Playflys<\/a> of the world. Think of it as the corporate sponsorship arm of these athletic departments.\u00a0<\/p>\nIn this current state, I\u2019m bringing it back to where talent costs have gotten. You might have seen Texas Tech pay over $55 million worth of contracts to its student athletes. That\u2019s football, that\u2019s men\u2019s basketball, it\u2019s women\u2019s basketball, baseball, softball \u2026 that\u2019s their pool. That\u2019s $20.5 million of revenue share from the university, and about $35 million coming from affiliated entities. It might be their collective, it might be Learfield, Playfly, whatever their MMR holder is, or a combination of the two. In this world, where there\u2019s a clearinghouse to decide whether the deals are fair market value or not, it is the job of these collectives and associated entities, to have enough deal flow for the athletes that will pass through the \u2018sniff test.\u2019 That can be used in conjunction with the revenue sharing to come to a total compensation package that is agreeable to.<\/p>\n
It\u2019s probably not a secret like right now that most college football budgets, if you\u2019re trying to compete at the top level, are between $20 and $30 to $35 million. That\u2019s just football. And then basketball. Men\u2019s basketball is anywhere between $10 million, and in some markets, up to $20 million. When you\u2019re adding all these budgets together across multiple sports, you need more than just $20.5 million if you\u2019re at a place like Michigan, Ohio State, Auburn, Alabama, Southern California, Texas.\u00a0<\/p>\n
That\u2019s where you\u2019re seeing these collectives and multimedia rights holders work together to get as much capital as they can, to then use and underwrite contracts for the athletes that will be above the cap. They have to be done in a way that can pass the clearinghouse standards for fair market value.\u00a0<\/p>\n
In practice, let\u2019s say it\u2019s a women\u2019s basketball player, starting point guard, making $1 million. Let\u2019s say $500,000 of it was going to come from revenue sharing, and $500,000 of it was going to come from the collective. The payment can\u2019t just be a lump sum payment of $500,000 \u2014 show up to an event and then be on your merry way. There has to be actual work done and actual services rendered for the $500,000. That might be spread out over 12 months. It might look like 20 different commercial activations. They might do signing events, they might have merchandising promotions, they might work with brands that are affiliated with the collective or the multimedia rights holder, there might be media appearances.\u00a0<\/p>\n\n\t\t<\/aside>\nThere\u2019s a whole host of services that groups like us have the athletes do to justify their NIL payments. That becomes even more critical if you want to be one of the schools \u2018above the cap\u2019 space, because that\u2019s really the new name of the game. How much capital can you put together, and how many deals can you get to the student athletes that can make their way through the clearinghouse and be used in a way that helps underwrite competitive teams? That\u2019s where a lot of this is moving.<\/p>\n
JK: <\/strong>Deloitte estimated that roughly 70% of deals would not have passed through their clearinghouse standards. Where would that number sit for Champions Circle deals? How is the Champions Circle changing its approach so 100% of your deals meet the clearinghouse standards but also keep athletes at the compensation levels they were looking to get before these new rules?<\/p>\nJW:<\/strong> It\u2019s hard to know for sure how much of our total deal volume would have gotten through the clearinghouse. I\u2019d say with high confidence that we would bat at a significantly better percentage than only 30% of our deals getting through. That\u2019s because our business was set up as a sports marketing agency before we built the collective. Valiant Management Group, which is the holding company to Champions Circle, was built as a group licensing agency, a talent rep agency and a merchandising company. It all spun up in 2021 around real commercial activity. It wasn\u2019t until 2022 that we set up Champions Circle as a fund that dollars would come in, and then we would use that to help underwrite payments for the student athletes. All of our agreements with our athletes read as real commercial services agreements.\u00a0<\/p>\nFor the amount of money we\u2019re paying the student athletes, are we getting that much in return for the work that they\u2019re doing? If you took a peek behind the curtain of our event calendar, our brand activations and our merchandising, we\u2019ve generated significant revenue of commercial dollars based on the services of the athletes. We\u2019ve had over $7 million worth of NIL merchandise sold over the last four years. Over $3 million generated around fan events. So think golf outings, think signing events, think private meet and greets. We\u2019ve brought in over $4 million worth of brand deals. When you look at these different parts of our business, we\u2019re one of the few collectives, marketing agencies, that you could point to to be like, \u2018Oh, they were actually using the athletes\u2019 NIL to generate real commercial revenue.\u2019\u00a0<\/p>\n
(Other groups) tried to capture as much money as possible and get it out the door before there\u2019d be more regulation. Those groups are now either folding or trying to restructure as a marketing agency.<\/p>\n\n\t\t<\/aside>\nThat\u2019s really where most of this moves \u2014 putting more infrastructure and bones behind the athlete marketing agency component of what you do. There is real commercial value that the athletes\u2019 marketing services bring, if done correctly. Not everyone is Bryce Underwood and can demand a large sum of money for an appearance or a post around the brand, but the athletes collectively can drive revenue, if done in a way that is capturing everybody\u2019s rights together to promote a good or a service.\u00a0<\/p>\n
An example would be the starting point guard for the women\u2019s basketball team.\u00a0 On her own, she couldn\u2019t demand a $1 million budget for a brand activation. But that starting point guard in conjunction with seven of her teammates, and then becoming a Michigan women\u2019s basketball partnership, the sum of the parts are greater than than the whole. It\u2019s more of a collective mentality around utilizing all of their NIL together to promote a good or service, using all of their social media handles to distribute that content, using their voice to elevate whatever product or service we\u2019re working with. It\u2019s a different type of marketing. It\u2019s more viewed around the property itself and aggregating all the talent together.\u00a0<\/p>\n
The really strong groups are going to separate themselves if they understand how to do this specific type of marketing. That is where you will be able to make a justifiable case to move significant sums of money through a clearinghouse, because you are a legitimate exchange of services.<\/p>\n
JK: <\/strong>It seems like in the last year or so, Michigan\u2019s NIL really took off. With the new regulation, is Michigan more uniquely positioned to succeed in the NIL space?<\/p>\nJW: <\/strong>I believe that Michigan\u2019s always been primed to succeed in a world where it can level the playing field and start compensating its athletes. I long felt like we were fighting with one arm tied behind our back, because that\u2019s an area where we were never active compared to some of the teams we were competing against. I do feel like we have had a leg up for quite some time.\u00a0<\/p>\n\n\t\t<\/aside>\nThe bad rap we got early on wasn\u2019t because we were not doing NIL, we just weren\u2019t using it in recruiting the way most other schools were. Almost all of our NIL money was predominantly used for the current student athletes, and not used in recruiting for prospective student athletes. That\u2019s changed as rules and regulations have adjusted over time. Now, we do communicate NIL opportunities, and we do have those compensation conversations on the front end in recruiting, whereas we wouldn\u2019t before. But the resources have been there. There\u2019s been greater alignment with the athletic department over the last two years that\u2019s really elevated the fundraising efforts.\u00a0<\/p>\n
Michigan has always been a place that demands brand attraction, and fan and donor engagement. We\u2019ve had a competitive advantage over the last four years now that we can pay student athletes, and I believe that will only continue to grow that competitive advantage over time, because we are at a place like Michigan. It has the largest living alumni base. We have more brands that want to partner with the \u2018block M\u2019 and partner with the athletes in conjunction with the \u2018block M\u2019 more than any other school in the country. We sit in a robust business market in metro Detroit, but have national ties into different markets because we have alumni in New York and alumni in California.\u00a0<\/p>\n
We\u2019re able to make a compelling pitch to brands when they want to do real NIL activations with our student athletes. Our friends down the street, in Michigan State and Columbus, don\u2019t quite have that same competitive advantage because they\u2019re so much more of a regional, localized brand than Michigan, which is more national. I do think that Michigan only stands to benefit from that.\u00a0<\/p>\n
You can\u2019t discount the educational piece of it, and the relationship value of it. When the sum of money for these student athletes has gotten so significant, then you really have to start peeling back. What the advantage is now, if you have money, then how can you multiply that? Some of the best multipliers of compensation are relationships and education. How are you going to take those earnings in that window while you\u2019re in college, and multiply that year over year. That\u2019s our goal with what we\u2019re trying to do, and I know that\u2019s the goal with Michigan athletics \u2014 create great infrastructure, develop relationships.\u00a0<\/p>\n
As they\u2019re earning that money, it\u2019s not about how much you make. It\u2019s about how much you can keep and how you can multiply that over time. There\u2019s no better market in college sports than Michigan for that. You might be able to look at Stanford or Notre Dame. I\u2019d say those are up to par, but Michigan is just so much bigger, and the engagement is so much more significant than those two other schools. I really do believe we check all the boxes, if you\u2019re a prospective student athlete. \u2026 There\u2019s a whole host of reasons, and we\u2019re at the level now where we can compete from a compensation standpoint. It\u2019s not like it was five years ago, six years ago and all the years before that, where some schools might have something under the table, and we had nothing. Now there\u2019s an equalizer there. Michigan is very well positioned for the future of college athletics.<\/p>\n\n\t\t<\/aside>\n\n\t\t<\/aside>\n
Related articles<\/em><\/h3>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"Last week, a federal judge made a landmark decision that transformed the world of college athletics. Schools were granted the authority to compensate athletes directly. The court decision also regulated rules concerning name, image and likeness (NIL) payments, a ruling that came as Michigan\u2019s NIL collective, Champions Circle, continues to thrive. Before the ruling, many […]<\/p>\n","protected":false},"author":1,"featured_media":1771,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[1974,1976,1534,726,1975],"class_list":["post-1770","post","type-post","status-publish","format-standard","has-post-thumbnail","category-news","tag-cofounder","tag-collective","tag-interview","tag-michigans","tag-nil"],"_links":{"self":[{"href":"https:\/\/tmbglobal.news\/index.php\/wp-json\/wp\/v2\/posts\/1770","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tmbglobal.news\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tmbglobal.news\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tmbglobal.news\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tmbglobal.news\/index.php\/wp-json\/wp\/v2\/comments?post=1770"}],"version-history":[{"count":1,"href":"https:\/\/tmbglobal.news\/index.php\/wp-json\/wp\/v2\/posts\/1770\/revisions"}],"predecessor-version":[{"id":1772,"href":"https:\/\/tmbglobal.news\/index.php\/wp-json\/wp\/v2\/posts\/1770\/revisions\/1772"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tmbglobal.news\/index.php\/wp-json\/wp\/v2\/media\/1771"}],"wp:attachment":[{"href":"https:\/\/tmbglobal.news\/index.php\/wp-json\/wp\/v2\/media?parent=1770"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tmbglobal.news\/index.php\/wp-json\/wp\/v2\/categories?post=1770"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tmbglobal.news\/index.php\/wp-json\/wp\/v2\/tags?post=1770"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}