WARNING THIS A VERY LONG POST.
SUBJECT
How NIL can be used to improve UM’s competitive position with recruits and roster
WHY SHOULD ANYONE LISTEN TO ME?
Long time posters know much of this…I spent the years following O’Bannon in a number of conversations with legislators and interested parties about NIL. I reviewed the Rosen Plan before it was published. My professional life is spent working with university presidents/chancellors, regents/trustees, executive officers and often even athletic directors. I have communicated frequently with leadership of one of the leading NIL consulting firms since summer 2020 (one year prior to NIL start). I’ve talked in the past ~8 weeks with a UM regent, executive officer, and two leaders in the athletic department; also with the folks leading and organizing 3 different UM donor collectives (disclosure: I will be a donor to one of them and may join its leadership; not the huge one…my money hits singles and doubles not home runs. Lol.). I don’t pretend to know everything; I do know an awful lot about what’s happening at UM and elsewhere.
THESIS
Assuming UM won’t condone the use of NIL to cheat, it can still do more to embrace and promote NIL to its advantage.
CONSIDERATIONS
1) Michigan won’t condone cheating.
UM won’t look the other way if it knows of recruiting inducements or NIL agreements that fail to have a quid pro quo (something provided by the athlete in exchange for the money) or otherwise break the rules/laws.
2) Money is not infinite.
At some level, Regent Acker is correct. It will not be long-term sustainable to raise $30mm per year to land each recruiting class plus $13mm (Ryan Day’s number) per year in “base pay” (via donor collectives) to retain the roster.
3) Michigan has fundraising needs too.
If donors give money to NIL collectives *instead of* gifting it to UM as they would otherwise, that materially impacts UM’s ability to improve its facilities and technology, pay its coaches/staff, etc.
4) UM should strive to be the “leaders and best” at everything.
We want the best facilities and technology; we want to recruit and retain the best coaches, staff and athletes. We will do our reasonable best to achieve this.
AREAS FOR IMPROVEMENT
Given the above considerations - what’s reasonable? What needs to be resolved? I’ll try to take them from the most obvious/easy to perhaps the most challenging to resolve.
1) Cut the red tape.
This is plain and simple. UM’s NIL compliance regimen is more strident than most. Given UM is not a party to the agreements and that its consent shall not be unreasonably withheld, it must create a straight-forward NIL compliance process that (a) approves of agreements within 3 business days or less and (b) only flags those agreements in which rules/laws are clearly broken or skirted. On the latter, UM must begin its review from the perspective that each agreement is legal and valid as opposed to the position that each agreement must contain some broken rule/law. With nothing but respect to the lawyers on the site, if you give a lawyer a document they’ll mark it up…if you give a lawyer that same document back they’ll mark up their own mark up. UM must stop reviewing NIL agreements with a lawyer’s eye. Further, the fewer questions you ask the fewer (potentially rule breaking/skirting) answers you’ll receive. Perhaps UM should stop asking so many questions?
2) Find a way for Development and fundraising to coexist with NIL donor collectives.
There is a clear overlap between those who want to donate to UM for facilities/technology/operations and those who want to donate for NIL. UM must accept that reality and, within reason, take a less adversarial stance. A few of the questions UM should consider:
- Could a major donor collective ($100mm+) be leveraged to provide no-interest (forgivable?) loans to UM to cover fundraising shortfalls? If so, can the loans be included in the calculation of UM’s development officers’ bonuses? Should their bonus calculation be changed entirely to consider NIL donor collective fundraising and/or spend?
- Should UM share its donor list with UM-interested donor collectives? If so, under what circumstances? What thresholds for fundraising, governance and use/privacy should be met?
- Should an NIL collective donor be granted UM priority points for their donation? A few other schools are doing this and believe it is allowable because the non-profit collective’s charter states that its collective exists for the benefit of the university and its student athletes. They believe the charter allows them to provide this benefit to donors and it still keeps the school separate from being party to any agreements between the collective and the athletes.
- Bottomline…where can and should UM draw the line in promoting NIL donations without sacrificing its own ability to fund facilities, etc?
3) Adopt a mentality that toeing the line isn’t stepping across it.
- Example 1 - Paying for performance
An athlete’s NFT has value based on their popularity. Their popularity is usually a function of their performance. If a collective is willing to buy NFTs with the athlete retaining a portion of the residual revenues upon resale(s), that athlete receives more revenue the better they perform. Is performance based pricing in a UM athlete NFT marketplace pay-for-play or pay-for-NIL? They are inexorably correlated. UM may (should? must?) therefore view such a marketplace as permissible.
- Example 2 - paying for commitments
A party may be willing to pay Collins Acheampong to promote his verbal commitment. It may also wish to pay him to promote the signing of his NLI. The quid pro quo for this payment may be future appearances in a date and location of that party’s choosing - let’s say for the sake of this conversation they wanted it in October in Ann Arbor, MI. Is that party paying Collins to commit to and sign for UM? Literally by the
agreement - no. Practically by the agreement - yes. This happens in a lot of instances — Miami-interested parties tried it with Collins, for example. Should UM (must UM?) turn a blind eye to these agreements which are literally compliant but functionally/practically impermissible benefits?
- There are other examples where a literal interpretation is to UM’s benefit and UM might (should? must?) therefore ignore its practical effect.
CONCLUSION
UM has set the line of what’s reasonable to review and police too far from the actual letter of the rules/law. In an environment where there is blatant rule breaking and creative pay-for-play and pay-for-commit - 99% of which will never go punished - UM must begin loosening it’s Compliance regimen. UM will never condone cheating; it does not need to spend such considerable time, effort and energy effectively reinterpreting the rules and laws to stop it.
THANKS TO THOSE WHO BEARED WITH ME ON THIS. I LOOK FORWARD TO HEARING WHERE YOU WOULD EACH DRAW THE LINE. WHATS REASONABLE?
Next time: How I think some of this change will be made at UM. Spoiler…I’m optimistic much of this will be addressed.
SUBJECT
How NIL can be used to improve UM’s competitive position with recruits and roster
WHY SHOULD ANYONE LISTEN TO ME?
Long time posters know much of this…I spent the years following O’Bannon in a number of conversations with legislators and interested parties about NIL. I reviewed the Rosen Plan before it was published. My professional life is spent working with university presidents/chancellors, regents/trustees, executive officers and often even athletic directors. I have communicated frequently with leadership of one of the leading NIL consulting firms since summer 2020 (one year prior to NIL start). I’ve talked in the past ~8 weeks with a UM regent, executive officer, and two leaders in the athletic department; also with the folks leading and organizing 3 different UM donor collectives (disclosure: I will be a donor to one of them and may join its leadership; not the huge one…my money hits singles and doubles not home runs. Lol.). I don’t pretend to know everything; I do know an awful lot about what’s happening at UM and elsewhere.
THESIS
Assuming UM won’t condone the use of NIL to cheat, it can still do more to embrace and promote NIL to its advantage.
CONSIDERATIONS
1) Michigan won’t condone cheating.
UM won’t look the other way if it knows of recruiting inducements or NIL agreements that fail to have a quid pro quo (something provided by the athlete in exchange for the money) or otherwise break the rules/laws.
2) Money is not infinite.
At some level, Regent Acker is correct. It will not be long-term sustainable to raise $30mm per year to land each recruiting class plus $13mm (Ryan Day’s number) per year in “base pay” (via donor collectives) to retain the roster.
3) Michigan has fundraising needs too.
If donors give money to NIL collectives *instead of* gifting it to UM as they would otherwise, that materially impacts UM’s ability to improve its facilities and technology, pay its coaches/staff, etc.
4) UM should strive to be the “leaders and best” at everything.
We want the best facilities and technology; we want to recruit and retain the best coaches, staff and athletes. We will do our reasonable best to achieve this.
AREAS FOR IMPROVEMENT
Given the above considerations - what’s reasonable? What needs to be resolved? I’ll try to take them from the most obvious/easy to perhaps the most challenging to resolve.
1) Cut the red tape.
This is plain and simple. UM’s NIL compliance regimen is more strident than most. Given UM is not a party to the agreements and that its consent shall not be unreasonably withheld, it must create a straight-forward NIL compliance process that (a) approves of agreements within 3 business days or less and (b) only flags those agreements in which rules/laws are clearly broken or skirted. On the latter, UM must begin its review from the perspective that each agreement is legal and valid as opposed to the position that each agreement must contain some broken rule/law. With nothing but respect to the lawyers on the site, if you give a lawyer a document they’ll mark it up…if you give a lawyer that same document back they’ll mark up their own mark up. UM must stop reviewing NIL agreements with a lawyer’s eye. Further, the fewer questions you ask the fewer (potentially rule breaking/skirting) answers you’ll receive. Perhaps UM should stop asking so many questions?
2) Find a way for Development and fundraising to coexist with NIL donor collectives.
There is a clear overlap between those who want to donate to UM for facilities/technology/operations and those who want to donate for NIL. UM must accept that reality and, within reason, take a less adversarial stance. A few of the questions UM should consider:
- Could a major donor collective ($100mm+) be leveraged to provide no-interest (forgivable?) loans to UM to cover fundraising shortfalls? If so, can the loans be included in the calculation of UM’s development officers’ bonuses? Should their bonus calculation be changed entirely to consider NIL donor collective fundraising and/or spend?
- Should UM share its donor list with UM-interested donor collectives? If so, under what circumstances? What thresholds for fundraising, governance and use/privacy should be met?
- Should an NIL collective donor be granted UM priority points for their donation? A few other schools are doing this and believe it is allowable because the non-profit collective’s charter states that its collective exists for the benefit of the university and its student athletes. They believe the charter allows them to provide this benefit to donors and it still keeps the school separate from being party to any agreements between the collective and the athletes.
- Bottomline…where can and should UM draw the line in promoting NIL donations without sacrificing its own ability to fund facilities, etc?
3) Adopt a mentality that toeing the line isn’t stepping across it.
- Example 1 - Paying for performance
An athlete’s NFT has value based on their popularity. Their popularity is usually a function of their performance. If a collective is willing to buy NFTs with the athlete retaining a portion of the residual revenues upon resale(s), that athlete receives more revenue the better they perform. Is performance based pricing in a UM athlete NFT marketplace pay-for-play or pay-for-NIL? They are inexorably correlated. UM may (should? must?) therefore view such a marketplace as permissible.
- Example 2 - paying for commitments
A party may be willing to pay Collins Acheampong to promote his verbal commitment. It may also wish to pay him to promote the signing of his NLI. The quid pro quo for this payment may be future appearances in a date and location of that party’s choosing - let’s say for the sake of this conversation they wanted it in October in Ann Arbor, MI. Is that party paying Collins to commit to and sign for UM? Literally by the
agreement - no. Practically by the agreement - yes. This happens in a lot of instances — Miami-interested parties tried it with Collins, for example. Should UM (must UM?) turn a blind eye to these agreements which are literally compliant but functionally/practically impermissible benefits?
- There are other examples where a literal interpretation is to UM’s benefit and UM might (should? must?) therefore ignore its practical effect.
CONCLUSION
UM has set the line of what’s reasonable to review and police too far from the actual letter of the rules/law. In an environment where there is blatant rule breaking and creative pay-for-play and pay-for-commit - 99% of which will never go punished - UM must begin loosening it’s Compliance regimen. UM will never condone cheating; it does not need to spend such considerable time, effort and energy effectively reinterpreting the rules and laws to stop it.
THANKS TO THOSE WHO BEARED WITH ME ON THIS. I LOOK FORWARD TO HEARING WHERE YOU WOULD EACH DRAW THE LINE. WHATS REASONABLE?
Next time: How I think some of this change will be made at UM. Spoiler…I’m optimistic much of this will be addressed.
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