $12, One Team collects $3.60, and $8.40 is left to be split evenly between the player and the school.”

So, let me try to do some math here.

If you buy a UNC jersey online, it’s going to cost you $130 + tax & shipping. Off the top, UNC gets 12%, and Fanatics (the company selling and shipping it) and the apparel company (Nike, Adidas) get the rest? It appears so.

After UNC takes their 12% cut, OneTeam jumps in and scoops up 30% for themselves and takes half of the rest for the players, which ends up being $4.20 for the player.

Note that OneTeam is paying the players, not the university, per the NIL rules. 

Meanwhile, at NC State, the players signed a licensing agreement with The Brandr Group (which like OneTeam, deals with NIL licensing). However, NC State wouldn’t comment on the deal’s financial breakdown, telling Murphy “NC State is not and cannot be a party to the licensing agreements between our players and The Brandr Group, so I am uncertain of the financial terms on this item.”

Brandr’s president and founder, Wesley Haynes, did say this:

“Proceeds of co-branded jerseys sold with the NIL of student-athletes who have opted into our group licensing agreement is roughly $10 to $12 a jersey for the student-athletes. This approximate payment of 10 percent of the final invoice price is aligned with existing industry standard best practices, and it represents the baseline for negotiations for our jersey programs.”

Ok, so NC State players seem to be getting a better deal, but we don’t know what Brandr takes.

That said, just look at all the hands in this pot.

– Fanatics gets a cut
– Surely Adidas/Nike gets a cut
– Brandr / OneTeam gets a cut
– The player gets a cut
– The school gets a cut

Pretty complicated situation, if you ask me.

If the schools could pay the players then you’d be able to cut out Fanatics and Brandr/One Team, leaving more money for the school and the players. Which would be good for both, right?

Well, the schools/conferences aren’t going to fight that fight, because if they are able to pay the players directly, then that’s going to open discussion about the players getting a chunk of the TV deal money, and you can bet your bottom dollar, that’s what they are going to work the hardest to protect.

But what’s the alternative? Allow the schools to pay the players? Then the richest teams would just pay kids the most money, no?

Well, and I’m just spitballing here, what if they came together and created a luxury tax, sort of like how Major League Baseball does it? Schools can pay players, and offer NIL deals, but have a soft cap.

If they go over that soft cap, then they are taxed at a huge rate on what they went over. That tax funds the smaller teams that can’t afford these huge NIL deals.

It seems to have worked in baseball. Over the past 10 years, the Royals have made the World Series twice and the Tampa Bay Rays have made it once. Those are some of the smallest payroll teams in baseball.

Either way, a lot has to be worked out. NIL is opening a lot of doors for players, and I applaud that. These kids deserve a cut.

However, the structure of NIL seems overcomplicated and allows for a lot of greedy hands to get into the pot. But with the rules, as they are, I don’t see another way. However, I’d love to see the schools and the players figure out a way to get those rules changed and to do most of this themselves, without having to get so many 3rd parties involved…

Because at the end of the day, with them involved they need enough money to go around and you know who is going to bear the brunt of that. You and me. That’s why a UNC or NC State Jersey is $130, but I could grab a Patrick Maholms jersey for $100.

That said, I just picked up a Leary jersey yesterday for $130. Don’t tell my wife.