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Now it's legal: College athletes are getting paid through NIL — and it may not end there

As Trev Alberts recently sat in his office discussing the rules governing football players cashing in on their name, image and likeness, he didn’t have all the answers. Heck, it seems nobody — not even the NCAA — does.

So the Nebraska athletic director picked up his cellphone and dialed the school’s director of compliance.

Jamie Vaughn provided a primer of the do's and don’ts in the loosely regulated sphere of NIL, where athletes around the country are collecting hundreds of thousands of dollars from what are essentially athletic booster groups.

There’s a reason some suggest NIL actually stands for “now it’s legal.”

No, the university can’t promise big NIL money to an athlete it’s recruiting, Vaughn said. And no, the booster groups — known as collectives — can’t do that, either. At least they’re not supposed to.

“The best we can do is make sure people understand what those rules are and what our expectations are as a department,” Vaughn said.

But amid all the questions and gray areas, there is one thing Alberts and observers around college athletics say you can take to the bank: The model of a major college athlete being compensated just with a scholarship has gone the way of leather football helmets.

It’s not just about NIL — under which one source said roughly a half-dozen NU athletes collected six-figure incomes in 2022.

Consider also that most Husker scholarship athletes are receiving nearly $10,000 each in annual cash payments directly from the school, the result of a court decision and an NCAA regulatory change.

What’s more, Alberts foresees — and is preparing for — a day when athletes in revenue-producing sports like football will be granted a direct share of the profits.

“I believe it’s likely that either through the courts or a proactive move that a portion of revenue that’s currently used to subsidize all our programs is going to be redirected directly to student athletes,” Alberts said. “We need to prepare ourselves for that reality."

It could happen sooner than you might think, Alberts said.

He added that Nebraska is also set up to compete in that new world about as well as any school in the country.

The university already appears to be a leader in NIL. Blake Lawrence, the former Husker football player whose Opendorse endorsement company provides the platform that facilitates NIL transactions at most power-conference schools, says NU ranks in the top 10 nationally in total NIL dollars.

And if it does ultimately come to schools needing to pay players a salary, the Husker football program remains a financial juggernaut that could provide the resources to make that possible.

Despite winning 19 games in the past five seasons, Big Red football posted a profit of more than $60 million last school year. A World-Herald analysis suggests that NU's profit ranks near the top of college football, still hanging with the sport’s blue bloods.

The Husker athletic budget also annually runs millions in the black, gets no subsidies from the rest of the university, and NU is the only school in the Big Ten whose athletic department carries no debt.

“I think the University of Nebraska is uniquely positioned to not only weather this storm, but to emerge from it in a very strong position,” Alberts said. “I like our chances.”

In the 1970s, college football players received a monthly check for $15 — what they called “laundry money.” Much anticipated by players, the checks were intended to pay for some of the everyday expenses not covered by tuition and room and board.

“It seemed pretty important to them,” said former football coach Tom Osborne. “Bear in mind, I suppose at the time a hamburger was 75 cents, and you could go to a movie for a dollar or less.”

As quaint as they sound today, the payments didn’t last. The NCAA did away with them in 1978 as a cost-cutting measure.

In fact, the NCAA, run largely by university presidents, for decades vigorously fought compensation for athletes beyond scholarships, claiming anything more would violate the principle of amateurism in sports. The stand often fueled rumors and hard-to-prove allegations that some boosters were rewarding star athletes under the table with cash and cars.

But the financial landscape of college sports was about to be dramatically reshaped.

The Supreme Court in 1984 struck down the NCAA's strict control over schools' TV rights. Suddenly, rather than about two dozen televised games each year, there were hundreds. And the TV money grew exponentially.

In 1982, top schools like Nebraska received $130,000 in TV revenue. Today, the university receives roughly $50 million, a figure that could double over the next decade under the new TV contract the Big Ten inked last year.

Flush with cash, football schools began to engage in a major arms race, looking to build the biggest and flashiest locker rooms and weight rooms to lure top recruits. Nebraska’s latest $165 million football palace is set to open later this year.

Most importantly, schools rapidly bid up the salaries of coaches. Top coaches like Alabama’s Nick Saban now command more than $10 million a year, dozens make $5 million or more and even some assistant coaches make more than a million.

NU spent more buying out the contract of fired football coach Scott Frost ($16 million) than it spends annually on scholarship aid for all of its athletes ($13 million).

Most of the money big programs generate from football pays for other nonrevenue sports like tennis, golf and bowling. Still, the fact that football coaches got rich while the players received little beyond their scholarships produced a chorus of criticism that colleges were exploiting athletes.

Now, the NCAA and its member schools “have lost credibility with the Congress and the public on the amateur model,” Alberts said. “It’s been challenging to defend as coaches' salaries continue to go up.”

In 2015, schools in the five major football conferences — the ones most flush with TV cash — succeeded in getting NCAA rules changed so that they could provide athletes “the full cost of attendance.”

The modern-day equivalent of laundry money, those dollars were to cover personal expenses, including travel to and from school. At NU, those checks amount to $3,500 a year for most scholarship athletes.

But that did not assuage critics or stop legal efforts to force change. And the legal landscape for paying athletes soon began to change seismically.

In June 2021, the Supreme Court in NCAA v. Alston struck down limits on educational benefits athletes could receive. As a result, Nebraska and many other top schools are awarding all scholarship athletes up to $5,980 in cash, a value calculated by the courts.

What's often called "Alston money" is a big deal, worth more than NIL money for most athletes. To those who question a future in which schools pay athletes directly, with the cost of attendance payments and Alston dollars “you could argue it’s already happening,” Alberts said.

The Alston decision came right as the NCAA began allowing college athletes to broker deals with businesses and individuals for profit through NIL.

The change came after California lawmakers passed the nation's first NIL law in 2019, supporters seeing it as a backdoor way to compensate athletes if the schools refused to do it directly. Nebraska and dozens of other states followed suit in passing such laws, and the NCAA authorized NIL beginning July 1, 2021.

The NCAA opened the door without putting much up in the way of guardrails. What happened next was predictable.

During his days as a Husker linebacker a decade ago, Blake Lawrence never received any compensation beyond his scholarship, and he’s fine with that. His education and experience set him up for life — though he does think he would have done OK if NIL had been around back then.

“I’m certain I would have made a dollar or two,” he said.

Now Lawrence is helping hundreds of thousands of college athletes collect more than $1 billion a year through NIL.

Lawrence and a former Husker teammate founded Opendorse, a company with an online platform that brings together college athletes and those who want to hire them for endorsements. Athletes receive offers through the platform, and by clicking on a green “Accept” box, the deal is done.

Since more than half the schools from the major football conferences use Opendorse, Lawrence has a pretty good idea who the NIL leaders are.

Nebraska ranks in the top 10 in total NIL dollars and top five in individual NIL deals, he said. Texas is No. 1. In all, Opendorse processed $917 million in NIL transactions in the first year.

Other sources say top players at Nebraska are making six figures. At least 120 made money last year, roughly two-thirds of them football players. There are reports nationally of some athletes topping $1 million.

The way NIL was largely sold by its supporters, athletes would be able to earn a little extra pocket money for doing endorsement deals, such as pitching a local burger joint on Twitter or Instagram.

But today, it’s generally acknowledged that many — if not most — of those who pay for NIL services from athletes are not looking for anything in return. They’re school boosters who want to reward athlete for having chosen their school.

“Do major universities like Nebraska have donors that are willing to do it just to help the cause? Of course,” Vaughn said. “That’s happening everywhere.”

Lawrence agreed.

“Why an athlete is being paid is in the eye of the beholder,” he said. Lawrence offered Casey Thompson, Nebraska’s starting quarterback last season, as an example.

“Casey Thompson's endorsement of a Nebraska business is undoubtedly valuable,” he said. “But oftentimes people are working with Casey Thompson not purely because of his NIL value, but because they believe that he's a great kid, or want to show support for the Cornhuskers.”

When it quickly became obvious that the promise of NIL riches could give some schools an upper hand in recruiting — not only of high schoolers but transfers from other colleges — collectives formed around just about every major university.

Collectives exist to raise money from fans, businesses and deep-pocketed boosters that can then be given to athletes through NIL deals. A significant majority of all NIL money now flows through them.

Nebraska was home to one of the first collectives, Athletic Branding and Marketing, which was co-founded by Gerrod Lambrecht, Frost’s former football chief of staff.

“Coach Frost knew we needed to have NIL to keep the best players,” said Jon Bruning , the former Nebraska Attorney General and NU grad who also helped found ABM. “That was apparent.”

After Frost was fired, ABM closed shop. A new collective, the 1890 Initiative, is now the primary NIL vehicle for NU athletes in several sports.

To legally receive NIL money under NCAA rules, the athletes must do something to earn it. So the collective lines up those opportunities. The athletes might be asked to appear at a charity dinner, visit the payer’s mother on her birthday, talk to nursing home residents via Zoom, sign autographs or record a podcast.

And how much are athletes paid for such things? Under NCAA rules, collectives have to value it based on “the going rate.”

So what is the value of a public appearance by a starting quarterback on a 4-8 football team? The market is in part set by whatever someone is willing to pay.

ABM sought to be conservative in valuing NIL activities, not wanting to raise potential eligibility issues for athletes or invite NCAA scrutiny.

“We weren’t going to mess around when it came to compliance,” he said. “This is Nebraska.”

Vaughn acknowledged it’s a challenge to figure out what the going rate is in an industry that didn’t exist a year and a half ago.

“I’d say there’s a lot of flexibility right now,” he said. “NIL is supposed to be employment, and I know how it looks publicly, but we’re doing everything we can to make it fit within what it’s supposed to be here.”

In some cases, NIL compensation is not in the form of cash but the use of a leased car. Nearly two dozen NU athletes had collective-leased vehicles the first year.

Schools can play no direct role in making the deals. And neither schools nor the collectives can promise prospective recruits a certain amount of NIL money if they sign. Often the collectives give recruits an estimated range based on what current athletes receive.

Could some recruits and collectives be making deals prior to signing? According to published reports, the collective affiliated with the University of Florida recently reneged on a promised four-year, $13 million NIL deal with a high school quarterback.

Vaughn said he doesn’t necessarily believe all the figures being thrown around. But Alberts said there was much angst at a recent meeting of Big Ten and NCAA officials over the wild west nature of collectives.

“Everybody would love to have some clear guidance,” Alberts said. “We want competitive equity in our sport, and it’s really hard to manage right now.”

The next athletic shoe to drop in the effort to pay college players could come in any number of places.

California — four years after its passage of the first NIL bill — is considering another bill that would require colleges to pay athletes in revenue-generating sports salaries of up to $25,000.

A lawsuit in a federal court in Philadelphia seeks to have college athletes declared employees under the Fair Labor Standards Act. Recent arguments did not go well for the NCAA.

“Our percentage of success in court as a membership has not been very good,” Alberts said.

But Alberts isn’t sitting around waiting to see what happens. He has already been looking at the numbers, figuring what the $130 million athletic budget would look like if the school was required to pay tens of millions of dollars to athletes.

Alberts thinks the university could take such a hit and maintain its nonrevenue sports programs. That’s thanks largely to its rabid fan base, which makes Husker football a financial colossus.

Not only did the $60 million-plus net profits generated by football last year rank sixth in the nation, the figure is arguably closer to $90 million.

Football generates another $26 million in seat licenses — donations tied to the best seats in Memorial Stadium. That money is outside the athletic budget, flowing to the NU Foundation, and used to fund facilities and other sports needs.

Still, to make the budget work, NU would likely need to find new revenue streams, turning football into an even bigger cash machine.

The upcoming renovation of Memorial Stadium will be planned with ways to maximize revenue in mind.

Instead of seven games a year, can it be used for more concerts like the Garth Brooks show in 2021?

What about beer sales, which were allowed at Husker basketball and baseball games for the first time this year?

How about more places inside and outside the stadium for fans to gather on game day?

“That’s why I’m so focused on all that,” Alberts said. “I kind of feel it’s my job to make sure we don’t end up in the ditch.”

And all the while, the landscape of college athletics continues to shift.

Under one change in NCAA policy, athletic departments are now allowed to help raise money for NIL collectives.

As a result, Alberts recently found himself with new Husker football coach Matt Rhule at an NIL fundraiser in Arizona. He also sent out an email urging support for the Nebraska collectives in January.

“Nebraska has emerged as a national leader in NIL activity because of our great fan support, and these opportunities are helping our coaches recruit the best talent to Nebraska,” he wrote.

As another sign of the school's embrace of NIL, its latest multimedia contract requires the rights holder to set aside more than $2 million for NIL payments to NU athletes.

Some schools are even using their in-house fundraisers to solicit funds for their NIL collectives. Nebraska has not gone that far. But Alberts constantly watches how the bounds are pushed by schools as they seek to gain an edge.

“We will never be first,” Alberts said. “But we will never be last.”

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