College sports opens the door for player compensation has been saved
Cover artist: Victor Koen
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College athletics is big business, drawing in a total of nearly US$19 billion annually; some colleges and universities bring in as much as US$150 million.1 But other than the scholarships athletes receive, none of that money goes to the student-athletes who spectators pay to see: The National Collegiate Athletic Association (NCAA) has historically prohibited student-athletes from participating in any for-profit use of their name, image, or likeness, or NIL. This may be changing, as states such as California and Florida have pushed the NCAA to allow student-athletes to monetize their NIL.
And there is certainly money to be made: Star student-athletes are cultivating large social media audiences that may follow them from adolescence through college and, potentially, to professional or Olympic levels. As national, regional, and local businesses and brands look to reach younger target audiences, this new way of consuming and engaging with sports is intriguing many in the college athletics market.2
Granted, supporting student-athletes’ commercial NIL rights comes with challenges. Universities and conferences should play a new role in tracking, managing, and accounting for their student-athletes’ contracts, as well as evaluating market rate compensation. This will likely require the NCAA, conferences, and schools to record NIL-based compensation and relationships in a transaction clearinghouse while integrating other functionalities around sponsorships, licensing, and recognition. This already complicated process could get even more complicated if NIL legislation is passed in certain states but not nationally, creating a patchwork of operational and regulatory requirements and even creating unfair recruiting advantages.
If student-athletes were allowed to profit from their NIL, revenue streams would resemble those of professional athletes: engaging in brand sponsorships and advertising, signing memorabilia, creating a sports-related business, engaging in speaking arrangements, and using professional representation. An initial market analysis comparing student-athletes’ social media presence to that of professional athletes provides insights into the scale of potential earnings for this group.
Using Instagram, we analyzed followership and corresponding sponsorship amounts for professional athletes to create a predicted baseline earning potential for student-athletes. Using this analysis, we calculated that student-athletes with social media followings similar to professional athletes could collectively earn up to US$35 million per year from that one platform alone. Expanding revenue streams beyond social media could create millions more dollars in revenue. While only a relative handful of student-athletes would be likely to score large national sponsorship contracts, many more would have opportunities to monetize their audience and grow their personal brand on a regional, local, or affinity group level.3
There’s no question that allowing student-athletes to monetize their NIL would disrupt the sports, health, and wellness industry in a variety of ways. Creating these new revenue opportunities and marketing mediums can allow businesses to access new markets and new customers, and to accelerate brand adoption.
Of course, the potential ROI for brands investing in student-athletes through NIL is speculative. But as college athletics remains a sporting and marketing powerhouse within the United States, we can anticipate the returns for both student-athletes and businesses would likely create new market opportunities for brands, earning potential for student-athletes, and regulatory challenges for colleges and universities.