A true NIL payment is exactly what the market is willing to pay. The idea that the group can assess whether it’s “true value” or not is silly. If you think a salary cap is important you need antitrust legislation.
NCAA set to allow direct payments to athletes
- Thread starter simply1
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The Clearinghouse is assessing whether or not the value of the deal is Pay for Play, not True NIL, in an attempt by boosters to circumvent the AD RevShare cap.
It’s about what the market will pay for your name, image, and likeness, not what the market will pay to play football. That’s the point of this clearinghouse to determine.
For those clinging to the idea of the Fair Market Value being some magical cure...
The legal definition of Fair Market Value: Fair market value is the price that an asset would sell for under current market conditions, assuming that both the buyer and the seller are seeking the best possible price.
Price paid (not worth) is what the FMV is defined as.
Again, no court and no entity could say what is FMV as it is the very essence of Capitalism. I'm not saying I like it (I don't), but there is not a chance in hell that the current legal system in the country would arbitrarily define a FMV for a player. Just like they can't with Lebron, Jordan, Purdy, or anybody else.
I know this "Clearinghouse" idea sounds good in theory. It's just not in alignment with the current legal system; though who knows where that's headed.
Note - I don't want things to go the way they are going to go, but there isn't anything that can constitutionally stop it from happening.
The legal definition of Fair Market Value: Fair market value is the price that an asset would sell for under current market conditions, assuming that both the buyer and the seller are seeking the best possible price.
Price paid (not worth) is what the FMV is defined as.
Again, no court and no entity could say what is FMV as it is the very essence of Capitalism. I'm not saying I like it (I don't), but there is not a chance in hell that the current legal system in the country would arbitrarily define a FMV for a player. Just like they can't with Lebron, Jordan, Purdy, or anybody else.
I know this "Clearinghouse" idea sounds good in theory. It's just not in alignment with the current legal system; though who knows where that's headed.
Note - I don't want things to go the way they are going to go, but there isn't anything that can constitutionally stop it from happening.
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Your FMV definition here is not inclusive of the following which was previously posted:
It isn't just what someone is willing to pay for services rendered especially when paid by a compulsive booster. FMV is most commonly used by banking and insurance firms to determine the value of assets to be used as collateral and insurance. The government also uses FMV for taxation and eminent domain where they need a value for an asset. And the IRS uses FMV for charitable donations and other transactions, meaning deals between related parties. The Clearinghouse will apply similar FMV standards in distinguishing pay for play vs True NIL with extra focus on deals registered by athletes with booster businesses.
And re' your following take: "I know this "Clearinghouse" idea sounds good in theory. It's just not in alignment with the current legal system; though who knows where that's headed."
The establishment of the Clearinghouse is an alignment with the current legal system given Judge Wilken's pending approval of the House Settlement and the likes of Jeffrey Kessler signing off on it on the behalf of athletes impacted by the Clearinghouse. It still does need to be codified by the Feds with an anti-trust exemption to help ward off any lawsuits and provide enforcement/punishment leverage.
It's really not that difficult. Just compare it to other similar deals (not in CFB). If it's 10x the $$ for similar reach it's pretty clear that's not just for NIL.
Well the clearinghouse isn’t privy to individual private businesses accounting records.
How much would you say is reasonable for my CPA business to spend on yearly advertising?
I have a hard time believing the clearinghouse won’t be manipulated by the sec and big 10.
If the records aren't provided, the deal doesn't get approved.
Yep. Anyone expecting this to put a lid on runaway "NIL" spending is going to be disappointed. The market reference numbers will become a self referencing circle jerk. Of course $5M per year for a QB at Texas to do one car commercial is fair market value, because the OSU and USC and Georgia QBs are all making $4-5M as well. This will be used as a way to further justify the actions of the wealthy schools to further separate from the pack, not the other way around.
Are they going to audit all the records provided? Or just take the word of the business?
If the NCAA gets legislation passed that give them an anti-trust exemption, they could set the rules. If you receive any payment for NIL that is not approved by the clearinghouse, you are ineligible to play NCAA athletics. The clearing house could require access to those business accounting records as a precondition to approve an NIL contract.
I don't know specific numbers, but if your CPA business has yearly revenue of lets say $5M dollars, and you offered Gary Green a NIL contract worth $10M, any idiot could know that is not a legitimate NIL contract.
Whatever they need to do. They could take the word of teh business for it, but if a business was ever caught cheating, they could be banned forever from getting an approved NIL deal.
There aren’t really similar deals
By nature, NIL is highly non-fungible.
There’s nothing to say NIL must be profitable to those that pay for it.
And take trading cards. If you sell it to a buyer that way overpays what others would, the “market value”, you’ll likely still be paying capital gains in accordance to what the buyer paid you, not what others would have.
FMV of NIL isn’t the battle the Clearinghouse should use. IMO little chance they can afford the time and cost of adjudicating that
More likely they can get favorable rulings on it being inducement vs NIL. Those sloppy in wanting to make certain a player doesn’t take the payday, then sit/walk, may be vulnerable to it not being deemed NIL
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Yeah, if they actually enforce the FMV strictly, then the true FMV or the players at the big programs is a lot higher than the players at the smaller programs. The same way the average Dallas Cowboys player probably gets a lot more NIL deals than the Jacksonville Jaguars players.
I’m imagining there are lots of market comps available of professional athletes getting paid a lot for appearance fees and advertising, etc and the blue bloods can argue that’s a good comp for their players because they routinely play on nationwide TV in front of audiences of millions of people. But it’s probably a lot harder to argue that players at Washington State have that much marketing appeal because they rarely play on prime time TV slots and they always get stuck playing late at night on some Pac12 TV channel that most of the country never sees.
I worry it will hurt the small market teams because presumably the advertising value of a player is tied to the population that advertising gets viewed by. Like isn’t a car commercial in Des Moines almost definitionally a lot less valuable than the same commercial in a high population area?
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I don't even think it will get down to the details of something like market size to justify the cost, the divide already exists because of NIL budgets. When all the blue bloods set the market price of $5M for a QB, the other big money schools will be able to match it. Won't matter that AtM can claim the massive Houston market while Penn State is in tiny Happy Valley. They will both be allowed to spend that market rate if they want.
ISU won't be able to just because we don't have the budget. It won't be justified based on TV ratings or market population. It will simply be dictated by available budget. Not much different than it is right now. Just an added layer of bureaucracy to give it the illusion of added legitimacy.
I think you may be confused on what is being assessed for FMV. It’s third party NIL deals to promote third party business. iSU’s budget has nothing to do with the assessment, nor does football viewership.
I'm not trying to argue, I would love everything I say to be wrong
I posted the legal definition, of which would stand up in any court in the land, regardless of any sort of clearinghouse, CBA, salary cap, etc. FMV can be capped on things like commodities, eminent domain, etc because there is a very clear ability to compare one asset to another based on locality, prior sales, historical trends, supply/demand, etc - but not on what an individual can make for "services rendered" or not in an endorsement or sponsorship deal.
You can't compare athlete A to B or trends because they all have different attributes and their value is dictated by the school's need, the sponsor's desires, the player, the locale, National visibility, the player's demands, team success, etc. The only way you could try to determine some sort of FMV would be to look at something like recruiting ranking or something crazily arbitrary like that. That would be absolutely bonkers.
But that still doesn't hold up. Arch Manning at Texas is going to be worth a hell of a lot more than a higher ranked in-state QB that goes to Iowa State.
Let's use this as an example. The median salary for a Fortune 500 CEO is $17mil/year. But it ranges from the highest - TPG Inc at $199mil/year to the lowest - Warren Buffet at $413K/year. Most have some sort of additional, non-salary compensation that can be worth vast ranges. Nothing but shareholders can control those salaries or the compensation packages, because company performance alone isn't a one-to-one evaluation.
The Clearinghouse that is being pushed through is specifically regarding pay to play, not pay to sponsor/endorse.
Again, the Clearinghouse will be effective in concept for limiting what schools and collectives can pay athletes, that's a great move in itself. Nothing however will be able to limit the endorsement deals, it's outside of the control of the Clearinghouse. IF the Clearinghouse tried to limit it, it would fail quickly at the first sight of a lawsuit.
