How College Athletes Are Getting Paid From NIL Endorsement Deals
source link: https://www.businessinsider.com/how-college-athletes-are-getting-paid-from-nil-endorsement-deals-2021-12
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How college athletes are getting paid from brand sponsorships as NIL marketing takes off
- In 2021, student-athletes gained the right to make money from their names, images, and likenesses.
- Athletes, universities, startups, and brands have spent months learning how to best navigate the new NIL world.
- Here's a breakdown of Insider's recent coverage on student-athlete marketing and NIL activity.
On July 1, after a decades-long fight, student-athletes across the country gained the right to make money from their names, images, and likenesses (NIL) thanks to a flurry of new state laws and an NCAA policy change.
What happened next was a mad rush of student-athletes, small businesses, national brands, and startups looking to cash in.
Some athletes in widely followed sports scored deals worth five or six figures. But many of the 460,000-plus student-athletes across the US ended up working with local businesses, like restaurants, or participating in one-off marketing campaigns with bigger brands, receiving free products, gift cards, or smaller cash payments, rather than big pay days, for their NIL promotions.
In addition to brand deals, student-athletes have run branded training clinics and have been paid for appearances and autograph signings.
Unlike professional influencers, college athletes tend to have small audiences on social media. In the influencer world, these athletes would be classified as "micro" (generally under 100,000 followers) or "nano" (generally under 10,000) influencers — an area of increasing focus for marketers.
"You don't have to have 40,000 followers or even 10,000, 5,000 followers to take advantage of these [NIL] rules," Christopher Aumueller, the CEO of the athlete-marketing and brand development upstart FanWord, told Insider. "Those small deals, while they may be small in monetary value, they may go a very long ways for these student-athletes. A couple hundred dollars here and there can make a big impact for some of these young men and women."
One company that leaned into nano-influencer marketing for its first student-athlete campaign was The Vitamin Shoppe, which hired 14 college players for a campaign.
The company worked with sports-marketing company OpenSponsorship to identify 14 student-athletes across a wide range of sports, from golf and cross country to volleyball and cheerleading. All of the athletes had under 10,000 Instagram followers.
Each athlete was given about $100 worth of free products, including a set of whey and plant protein, a True Athlete performance supplement, and a shake bottle, in exchange for promoting the brand on social media.
"The micro-influencer trend has become popular because when you get people with smaller followings, with smaller networks, the things that they promote or suggest come off as more genuine," Dustin Elliott, a senior brand manager at The Vitamin Shoppe, told Insider.
In a few states, even high school athletes are starting to get in on the NIL action.
Jaden Rashada, a quarterback for Pittsburg High School in Pittsburg, California, signed in December a sponsorship deal with the recruiting app AIR.
"Who better to talk about recruiting from a marketing perspective than someone that has just gone through it or someone that is actively going through it currently," AIR's founder James Sackville told Insider.
Read more about how a high school football star landed his first brand sponsorship deal
How much student-athletes are earning from NIL
The student-athletes who are already making life-changing money tend play for Power Five schools. But for most of the country's athletes, the monetary benefits have helped more with day-to-day expenses.
"I can't tell you a single player [in the Football Championship Subdivision] that's making six figures or maybe even $50,000," North Dakota State wide receiver Phoenix Sproles told Insider in July.
Sproles said when the NIL rules were first announced, he thought he was going to "strike gold." However, after realizing that non-Power Five athletes weren't making as much, he embraced the pocket money for weekend outings.
Like Sproles, Amherst College wide receiver Jack Betts thought he would profit significantly from the NIL deals, but quickly realized that it wouldn't be easy for a Division III athlete.
However, by pitching himself to brands, Betts has been able to secure 35 NIL deals in 2022 alone. They've come with some cash and free products, and have helped build Betts' brand.
"We've been so accustomed to seeing these million-dollar deals and sure those are great, but not everybody's going to get those," Betts said. "I'm more interested in seeing the extra hundred dollars in the kid's pocket for after practice."
While many schools are being tight-lipped about how much their student-athletes are earning from NIL activities, in November, the University of Arkansas released data on how much its student-athletes had earned since July 1.
It reported that 140 of its student-athletes had participated in some type of NIL activity, working with over 170 companies on at least 300 agreements and earning an average of $4,102. Football, basketball, softball, and baseball players saw the highest volume of NIL deals at Arkansas, according to the university.
Those earnings could increase next year, as some brands are already making spending bets on the category for 2022.
Over half of the 300 brand, agency, and retail professionals surveyed by retail analytics firm Inmar Intelligence in November said they planned to spend between $50,000 and $500,000 on student-athletes next year. Only 15% of respondents said they either don't plan to invest in the category or weren't sure yet what their budget would be.
Student-athlete growing pains
Although some marketers are bullish on running student-athlete campaigns in 2022, the category comes with logistical challenges.
Colleges, student-athletes, and brands are still trying to figure out how to navigate a web of state laws and university guidelines around what players are and aren't allowed to do with their names, images, and likenesses.
Some colleges and universities have developed policies to stop student-athletes from making brand deals that would interfere with their own lucrative sponsorship contracts.
A deal requiring an athlete to "wear products competitive to Nike during team activities – ex. practices, competitions, media, team travel, community service, photo sessions, team-building activities, etc." could violate Ohio State's rules, for example. The university also said that students should not "promote beverages competitive to Coca-Cola on-campus."
"It is messy," Blake Lawrence, CEO of sports-marketing platform Opendorse, told Insider in August 2021. "If a student athlete at an Adidas school that signs a deal with, let's say, Lululemon shows up to a press conference with a Lululemon hat and shirt on, is that a violation of the team's contract with Adidas? Those are the things that people are trying to figure out."
Other universities have pushed back against Barstool Sports' student-athlete ambassador program, telling Insider the company did not have approval to use their trademarks and logos.
Brands tested their first campaigns with student-athletes during March Madness 2022
One of the first marquee marketing events for student-athletes after the NIL rule change was the 2022 March Madness tournament, which put NCAA men's and women's basketball players in the spotlight.
Some players, like Saint Peter's University guard Doug Edert and University of Connecticut's Paige Bueckers, were able to capitalize on the attention by scoring deals with brands like Buffalo Wild Wings and Chegg.
But industry insiders said the real payoff for student-athletes who gained social-media followings during the tournament could be still to come.
"If you have a really successful March Madness, you're increasing the value of your NIL," Nicholas Lord, CEO of the NIL deal-making platform NOCAP Sports, told Insider. "Then you're able to capitalize on it more in the future because you have more eyes on your social media and your persona in general."
Student-athletes are the 'best performing subset of influencers' after a year of NIL rules
A July study by influencer marketing database Captiv8 showed that student-athletes have outperformed the engagement benchmarks of standard influencers on social media through the first year of the NIL rules.
"We started to see anecdotal evidence of athletes outperforming influencers by wide margins," Captiv8's director of partnerships, Bryce Adams, told Insider. "The results of the study showed us that college athletes are the best performing subset of influencers available right now to brands."
Captiv8's study compared standard influencer benchmarks on Instagram, TikTok, and Twitter with data on 312 student-athletes. It showed that student-athletes received two times more engagement on Instagram, five times more on TikTok, and 12 times more on TikTok.
Startups and other companies are shaping the future of NIL marketing
As with any new industry that has a variety of regulations, a wave of startups and established companies have rushed in to help universities, student-athletes, and brands both succeed in the field and avoid missteps.
Some companies, like Athliance, are focused on helping universities and players handle NIL education and compliance. Others, like MOGL, are interested in building marketplaces to connect brands with student-athletes.
Learfield, a nearly 50-year-old firm that helps schools monetize their IP in categories like digital media and stadium signage, launched a series of features over the past few months to support student-athlete NIL activities.
"People keep saying it's the wild west," said Chase Garrett, CEO of the athlete-marketing platform Icon Source. "But I think 2022 is gonna be the year of adoption. People have built-in marketing budgets. They've started to find the athletes that they think they would wanna work with. They've started to learn what's market value."
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