Football Fridays: NIL Player Valuations

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Happy Friday, folks.

It seems that all of my Scott Frost material has expired. I was expecting to be able to make Nebraska jokes until at least October 1 when his buyout would drop from $15M to $7.5M. Unfortunately, I was wrong. The cost of his presence for another 20 days became too much to bear following the team's loss to Georgia Southern this weekend. Pour one out for the Huskers.

Now, unless you're somehow strong enough to avoid becoming emotionally invested in the heart-wrenching world that is college athletics, you're likely aware that athletes are now allowed to cash out. Officially, name, image, and likeness (NIL) rules now allow college athletes to profit from sponsorships and brand deals, something which was illegal before last summer. In reality, literally anyone else in the world was able to do this, but most of us never made it past backup JV wide receiver to achieve the same platform that comes with being a star athlete at a major school.

Athletes have since launched their own clothing lines and companies, signed deals with restaurants and automobile companies, and even joined team-wide revenue sharing platforms where devoted fans can pay monthly subscriptions for exclusive access to the players in the form of digital communications and autograph signing.

However, NIL has also opened the doors to an unanticipated use through collectives, semi-organized groups of donors "unaffiliated" with the school though potentially using deals as recruiting tactics to lure top high school talent and, in some cases, to provide an annual income to every member of the team.

Some of the numbers that have come out are eye-opening. The first major news broke prior to the 2021 season claiming that now Heisman-winning Alabama quarterback Bryce Young had racked up over $1M in deals. That might not be shocking considering he won the damn Heisman as signal caller of the nation's best team. However, these deals were actually reached before he had even started a game for the Tide.

The numbers have only soared since with some unconfirmed rumors claiming that some of the nation's top high school quarterbacks have committed to schools after being promised deals approaching $10M... before even playing their senior seasons.

In a world ripe with influencers and social media and given how valuable college football has become as a product, some of these deals for big name players cease to be so outlandish. Admittedly, Cane's signed a few of my own favorite players to deal, motivating me to drive a few extra miles to get some tenders with Texas Toast when I would have otherwise gone to CFA.

Some, however, are a bit harder to justify. For example, Texas quarterback Quinn Ewers reclassified in order to sign a couple of multimillion deals with a kombucha company and an autograph agency and enroll at Ohio State after his junior year of high school. He played a grand total of two snaps for the Buckeyes before transferring to lead the Horns.

How exactly are companies deciding on valuations when negotiating NIL deals?

Most companies are evaluating players' social media presence, media hype, and in some cases, their potential to breakout as a star and thus raise marketability on an individual company level. However, there've been attempts to aggregate this data to more accurately determine what player's brands might be worth.

On3 is a new entrant to the sports media game, founded by the same guy that started Rivals and 247. In addition to traditional coverage of results, stories, and recruiting news, the company has been a pioneer in the use of data and models for predicting recruiting battle outcomes, game results and player performances, and, most novel of all, creating an athlete NIL valuation for high school and college athletes.

The top of their NIL 100 (100 most valuable athletes in the database) is a bit surprising in that the top three athletes (Bronny James at $7.2M, Mikey Williams at $3.5M, and Arch Manning at $3.4M) are actually all high schoolers, beating out household names like Bryce Young ($3.2M) and Caleb Williams ($2.4M). These are massive numbers, but compared to some of the reported deals, it would imply that collectives are dramatically overpaying for their (hopeful) next QB1.

On3 claims to utilize "performance, influence, and exposure" when calculating these values, and considering that the number of social media followers (even broken down by platform) is featured right beside the monetary value, this does imply that this plays a big role. The model also takes into account position played, the national exposure of the team, and the media market size of the school. Quarterbacks playing for a team like Bama, just a few miles from the Birmingham media market (the biggest in college football for 11 of the past 12 years), are going to demand a high valuation, supporting some of the big deals Young secured seemingly prematurely.

Looking back at the list, these same top five have 12.1M, 5.9M, 171K, 263K, and 169K followers, respectively. Massive existing audiences make them attractive from a sponsorship perspective, but this isn't the only important factor. Just look at Florida quarterback Anthony Richardson. After bursting onto the national scene following his Herculean performance against Utah in Week 1, he saw his NIL valuation shoot from roughly $525K to $1.1M despite only having 91K followers. His Heisman betting odds experienced a similar jump from +6000 to +2000, thus demonstrating the value of media attention and on-field performance in marketability.

It appears that the market for active college players is more economically rational than the high school level. Rather than consisting of brands looking to make sound business expenditures, collectives have a case of FOMO, engaging in arms races for top commodity high school athletes. Scarcity is also introduced, as unlike brand deals which can be reached with multiple players and tend not to be exclusive, there are only so many elite prospects that can only sign with one school each. Let the bidding commence.

We're far from the days of market equilibrium, and I don't anticipate the going rate in four years to be anything north of $3M for unproven prospects. Once some of these high school athletes do begin to produce, though, a whole new field of sports economics opens up as analysis can be performed to find out just how much a win, and potentially a title, is worth for the boosters shelling out the cash to "earn" them.

Forget the Pac 12... The Big Twelve should be poaching Sun Belt programs left and right. App State and Marshall dominated tOp TeN A&M and Notre Dame, respectively. I might still be actually depressed about the former, but kudos to the underdogs for showing their teeth.

Texas is licking Quinn Ewers' AC injury, but wow... Talk about a game. UT took Bama down to the wire even after QB1 left partway through its second drive after he was crushed by Bama edge Dallas Turner. In all seriousness, Texas impressed the entire country. Sark and the Horns won everywhere except for the scoreboard. Whether Texas is back remains to be seen, though. Bevo's boys have been able to get up for the big games like this past weekend's throughout its decade-long down period. It's whether the same energy can be brought to stretches like the upcoming UTSA, Texas Tech, and West Virginia that will determine whether they truly are on the right track.

• UGA (1) and Bama (2) flipped

• Kentucky (9), BYU (12), and the Vols (15) all jumped after big wins over ranked teams

• Baylor (17), Florida (18), and A&M (24) all dropped big after being on the losing end of some of these games

Biggest games this week:

• #13 Miami finally gets to experience nice views as it heads to C-Stat to face #24 A&M. This one lost a bit of its luster, but I truly expect A&M to bounce back before still finishing 7-5.

• #6 Oklahoma and Nebraska; Huskers suck but this rivalry is as nasty as it gets

• #12 BYU and #25 Oregon; sorry... slow week.

Fewer big games this week than the past two. More eyes to watch my Aggies send Cristobal back to his sad, sad mansion in the terrible place that is Miami Beach 🌴. Loser.

Cheers to another day,

Trey