Because schools can’t pay athletes due to the NCAA’s rules, they are essentially asking fans to pick up the tab. When speaking with The Athletic, Georgia season ticket holder Brent Freeman shared his concern over the current system:
“No ill will toward the university or anything. My gripe is with the system. Asking us fans, I think, is wrong. I think it’s comical the money the NCAA brings in, and the fact they’re asking fans — and not just Georgia fans, but fans across the country — to give more, it’s just kind of comical. You can’t explain to me that this is the best way to do it.”
These donors are usually the same people who have historically given millions directly to their programs, but collectives have monetary freedom that the universities do not. Thus, athletic directors and administrators understand that money donated to a local collective often goes further.
Most programs have shifted their focus from winning the facilities arms race to securing on-field talent. Take Maryland for an example, which moved into a new $149 million football-only facility last season. As Maryland head coach Mike Locksley told The Athletic, “Unfortunately, we moved in at a time when facilities have been de-emphasized in a recruit’s mind … they’d get dressed in the trash can for $25,000.”
Speaking of recruits, that’s another pressure point for schools. They can spend big NIL dollars up front, only for their prized newcomers to transfer out or simply not live up to expectations.
Yet, there was a nationwide bump in donations to athletic departments last year, continuing an ongoing trend. From 2018-19 to 2021-22, total donations to FBS public schools increased by 20%, with expenses being up just 8% over that timespan, according to Sportico. In 2021-22, donations accounted for 24% of all revenue generated by Power Five athletic departments and 27% for Group of Five programs.
Cincinnati athletics CFO/deputy AD John Daniel told Sportico, “While there could potentially be a future correlation between collective dollars raised vs. institutional dollars raised, at this point, it’s too early to tell.”
The facts: direct-to-school donations are up, and NIL collectives are certainly earning enough to afford top athletes. The takeaway: Fans are asked to foot the bills … and fatigue is wearing in.
A lack of transparency from the collectives certainly doesn’t help, as they are not public and don’t have to divulge their finances. Additionally, the vast majority operate as legal entities that do not provide a tax break, with the IRS releasing a memo claiming that most NIL collectives who have registered as 501(c)(3) do not meet the standards of a charitable organization.
All this means that the current NIL format has turned into a results-based market. If your team hasn’t produced winning records, or at least the hope of success in the near future, the funds are going to dry up. Add in a shaky national economic outlook, and those who initially jumped into the NIL craze could rethink their investment.
Jason Belzer, the founder of Student Athlete NIL, an agency that advises around 50 collectives, said, “Those people have now had to step up to pay not only the university’s regular operating costs but now the payroll of these teams. We’re now in the third year of NIL, and a lot of schools’ donors aren’t getting a return on their investment. Before you at least got your name on the building. Now you pay for the payroll, and your team doesn’t win.”
In 2023, Belzer estimated at least 15 collectives would pay more than $10 million to football teams, with the median among power conferences being $4-5 million.
Neil Paul, a Clemson fan, had been giving money to Clemson’s athletic department for over 20 years but stopped in 2020 and never looked back. “I’ll hear friends who are donors say, ‘Well, they’re hitting us up for this, can you increase your donation by 10%’ or whatever amount,” Paul said. “Where does it end?”
Shortly.
