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Endowed NIL Deals: The Future of College Athletics?

Updated: Jul 28, 2022

The last month in the world of college athletics has generated a lot of conversation. Every year around this time, coaches are hired and fired in what’s called the “coaching carousel.” However, this year’s cycle has been far more chaotic than one’s we’ve seen in recent years due to the movement from blue-blood program to blue-blood program and the significant amount of money being thrown around for some of these coaches.

As a result of high-profile schools like USC and LSU firing their coaches so early in the season, several athletic directors and fans across the country feared their coach would leave their school for those jobs. While labeling a certain coaching job as a “top 5 job” is extremely subjective and varies by each individual coach, USC and LSU are widely considered to be among the best places to attract elite talent and compete for national championships on an annual basis. Therefore, we saw several coaches get massive contract extensions to levels that raised eyebrows from many in the industry.

Despite only being in his second season at Michigan State and third overall as a head coach, Mel Tucker received a 10 year/$95 million contract extension to stay in East Lansing. James Franklin, whose Penn State Nittany Lions slumped down the stretch to a 7-5 record, netted a 10 year/$85 million extension for himself. Not to mention, Lincoln Riley and Brian Kelly, who got the USC and LSU jobs respectively, each inked deals at or near nine figures. Furthermore, Jimbo Fisher (Texas A&M), Lane Kiffin (Ole Miss), Mike Gundy (Oklahoma State), PJ Fleck (Minnesota), Dave Clawson (Wake Forest), Mark Stoops (Kentucky), Jonathan Smith (Oregon State), Jeff Hafley (Boston College), Jeff Traylor (UTSA), and Hugh Freeze (Liberty), have all signed contract extensions in the past three months as well due to the interest they’ve garnered from other schools. All this activity has generated a lot of attention on college athletics. So much so that Senator Richard Blumenthal from Connecticut said that the recent flurry of what he termed “outrageously astronomical” contracts for college football head coaches is getting the attention of Congress and could spark reform.

Now, it’s worth mentioning that coaches deserve to be handsomely compensated. I happen to be a big proponent of coaches and love to follow them as they build each of their respective programs. From an X’s and O’s, recruiting, and relational perspective, the number of hours they put into their jobs cannot be understated. However, in this new era of college athletics with the advent of NIL, the Transfer Portal, and Alston, is solely investing heavily in a head coach’s salary enough to help maintain a sustainable program? I don’t think so.

This week, the University of Texas announced an unprecedented NIL initiative where each offensive lineman at the University of Texas will receive $50,000 annually to promote selected charities through a newly created Horns With Heart non-profit entity. While Texas might’ve been the first school to publicly announce this type of NIL deal, they most certainly shouldn’t be the last. When it comes down to it, the teams that compete annually for national titles are the ones with the best players. You can have the best coaches, the coolest uniforms, the nicest facilities out there, but the lifeblood of college athletics is recruiting. Kirby Smart, the Head Coach of the CFP bound Georgia Bulldogs, put it bluntly with “There's no coach out there that can out-coach recruiting. I don't care who you are. The best coach to ever play the game better be a good recruiter because no coaching is going to out-coach players.”

Therefore, whether everyone likes it or not, a big part of recruiting nowadays comes down to what a school can offer from an NIL standpoint. Now, a school cannot actually provide their student athletes NIL deals, but there are certainly things they can do to let all of their prospective recruits know they will be taken care of when they arrive on campus. Every school that competes at the highest level of college athletics have an abundance of well-connected donors and boosters who run successful companies. Since NIL was enacted on July 1st, we’ve seen no shortage of NIL deals for individual student athletes and a decent number of team-wide deals as well. But what’s going on at the University of Texas right now is something I think could be one of the biggest recruiting tools out there: Endowed NIL deals.

Similar to how certain donors or corporations endow scholarships to college students at a university, the Horns with Heart non-profit entity is endowing NIL deals to the offensive lineman at Texas. Instead of donating money to either pay for a coach’s salary or to the athletic department in general, the army of boosters some of these big-time college athletic programs have could come together and create NIL endowments for players on their respective teams. This could be broken down by position group or other factors, but I think it could be the future of college athletics. It goes without saying that the top offensive lineman in high school right now took notice of the announcement of the $50,000 that could be coming their way if they went to Texas.

Many around the country have asked how or if we can stop this trend of escalating coaching salaries and the arms race of facilities in college athletics. From a legal perspective, capping coaching salaries is probably not practical, but that doesn’t mean things cannot be done. From a booster’s perspective, taking the investment that has gone to paying for or buying out a coach’s contract and redistributing it into the hands of student athletes through endowed NIL deals like we’re seeing for the offensive lineman at the University of Texas could be an option where everyone wins. While they may not get the 1o year deals in nine figures, coaches will have an easier job recruiting to their schools with the NIL outlook they can point to (which in turn will likely lead to good results on the field). Student athletes, who are obviously prohibited from being paid directly by the schools, can earn money many people think they deserve for the revenue they generate. And although athletic departments might not like that their boosters aren’t investing directly in their hands, I think it’s clear that by getting the best student athletes to their campuses, they will benefit in the long run by winning games and competing for championships.

Times are changing rapidly in college athletics. A decade ago, no one would’ve envisioned a non-profit entity offering $50,000 to a position group on a college football team. To succeed, people involved will need to adapt to the modern era or risk falling behind on the field, court, or pitch. To be clear, schools cannot contribute to these deals or explicitly guarantee recruits will get them, but they can certainly do their due diligence with their donors and boosters. Endowed NIL deals could be the best way to redistribute some of the money that many have described as being “carelessly thrown around” in terms of astronomical coaching contracts and luxurious facilities. It will be interesting to see how soon we’ll see more of these type of NIL deals in the future.

Brendan Bell is currently a Junior at Auburn University majoring in Finance with aspirations to attend law school. He is passionate about the business of college athletics and would love to obtain a career in the industry some day. You can follow Brendan on Twitter @_bbell5

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