Show Me the Money, Pt. 2: NIL, Rev Share & the House Settlement Era

Seth Saunders: Yeah, yeah, fire up the grill, crank the speakers loud. Saturdays feel holy in this college crowd. Sethin' James on the mic, preaching gospel true, talking rivalries, legends, red, black, old and blue From dead valley lights to the camp, Randall Cold, they're telling stories, they never get old, ain't no bench warm hearts on the show tonight. They're walking on proud on the stadium lies. Little preferred walk on, no scholarship still putting it on From the church until gate hands in the air. Welcome to the Preferred Walk On Show, the People's College Football Show. I am your host, Seth Saunders. Thank you for hanging out with us today. If you are not already, please subscribe to the show. Please like it where wherever you are, whether it be ⁓ through the podcast providers, Apple, Spotify, whether you're hanging with us on YouTube, whatever it may be, subscribe to the show. The more the more you like us, the more you give us ratings, ⁓ the more people that we can reach. We certainly appreciate the folks that are here and always appreciate the support. Without y'all and without you listening. We can't do this, which we love to do. So ⁓ thank you so much for being here. We are continuing today part two in our Show Me the Money series, untangling the web of compensation in college football. And last episode, just to give a quick recap, we talked about the first two buckets in that three bucket compensation structure. We talked about the traditional scholarships, how that still plays into things. And then we talked about the world post-house settlement. So the $20.5 ⁓ million. Rev share opportunity, direct payments from the school that the house settlement provided. And today we're going to talk about that third bucket, which is, you know, we keep hearing these reports about what the actual values of rosters are across college football. You know, there were murmurs that maybe LSU's roster this fall is somewhere in the range of 40 million. We don't know that. Okay. None of these numbers have been hard confirmed, but we've heard. twenty five million, thirty million, forty million for different programs across the country. And so if as we talked about last episode, only fifteen million of that at the top level is coming from the Rev SharePot, where is the rest of that funding coming from? And so that's what today's episode is. Is going to discuss. And inherent in that is part of the picture that we got used to once athletes started to get compensated. Okay. So past 2021. And that is the NIL, right? So name image likeness. And then how those NIL deals were fostered via collectives, which we've all become pretty familiar with. And I, you know, whatever your school is, whoever you're a fan of, they have a collective, and I'm sure you know who they are. And what their structure is. And so one of my questions was, what is the role now of collectives? A and then B, what has happened to collectives? Because what we saw post-house settlement was you'd see a lot of these collectives that we'd heard about, I guess folding is the right word, but they were they were shut down. And then new creations kind of came up in a different structural setup. And so that's What I want to talk about today, and and I want to talk about how these deals are being structured and how they're trying to navigate NIL Go, which is now the essentially the clearinghouse for all of these above Rev share deals. So if you're trying to compensate above whatever direct payment figure that you're given to the football program, how are these deals being brokered? And so, you know, look, if we're looking at everything above that rev share cap, we're looking at things like Collectives. MMRs. I want to remember that term. Okay. MMRs. And that stands for me multimedia rights partners. And some of the big ones that you're probably familiar with, or Learfield, Playfly is the one we talked about in the last episode that had to do with the Nebraska case. And then JMI Sports is another one. Okay. So MMRs. I want you to remember that because we're going to dig into that a lot more. MMRs have become a very strategic chess piece in this compensation game. So that's something we're going to flesh out a little bit further. The other one are gonna be traditional deals, right? Your apparel and brand deals. If Nike or Adidas or Puma or whoever wants to come and pay an athlete, they can broker that independently, all right? A third party deal. And then direct engagement stuff, all right? A car dealership wants you to have a brand deal, ⁓ restaurants, regional banks. I feel like we see a lot of law firm, ⁓ whether it be commercials or billboards, whatever it may be, all those things. So those are the different avenues. And just like we talked about last time, just to reiterate, NIL go. Is what is gonna be the clearinghouse or be the arbiter, the determiner of whether or not any of those deals that are above $600 are go or no go. And the two factors they're looking at with these deals are do they have a valid business purpose and are they for fair market value? So if I'm gonna do one social media post, you can't pay me a million dollars. Well, in most cases, right? It's not gonna be worth the market value. Shoot, maybe Livy Dunn could pull something off like that. Given her following, but it that that's not going to be the case, right? If you see something like that or NIL Go saw something like that, they're going to say, this doesn't smell right. And, you know, there have been statements that have been made. There have been reports that have come out that on estimation, they've approximated that probably close to 70 of NIL deals from the past from 2021 to 2025 would not have passed smell test ⁓ w if they had gone through NIL Go. So keep that in mind, because that's the landscape. That everybody's trying to navigate and work through. Okay. So we're going to talk about collectives and how the new structure sets up. But what I want to talk about first is these multimedia rights partners, these MMRs, because that's what's been in the news lately with this Nebraska case. And essentially what the what the structure of that was is there were 18 student athletes in Nebraska. There had been a deal brokered through P PlayFly, their MMR, their multimedia rights partner. And that case got put through NIL Go like you're supposed to. And it got essentially shot down in that initial pass with NILGO. And when that happens, you can submit your case to an arbiter and say, hey, we want y'all to take a second look at this and give us an idea about whether or not NIL Go was on board or offboard. And just to reiterate from last episode, Deloitte is who is behind NIL Go. So they are the action step within the NIL Go process. That's who in ch that's who's in charge of evaluating that ⁓ Fair market value and valid business purpose kind of duality model that they're checking out to see if these deals are good or not. And so that's what happened with this Nebraska case. NILGO said, nope, this doesn't work. They go to the arbiter and the arbiter came back and said, this deal is is not above board. All right. And it's the first time that there's been a really strong statement from an arbiter saying this type of deal brokered by an MMR will not fly. And I want to get into that a little bit more, but first let's flesh out. What these MMRs are. All right. So they're multimedia rights partners. That's what the MMR stands for. And essentially they are marketing middlemen that the schools hire to monetize their inventory. So let's think about the football team or the basketball team. You've got a radio broadcast, you're going to sell advertising, you're going to sell sponsorships, you're going to sell stadium signage, whatever your economic inventory is as a program, those MMRs are going to sell that. All right. And the way they structure that. Is the MMR comes in and pays a fee to the university. So let's say they strike a 15-year deal, and each year the university is guaranteed a payment from the MMR. And in exchange for that payment, the MMR gets that inventory that they can then go sell on the free market and they keep all the upside. So if they paid, you know, 10 million a year for the deal and they sell. The inventory for 20 million, they're going to keep that $10 million upside, is essentially what that looks like. All right. So as you can imagine, they've got tons of relationships with sponsors, with with folks who have deeper pockets and could help facilitate deals in something like an NIL space. And so post-house settlement, the schools were like, look, we need a way to comp players above the rev share cap, because that's obviously not going to do it. If we've only got $15 million to play with, and the going rate for a starting quarterback, for example, in the open market is somewhere between three to five million. We're going to be short when we're trying to build a 105-man roster that's as competitive as possible and getting all these top-tier players. And so what they want to do is they want to try to navigate that set cap from the house settlement, be able to go above it while also trying to avoid scrutiny from NIL Go. And so The MMRs set up a logical fit because, again, they're not boosters. They're not collectives. They are for-profit entities that are bringing in real revenue and they're dealing with real third-party sponsors. So the schools thought, man, this is a great kind of interlay. We already have relationships with these entities. They've already got relationships with different businesses that have deeper pockets that are already doing sponsorship work, already connected with the university. That could then help navigate and broker some of these deals. So the schools are trying to kind of route these above cap payments through the MMRs. And let's try to give a real world example for this. Let's say that their portal has opened. Number one transfer quarterback in the country is in the portal. And your school wants QB one in the portal. So they will go to Playfield, Playfly, or Learfield, whoever their partner is or JMI Sports, and they'll say, okay, we need to make an offer to. QB1 here in the portal. And so what PlayFly or what Learfield will do is go to that individual or go to their representation and make them a contract offer. Let's say, in the case of some of the reports we've heard in the portal this year, they were going to make an offer of three to five million to garner those services. And essentially what they were doing was they were packaging these deals so they were guaranteed the NIL rights to that particular play. So for example, if ⁓ you know, whoever the transfer quarterback of the day was, let's say it's let's use Sam Levitt, all right? Let's say that LSU is brokering the deal for Sam Levitt, whoever their MMR is, which I think they're a play fly school. Don't quote me on that. Let's say they're a playfly school. Playfly goes to Sam Levitt, offers the deal, says, We're gonna give you a three million dollar deal. We get your NIL rights. The problem here is, and this is what came up in the Nebraska case, is there aren't actually any concrete deals in in place. All they're doing is paying for Sam Levitt's NIL rights. So Sam Levit's not having to do 15 social posts per month. He's not having to do four commercials a month. You what I'm saying? He doesn't have these hook ins where he has action items that he has to check off to then receive the compensation. So there's no real exchange of compensation for goods and services. They are functionally just trying to have a right in their interest and then The premise was we'll go get the sponsorship deals in the future. Now, what NIL Go has determined this is called is something called warehousing. And warehousing is essentially paying for an athlete's NIL rights up front with the ability to monetize those NIL rights later. All right. But that it's it's essentially just an upfront payday that has a sponsorship costume on. Okay. It's not an actual sponsorship because again, there's no action step for that. signed party to take. So in the case we were using, Sam Levitt doesn't have a hook. He doesn't have something he has to proactively do. He's just receiving the money and they're going to figure out the action steps on the backside. Problem is, do they really have to figure those out? And what the schools thought was, well, look, these MMRs are separate from us that are a commercial vendor. They're not really going to get scrutinized or have to deal with NIL Go and not have to pass these two markers, the FMV marker or the exchange of goods for services marker. Now, this is where the Nebraska case comes in because what the arbitrator ruled was first and foremost, and this is very, very important. Nebraska deals with play fly. So that is Nebraska's MMR provider. And what the arbitrator said was is that PlayFly is an associated entity, meaning the nexus between PlayFly and Nebraska is so tight that it's essentially an arm of Nebraska. It's not operating independently. It is essentially doing the bidding of Nebraska. is what they said in so many words. That's the associated entity piece. Okay. And because of that, they can't sidestep NIL's processes through NIL Go just because their business is commercial in nature. So that's important because schools all across America have these MMR relationships that they have been utilizing or thinking they were going to be able to utilize in order to broker some of these above Rev share deals. The other important part is they said, and this is where the warehousing comes in. They said the deal has no valid business purpose, right? There are no goods or services being offered to the public. They're not having to do any social media posts. They're not having to link anything on their websites. They're not having to do any commercials. They're not having to make any appearances. None of those things. And so it absolutely falls in this bucket of warehousing where essentially all PlayFly was doing was paying for NIL rights and then not activating them. So they have the rights to them, but they're not. doing anything with them. So like I said earlier, functionally what that is, is it's it's pay for play, right? They're just giving them the money without any expectation that they're gonna do anything about that. And we're gonna see what happens on that. Cause here's the thing with the arbitration rule or the arbiter ruling is it's not law of the land. All right. So I believe and I don't know the dates on this, it may be this week or next week, but this case is going to go in front of the court and they're gonna rule on it further. To figure out if what the arbitrator said lines up. I don't know, man. I I read through what the arbitrator said and it it sounds pretty solid to me. I mean, it sounds like the way these deals were set up was absolutely structured to be a side step to not have to deal with kind of the enforcement arm of this house settlement. And so it it has the potential, I think, to put schools into a pretty big pickle when it comes to compensation side because this was the plan. To essentially have these big chunk payments go out to the different athletes that you're trying to get to come to your roster. So we'll see. But the MMR piece is big and one that you certainly need to keep an eye on. And like I said, some of the names you want to keep in mind are play fly, Lear Field, JMI Sports, things like that, and kind of how this is going to sit. And so as you're keeping the antennas up and watching news throughout the college football space, keep an eye on. what happens with the ⁓ case that got appealed from the arbiter arbiter to for for the Nebraska case to see what's gonna happen with that, to see what the ruling in that is, because that's the process with that, is that you still have an appeals process and that's where they're at now. So Nebraska has chosen to appeal. They think the MMR deal is within the confines and they think it's above board. I'm less optimistic. So we'll see what's gonna happen on that. But it is going to significantly shape how things look on that side of the pot. So that's one kind of vertical within this over the rev share or let's just say over the cap payment portion. Now I wanna shift gears into the collective piece because that's the nomenclature that we all got pretty familiar with was these different schools having collectives. And let's just use ⁓ Georgia as an example and Texas had a similar structure, but let's use Georgia as an example. When the ⁓ Pre-house settlement. So kind of after 2021, after the Austin case, after payments were starting to be made to players, these collectives started to stand up. And Georgia's collective that they stood up was called the Classic City Collective. And for the four years or whatever it was between 2021 and the House Settlement, the Classic City Collective functioned as the fundraising is probably the right way to put it, but they were, it's the old model. All right. They were unaffiliated with the university. They were supporter funded. And their purpose was to facilitate NIL opportunities for the different athletes across the UGA athletic space. And all of that, that distinction was important then because pre-house, the schools couldn't directly pay athletes. And so this was a way to funnel booster money into a pot. that could then arrange these NIL deals, set up payments for players, and kind of entice them to either stay with the school or come to the school. All right. Now, they were independent, but obviously they were aligned with the structure. You know, in the case of Glory Glory, you know, the leadership structure there were former UGA athletics staff. They had very outward support from Coach Smart. There was Let's just say significant donor overlap between say your traditional donations to the UJA Athletic Association and then who's donating to the Classic City collective. And then obviously there is some strategic NIL work as it pertains to filling roster holes or maintaining roster holes. And that was a pretty standard NIL structure nationwide for these various collectives. Now, once the house settlement happened, you have direct revenue sharing with the schools. where they can make direct payments. You have new roster caps where you've got 105 set roster. You have the NIL Go Oversight. And then obviously College Sports Commission, which we talked about last time, CSC is sitting over top of that. And so when that happened, the schools needed to shift gears and change structures a little bit. They needed to get more controlled, more centralized. They needed to make the compliance structures a lot cleaner. And they needed a lot more sustainable fundraising. Because like we talked about last episode, essentially when you had the donations coming to the athletic associations, but then also these collectives asking for donations, it kind of felt like to donors, you're coming in both my pockets and trying to clean me out. And so the hope is post-house from the schools is they wanted to shift that because they wanted to eliminate some of the donor confusion. They wanted to eliminate this overlapping fundraising ask or what that felt like. And probably most importantly, they wanted to eliminate. compliance risk because they want to be able to go in to the NIL Go structure fortified and able to defend what they're trying to do. And in George's case, what they did was they folded down the Classic City Collective and they created something else called Glory Glory. And the language that is used with Glory Glory is that is it's an independent, fan-first ecosystem that's essentially functioning as a third-party marketing arm, a membership-based platform. All of this language, guys, is very, very intentional, okay? Because they want things to be unified and they want there to be operational alignment, but they also don't want it to read as another arm of UGA payroll, because it can't be. All right. And so it's not directly under the UGA Athletic Association hat, but let's just say there is a coordinated efforts, I would think, okay, between those two entities to figure out how they're going to ⁓ bridge the gap between what UGA is able to pay or what Texas is able to pay from the Rev share cap and then what has to be paid to sustain the rosters they need to compete at the level that they want to compete. And so what this is also trying to do and we talked about this a little bit last episode is there are some some hanging issues out there. And that's, you know, whether employee whether athletes are going to be considered employees in the near future, what the Title IX situation is going to look like. How things look from an antitrust perspective. And setting up the collectives this way gives some defensibility in all those cases. Okay. And again, it makes them a little more pliable as it pertains to NILGO. So if you look at the old models, pre-house settlement for these different schools, they were kind of independent booster collectives. Whereas now the collectives are more packaged as school-aligned fan engagement or Athlete marketing ecosystem. So very different, but same purpose. Okay. And you know, for example, Glory Glory has said one of their aims is to create market oper marketing opportunities above the allotted $20.5 million revenue sharing cap. So that's one of the big changes now. Instead of things being in these two separate buckets, we're now creating one message, one ecosystem. One fundraising pipeline for these different types of G deals, which then allows for better compliance control because we got to go through NIOGO. We got to make sure that the CI CSC is not going to ding us. We need to make sure there's going to be fair market value presented. It's better for legal review, better for deal structuring, better for reporting, all those type things. And that's why now you're seeing a much more professional model as it pertains to roster management. Programs hiring GMs, programs hiring salary cap evaluators, all these different things because they're trying to put themselves in the best possible position to sustain their roster, but also do so in a way where they're not going to get dinged in this new compliance structure. And so, you know, Georgia isn't the only one dealing with this. Texas did the same thing with the Texas One Fund. Tennessee did the same thing with Spire. University of Mississippi has the Grove Collective. It's all shifting this way. Okay. Because prior to house, the boosters were in the place of funding players because the schools couldn't touch any of that. Now there has to be alignment between what the schools are funding and what has to be brought in by third-party vendors. And so that's the changing landscape now is. These collectives working in that space, but then also trying to figure out ways where they can navigate and hopefully avoid an IL Go. Because if you're the school, you want to be able to make the payment as if it's you. And so that was what they thought would be the case with these MMRs. We're gonna see. This Nebraska thing is kind of the biggest shot over the bow to see if that's gonna stand up or not. And I think these collective structures, it'll be interesting to see how they continue to evolve because. I just think like everything else in this world, everything is getting more expensive. And even with the restructure, I still think you're gonna see donor fatigue at different schools. And so, you know, you have to find out ways or I I think schools like a Texas Tech, for example, who kind of shot on the scene last year because of the very, very intentional and very strategized funding they had from the Matador Club, well hilted, by the way. More schools like that, you're gonna have more ability then to function well. In that new collective space. What remains to be seen is doing all of that in a way where you are not running a foul of NILGO and where you're still getting a two thumbs up for these deals. And so, in so, so many ways, this space is still very much wild, wild west. But as more of these things get hammered out, the more we're kind of gonna figure out where all this lays itself out. And again, the things we still have to look out for is status of student athletes. So Whether or not at some point they are gonna be termed as employees. That's one big one. And that's that's out there, man. There's gonna be there's gonna be some suits about that. I think there may already be one pending in in the district court levels. I'll have to look on that. But then you also have the Title IX issue, which is the same boat. They're gonna have to figure out some type of proactive solution on how all this fits in with Title IX, most notably The Rev Share piece. I don't think you have to worry about any of that on the NIL side because theoretically that's all third party. So you're not going to run afoul of the Title IX piece on the collective side, but it's going to heavily influence the RevShare side. So all these things you got to keep an eye on as we're looking at what this compensation picture looks like in college football. And so what I want to do on the next episode is I want to talk about how we got here. So what cases got us to this point. And the two we'll obviously focus on are the Alston case and then the House settlement, which was a direct result of the Alston case. Because again, like we talked about last episode, the House case was a pending case that after the Alston case, everybody kind of went, Well, the writing is kind of on the wall here. If we take this up through all the legal channels and we get to the Supremes again, they've kind of already hinted how they feel about this and they're going to go in that direction. So I want to try to break that down as simply as possible so you have an idea of what the framework was. And also I'm, you know, I'm pretty sure everybody is somewhat familiar with the Obannon case. And the Obannon case kind of started the engine on all of this to then turn into the Austin case and then turn into the house settlement. So that's the genesis of where all this is going. But the long and short of this is the the picture on this just gets muddier. And depending on what comes out of this appeal from the from the arbiter's ruling in the Nebraska case. it could really put a thorn in the side of schools all over the country because kind of what they they thought they were their biscuit was gonna be buttered with these MMR wings and it's it's looking like that's gonna fall apart. And with that, this raging compensation war is also gonna get itself, I think, taken care of pretty quickly. So we'll see. I I mean I think the big thing for me and I haven't gotten a ton of clarity on this is What's the enforcement on this? Like what does what if Nebraska just says, yeah, well, y'all can just kick rocks. We're still gonna pay these kids and you do what you want? Like is it's not like the NCAA really has any teeth to say somebody's ineligible. I just I don't know, I don't know how the enforcement arm of it happens. And that's that's kind of what remains to be seen. And maybe this, maybe this case, this appeal of the arbiter's decision in in in the Nebraska case, we'll give some more clarity to that. But that that's that's kind of where I'm interested to s on on pathways is what does this look like? How do you enforce what the actual rulings have been from a comp perspective and what does it mean on the competitive landscape? So so that's the third bucket, guys. That's how we're paying guys above any of the Rev share money is we're trying to flow it through these multimedia rights partners and we're trying to flow it through these now much more centralized collectives. university to university. So that's our three buckets. Scholarship money, you got your post house settlement, Rev share money where the schools are directly paying. And then you have the collectives and the MMRs that are now your third party wing, your third party pot to pay guys to come to play to play there. So what you saw from Texas Tech last year going out in the transfer portal and just gobbling guys up with essentially blank checks, ⁓ you're not really able to do that anymore. You're not supposed to be able To do that anymore in the NIL Go landscape. So again, a lot that remains to be seen. Like I said last time, man, I I'm probably screwing some of this up. And if I am, tell me, because I'm trying to learn all this and figure all this out. This is one of those things where this is part of our game now. This is part of the game we love. And I I just want to understand it as best I can. So when you consume it, you have some basis of knowledge for what in the world is going on. And and look, we talked a little bit last episode about the inevitability. Of the transition to the 2014 playoff. And I I want to do an episode about that because I got a lot of feedback on that from folks. And folks feel pretty passionately about it. And rightfully so. ⁓ but I want to delve into what it's looking like it will look like, a model for what it could look like if they mimicked the FCS structure and how that might be much more interesting and inclusive, to be honest, and keep everybody, I think, a lot more honest. Cause I think the big rub with this. 2014 potential is ⁓ it devalues the regular season. Well, if you did it more like the FCS, I don't know that that's necessarily true because there would be so much auto bids from the various conferences that the ⁓ the the at-large bids wouldn't be as big a field. So you're not looking at getting four lost teams and the things that everyone's worried about. So, anyways, that'll be more of what we're gonna do during this summer series of things before we start getting into previewing schools, previewing conferences and getting ready. For the 2026 season to kick off. So again, if you have questions about this, drop them in the comments on any of the shows. Shoot us an email, shoot us a direct message on social media. ⁓ you know, if we screwed something up, tell us that too. Cause I obviously want to communicate things appropriately. And there are a lot of folks out there that are way smarter than I am. So I want to be the best messenger I can for all this and give everybody as straight a path and as much clarity on trying to figure all this out. So again, thanks for hanging with us. Thanks for listening to all this. Hope you're getting something out of it. Until next time. Earn that scholarship, baby, and kiss your nooch.