Planet Money Indicator: NPR



SYLVIE DOUGLIS, BYLINE: NPR.

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ADRIEN MA, HOST:

Being a college athlete has always been a bit of a juggle. You have classes and books to read, workouts and plays to study. But about a year ago, Pierrick Gould and his Georgetown football teammates went ahead and added a new thing to their to-do list: making deals.

WAILIN WONG, HOST:

They thought about all the different products and services they use, then started cold calling and direct messaging these companies on social media. They were like, hey, do you want to sponsor me or, like, pay me to endorse your product?

PIERRICK GOULD: You’re just selling yourself. Like, yeah, I play for the #1 men’s soccer team in the country, that number of followers on Instagram. I love your product. And yes, sometimes it hits. Sometimes that’s not the case. I have a few friends on the team who work with this taco shop near campus. They get free food and get paid to post every month. So it’s a very good deal.

MA: Good deal? Sounds like an incredible deal. I mean, how can you beat free tacos?

GOULD: I don’t know if you’ve seen, but there are football players in some public schools now getting Lamborghinis, which is outrageous.

MA: Okay. I think that beats free tacos.

WONG: I would actually prefer the tacos.

MA: (Laughs) Whether it’s cars or tacos, for decades the National Collegiate Athletic Association, which governs college sports, has banned those kinds of deals. And then a year ago, the NCAA just changed the rules. This is THE PLANET MONEY INDICATOR. I am Adrian Ma.

WONG: And I’m Wailin Wong. A year ago, the NCAA announced that student-athletes would be allowed to earn money with their name, image and likeness, or NIL for short. Today on the show, we examine how this powerful new incentive came about and how it is reshaping the college sports industrial complex.

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MA: The NCAA was founded in 1906 to set the rules for college sports. And pretty much all the while, its rules stated that college athletes weren’t allowed to be compensated beyond the cost of certain educational things – right? – like tuition, room and board, stuff like that. This therefore meant that athletes could also not make money on their name, image and likeness, their NIL. So they couldn’t do things like accept sponsorships or enter into sponsorship deals, because that would defeat the NCAA’s mission to promote amateur athletics.

WONG: David Berri is a sports economist at Southern Utah University, and he says the notion of amateurism in college sports is ironic because, for decades, college athletes have been handed money.

DAVID BERRI: It goes back to the beginning. You go back to the 19th century, and athletes get offers, incentives to come to schools.

MA: But those prompts were kind of the hush, hush, wink, wink, nudge, nudge variety. You see, under NCAA rules, schools weren’t allowed to just pay students to play for their teams. So instead what schools have often done is allow an interested third party to do it. These were called boosters.

WONG: Boosters are basically wealthy people willing to shell out money to help attract award-winning athletes to their favorite school. And sometimes the way they did it was ethically questionable.

BERRI: If you go back in time, you have the story of athletes going to college, hired out of season by a car dealership. And the car dealership pays the athlete money, but the athlete does nothing at the car dealership.

MA: A comfortable, low-key job, payment routed through an agent, a free apartment — for decades that’s how student-athletes got paid, if at all – under the table. But this status quo would eventually be challenged. In 2009, a former college basketball player sued the NCAA for using his name, image, and likeness in a video game, and he won. More recently, state legislators have considered passing laws explicitly allowing college athletes to enter into NIL agreements. And a year ago, after decades of fighting, the NCAA threw in the towel. They said, we are changing the rules.

WONG: And that meant if you were a student athlete, you could now do sponsorship deals, endorse products, monetize your social media following.

BERRI: We’re at a point now where, instead of people handing you piles of money in a paper bag, we just sign you a contract.

MA: In recent months, these contracts have resulted in something the public has never seen before: college athletes selling products for major national brands.

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HALEY CAVINDER: What’s up, guys? It’s Haley.

HANNA CAVINDER: And Hanna.

HALEY CAVINDER: We want to come here and talk to you about Boost Mobile and the holiday season.

ALIYAH BOSTON: Did you know it was Bojangles’ 45th anniversary?

MA: It was a couple of ads featuring the names, pictures and likenesses of a few college basketball players: the Cavinder Twins and Aliyah Boston. And other high-profile college athletes also have NIL deals with national brands.

SPENCER WADSWORTH: I think it’s good that now athletes can make money on themselves. In many ways, it teaches them to be businessmen or businesswomen more quickly, and it teaches them to be more creative.

WONG: Spencer Wadsworth is an agent for a sports marketing company called Wasserman Media Group. One of his clients is Reilyn Turner, a UCLA footballer who became the first college athlete to be sponsored by Nike.

MA: Huge deal, isn’t it? Although we should say that the vast, vast majority of transactions that took place last year were not with ginormous global brands, were they? And according to a company that tracked it – a company called INFLCR, which tries to connect students with NIL offers – about half of last year’s offers were worth less than $53 – so not exactly money that life changing. On the other hand, when you add all of the trades that took place in the last year, the INFLCR estimates that college athletes collectively earned over $900 million.

WONG: That’s a lot of tacos.

MA: It’s a lot of tacos and a little less Lamborghini.

WONG: And some people have expressed concern about how this will change college athletics. For example, won’t this turn amateur athletes into quasi-professionals? But Spencer – he doesn’t think so.

WADSWORTH: Those who think this is going to ruin college sports are just clinging to an old idea. It’s not going to spoil it. If anything, this will make it bigger. It will make it better. And yes, will there be more problems to manage? Sure. But, like, I think it’s more of a–just an old way of thinking. And this is a new way.

MA: There’s another concern that’s often raised about this latest influx of money into college sports, and that is, is it going to be bad for competition, right? So the worry is that schools with the biggest recall networks will find ways to lure recruits into their school by dangling them NIL offers. And as a result, a handful of schools will suck up all the best players and end up dominating their sports.

WONG: David Barri, the sports economist, is skeptical of this argument because, on the one hand, he says, most college sports are already dominated by a handful of the same schools every year. And that was even before earning sponsorship money was even a possibility for student-athletes.

BERRI: Why would that happen? Because the athletes in each of these sports, when they were trying to choose which school to go to, they were like, look, I’m going to base it on, am I going to win or not?

WONG: Who doesn’t want to be with the winner, right? David says a handful of powerful schools attract a disproportionate amount of top sporting talent, so much so that even their reserve players are incredible athletes.

MA: That’s how it’s always been. But David now believes that athletes can make money with their names and images, many talented athletes who might have been content to warm up to the bench of a powerful big school might choose to play for a smaller school instead where they can be the star because, you know, bigger fish, smaller pond – maybe that means more potential for a juicy endorsement deal. And David thinks the effect of that over time will actually be to improve competition between schools.

BERRI: I think that’s the story. I think the story is not that the competitive balance will deteriorate. I think it will get better because athletes are making different decisions now.

WONG: Name, image and likeness money changed the incentives. For athletes like Pierrick Gould, that means learning a whole new set of skills, like, how to pitch to companies on social media.

GOULD: Some brands let me down, and it was a bit difficult, I’m not going to lie.

MA: Wait, what does it mean they let you read?

GOULD: So on Instagram DMs, you can see when someone reads your message and doesn’t reply. So there are a few brands – like, I won’t mention them because I’m not…

WONG: Eventually, he says, he made a few deals — one with a clothing brand and another with a nutritional supplement company. He gets a discount on merchandising and a small commission for customer referrals.

MA: So Pierrick isn’t making any money at the moment, and he says that’s okay because he’s still an amateur athlete. But at least now he says he enjoys being an amateur athlete who can get paid.

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MA: This episode of THE INDICATOR was produced by Corey Bridges with engineering by Debbie Daughtry. Kathryn Yang checked the facts. Viet Le is our main producer. Kate Concannon edits the show. And THE INDICATOR is an NPR production.

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