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        The unintended consequences of NCAA’s NIL settlement and transfer portal

        June 17, 2024 By Glenn Richey + David Martin, interview by Michael Ares

        All News


        The opinions of individual faculty members reflected here do not necessarily represent an official policy or position of the university.

        Major issues remain unaddressed while critical financial and legal responsibilities are shifted to university leadership

        College athletics is at a crossroads, with roles, responsibilities and business models in an amplified state of flux. Disjointed rules and regulations vary conference by conference, state by state, university by university and sport by sport. It is becoming increasingly difficult to tell who’s in charge of what these days, with players, coaches, athletic directors, university administrators, booster clubs, advertisers, and corporate sponsors all jockeying for position.

        Two Auburn faculty with experience in college athletics recruiting, business education and sports marketing say much of the responsibility for what they call the “rampant ineptitude and uncertainty” in college athletics can be placed directly at the feet of the National Collegiate Athletic Association (NCAA).

        Glenn Richey left, David Martin right

        Harbert Eminent Scholar Glenn Richey (left) and Associate Professor David Martin (right)

        Glenn Richey and David Martin contend that the official positions put forth by the NCAA regarding name, image and likeness (NIL), the transfer portal, and competition eligibility are failing the student-athletes and higher education institutions the NCAA is charged with serving. More precisely, they argue that “the glaring absence of a clear vision, equitable rules or enforceable regulations coming from today’s NCAA is putting their key constituencies at risk.”

        And that was before the recently revealed outline of a settlement being finalized by the NCAA and multiple plaintiffs involved in various multi-billion dollar lawsuits. The very real threat posed by these legal challenges finally prompted the NCAA to offer a proposed structure that would retroactively pay student-athletes as far back as anti-trust laws allow – 2016 – and attempts to clarify what is and isn’t allowed when it comes to NIL going forward as early as the fall of 2025.

        Glenn Richey:

        The NCAA posture today is quite a departure from the heavy hand of the NCAA over the past half a dozen decades, when even the impression of impropriety by a Division 1 school’s athletic department or individual athletes themselves earned a harsh rebuke and sanctions that directly impacted the university and the student-athlete financially while also reducing the value of their respective brands going forward.

        David Martin:

        Just look at University of Georgia quarterback Jaden Rashada’s recent lawsuit against University of Florida Head Coach Billy Napier and a school booster for a sign of what’s to come. Rashada contends he lost out on millions after a lucrative NIL deal fell apart just before he was to start at Florida. He played for Arizona State last year before transferring to UGA for the upcoming season.

        Glenn Richey:

        Let’s be clear – college athletics is now a huge business that often transcends the visibility, reputation, and financial viability of many universities themselves. While some colleges and their athletic departments are directly intertwined legally, financially or both, many of the most prominent are not. The balance of power between the two entities spans a wide array of situations even within a given academic or athletic conference, and the constant shifting of conference membership and alignments only adds to the chaos.

        David Martin:

        When it comes to NIL and the transfer portal, things are heating up, but the temperature will get even hotter if – or more likely, when – universities begin serving as the provider of a large chunk of the money being thrown around. A big question I have is what happens when universities soon begin managing NIL for players? How long will it be before one of these athletes sues the university or the athletic department directly? The liability factor alone is daunting.

        And what about the transfer portal? Right now, it’s literally unrestricted free agency. That’s something even pro teams aren’t into. Fans don’t like it in professional sports, and they are even more adamantly against it in collegiate athletics.

        Glenn Richey:

        When I was at the University of Alabama, I was the academic representative for the business school for eight years, selected by Sr. Associate Athletics Director Jon Dever and Coach Nick Saban. I helped recruit players, starting with the Julio Jones and Mark Ingram class, meeting with families on Saturday mornings of home games. I taught hundreds of athletes, traveled with the Bama football team each year, and assisted with picking mentors and tutors. My role expanded to recruiting any sport that needed help. During that time, Jon kept the Alabama athletic program consistently ranked in the top tier of SEC student graduation rates largely because of the academic support processes he and Saban developed.

        What I found was that these young men and women come in, they have tutors, and they have required study halls. They built valuable relationships with people in academic counseling and support services to make sure they got the degree they and their parents were promised during recruiting visits, including hands-on educational support.

        And then on the back end, if they’re among the very high percentage of student-athletes who don't go pro, there are opportunities for them to work for a car dealership, marketing agency, broadcasting, or some other job related to their major upon graduation, and the university helps with that career placement.

        But when you transfer, you give all those valuable relationships up. You don't know who your counselors are at your new school, you don't know who you're working with, and they don’t know you. Yes, they are welcoming, but you are, essentially, starting out all over again from an academic support team and relationship building perspective.

        And these same challenges of transferring schools impact the student-athlete’s athletic prospects – new training, coaches, schemes, playing time adjustments, etc. – put added pressure on athletic performance, which is related to NIL payments and future professional opportunities. And don’t forget, the limit on NCAA eligibility remains at four years within a five-year period.

        Eligibility is making the transfer portal an uneven market. Universities typically do not accept all the credits from another school. And according to the NCAA, 40 percent of required coursework for a degree must be complete by the end of the second year, 60 percent by the end of the third year and 80 percent by the end of their fourth year. That needs to be explained to student-athletes and considered before transferring.

        After years of the NCAA working to award college football programs and basketball programs for graduating student-athletes, it looks like we now have a system in place that almost guarantees that they won't.

        And then there’s all the misinformation floating around about the NIL market. Imagine a young linebacker who is projected as a third rounder transfers from one Power Five school to another. He arrives and brags a bit about his NIL deal being $350k. Over time, that number gets published online and filters back to three other NFL-quality linebackers at his new school. They visit with the coach,  noting they are projected to be NFL second rounders and should, therefore, get at least the same pay. The coach tells them the third rounder’s NIL deal is $35,000 each year not $350,000. Who do the players believe? 

        David Martin:

        And what about the consequences of student-athletes becoming employees of the institutions they attend? While the NCAA claims that won’t happen, I’m not convinced that this will be as easily avoided as they do. I see this as an aggravating factor in finalizing the proposed settlement itself, adding fuel to the fire in ways it appears the NCAA may not have fully considered or deemed important.

        Just take a look at the tax implications of these payments to student athletes. Who makes sure they and their parents are aware of their withholding and filing  responsibilities – federal, state and local – when agreeing to this compensation? Begin with recognizing that the tax implications of a 17-year-old dependent are significantly different than those of an 18-year-old independent adult and then do the math.

        What happens when all of a sudden, it’s three years in and the recruited student-athlete doesn’t play sports anymore, they didn't complete their education and now they owe back taxes on $20,000 a year and up – or their parents do? That’s not a good look.

        In the end, according to Richey and Martin, the responsibility for ensuring equitable and sustainable solutions to these myriad problems now falls into the hands of university leadership.

        Glenn Richey:

        When you think about Auburn, Georgia, Ohio State or any other Power Five school as a brand – which they certainly are from a purely marketing standpoint – it doesn’t fare well if you have a bunch of players walking around saying “I played there and now I'm in financial ruin, I've got CTE, I can't think straight, and they're not supporting me.” That’s a brand management issue that goes all the way to the top.

        David Martin:

        I believe colleges and the universities – and when I say that, I don't mean athletic departments, I mean the universities themselves – have to have a greater level of control and the ability to monitor and help make decisions when it comes to these things. Otherwise, it's just going to be that zero sum game of “what do we do to make our athletic department the most competitive as possible? Forget about everything else.”

        It doesn't appear the NCAA has thought through all these critical issues, and yet a majority of the Power Five conference schools seem willing to take on financial and legal responsibility for this new way forward.

        About the authors


        Glenn Richey is the Harbert eminent scholar in supply chain management (SCM) at Auburn University and a leading international expert in the SCM, logistics, and marketing strategy fields. He previously served as a faculty liaison with athletics while at the University of Alabama.

        David Martin is an associate professor in the Horst Schulze School of Hospitality Management in the College of Human Sciences at Auburn University. He has co-authored research papers on NCAA-related topics that have been published in Sport Marketing Quarterly and the Journal of Services Marketing.