College Athlete NIL Rights Will Be Big Business for Startups
Companies will face risk from uncertain regulatory conditions, but the opportunities will be lucrative
There’s a wave coming. What started last year with the NCAA’s new guidelines on how student-athletes can profit from their names, images, and likenesses (NIL) is set to continue early in 2021. It’s a wave that grew even bigger this year as COVID-19 helped give voice to players now concerned with both their health and their wallets. And, as with any emerging market, companies are lining up to profit from the practice.
By January, the three athletic divisions under the NCAA governing body are required to draft rules that will govern how their players can use those newly-acquired rights.
Simultaneously, six other states — California, Florida, New Jersey, Colorado, Michigan, and Nebraska — have passed NIL bills through their state legislatures, thereby clearing the road for the practice to become legal. Florida’s law will go into effect in July 2021, while the others will become law between now and 2025.
Another 20 states have similar legislation on the books at this time. And there is a major push in Congress right now for a federal framework for these laws, which would result in one set of rules for the NCAA’s member institutions to follow instead of having to deal with the individual rules of every state.
The bottom line is that the paradigm has shifted, the die is cast, and a new day awaits for college athletes. Long denied the ability to do what every other student on their campuses could always do — profit from their own hard work — athletes will now find themselves with various options to do just that. The key for businesses will be how to attract these athletes to their platforms and see them safely through the myriad hurdles sure to be present in NCAA rules.
Look around at any industry, and you’re likely to see that the big players are the ones who created the market, who got in early and defined what the opportunities would be. This is another such time in history, with an emerging market for services that, while they have been done before, have not been done in quite this way.
The market knows the power of athletes in advertising, but these athletes, at this level, have never been able to be tapped before. The breadth of opportunities is as yet unknown, but the scope is somewhat more predictable. One only needs to look at towns like Tuscaloosa, where the University of Alabama resides, to see what could be. People line up for hours to see the NCAA Championship Trophy at a Walmart. If a hunk of metal can do that, imagine the power of the players who earned that trophy.
“We’re really on the precipice of something huge here”, says Luis Pardillo, CEO of Dreamfield, an Orlando, FL-based startup aimed at connecting athletes with opportunities to profit from their NIL rights. “College sports are way more popular on a local level than even the NFL, and with stars that are viewed as being more approachable than the pros, there’s a huge opportunity for athletes to build their brand and capitalize on their fame.”
Dreamfield aims to create a marketplace for athletes to manage their brand and marketing opportunities, with the goal being to monetize those opportunities, be they for personal appearances, speaking engagements, or autograph sessions.
Think of it as Cameo for college athletes, with the offering expanded far beyond video greetings. “Consumers want to be a part of this market”, says Pardillo, “and the brand loyalty is even stronger because these people went to these schools, they have the memories of their time there, and it creates this irresistible pull toward the product.”
With any new industry, especially one as fraught with pitfalls as the marketing of amateur athletes, there are bound to be risks to participating in the market. At this moment, the rules are still being written, with the NCAA having adopted “guardrails” to broadly outline what can’t be done.
So for the moment, though these companies know that their business activities will be legal, they have to guess at the specifics, which creates inherent risk for startups in this market.
“You know going into a venture like this that there will be risks, but with Florida having the first NIL law to go into effect, we will be at the forefront of the market and be able to work with the NCAA to understand the rules and help our client athletes navigate those waters correctly.” — Andrew Bledsoe, co-founder of Dreamfield
To be sure, a major part of the equation for companies in this space will be their ability to convince the athletes they want to enroll as clients that their playing status will be safe. But don’t expect that challenge to stop companies from taking part in the types of transactions that can only be imagined at the moment.
History is littered with the corpses of companies that waited too long, missing out on the opportunities afforded to those visionaries who saw what could be done and weren’t afraid to take the chances. NIL marketing is no different from the tech boom in that regard, as the companies that get there first will be able to set the market and mold the rules as they come into focus.
Marketing is one of the biggest industries in the world, and the doors to the kingdom are about to be thrown open to almost a half-million student-athletes across the country. The NCAA can no longer hold back the tide as the athletes who bring in millions of dollars for their schools demand the chance to get in on the fun. And for those startups waiting to help them figure out just how to maximize that fun, the potential is limitless.