Secure The Bag
Student athletes are quickly becoming millionaires in the wake of the recent NIL changes
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Secure The Bag:
College sports are in the midst of a sea change and student athletes are about to secure the bag in a massive way. All I can say is: It’s. About. Damn. Time.
A mixture of new state laws and NCAA rules changes that went into effect on July 1st, 2021 have provided athletes with varying degrees of new protections and opportunities to make money by selling their name, image and likeness (NIL) rights. Under the previous NIL rules, student athletes were prohibited from accepting payment from a third party in exchange for the use of their name, image, or likeness.
The proposed update to the rule originated in October 29, 2019, when the NCAA's board of governors unanimously agreed that it was time to modernize its name, image and likeness rules. As reported by ESPN: The board directed all three NCAA divisions to make rules by January 2021 that would allow athletes to make endorsement money while maintaining "the collegiate model."
Flash forward to June 30, 2021, when the NCAA's Board of Directors adopted a temporary rule change that opened the door for NIL activity, instructing schools to set their own policy for what should be allowed, with minimal guidelines.
From Boost Mobile to Milo’s Sweet Tea, as soon as the clock struck midnight on July 1st, student athletes across the country were immediately getting scooped up by advertisers and agents. While details of most of the endorsements are still vague, some deals were leaked this week with huge price tags.
For example, Bryce Young, a 19-year-old quarterback for the Alabama Crimson Tide is reportedly already making bank. This week at the Texas High School Coaches Association Convention, Alabama coach Nick Saban commented that Young has racked up close to $1 million in NIL deals.
Yeah but he’s a huge star, right? Well, not yet. He only threw for one touchdown for Alabama as a freshman last year. But that isn’t stopping advertisers from spending the big bucks on him—fully knowing the starting QB for the Crimson Tide has been one of the most prestigious positions in college sports for the past 10+ years.
“Our QB has already approached ungodly numbers, and he hasn’t even played yet,” Saban remarked, per Chris Hummer of 247Sports. “If I told you what it is…it’s almost 7-figures. And it’s like, the guy hasn’t even played yet. But that’s because of our brand.”
Secure the bag young man.
Another first in NIL was announced this week as high school basketball star Mikey Williams signed with Excel Sports Management and is expected to “generate millions of dollars”.
Secure the bag young man.
The Cavinder twins, who are popular on TikTok and play basketball for Fresno State, have locked in multiple NIL deals.
Secure the bag young women.
As a former D1 athlete (crazy, I know), I couldn’t be happier for these kids—with just a hint of jealousy. Being a student athlete is such a demanding job. The weights, the practice, the film, the games, the study halls, the curfews, etc., all while trying to earn a respectable degree in case the dream of making a professional sports team falls through. It is an intense amount of pressure.
But at the end of the day, these kids deserve to get paid for the hard work they’ve put in their entire lives.
I don’t buy the argument that “they shouldn’t get paid for their NIL because they are amateurs and get their room and board and tuition paid for”. So what? That’s not enough. Not even close. How about the tens of millions the school’s athletic department brings in through tickets and jersey sales with their star players’ names on the back?
During the season, athletes spend anywhere from 20-40 hours per week doing team activities. That’s a full-time job, except they were previously never getting paid in the traditional sense. They were unpaid interns. All the while, the NCAA and the universities were profiting off of their hard work and blood, sweat, and tears.
The new NIL rules couldn’t have come at a better time. We are living during a parabolic rise of the creator economy. Those building massive online followings have been rewarded handsomely. And now student athletes can leverage their social media followers to sell huge deals. Advertisers and agents would be wise to scoop up some of these rising stars. Don’t forget about the bench players and walk-ons. They need love too.
Will there be downsides and unintended consequences to this new era in NIL? Of course. We just don’t know what they’ll be yet until they happen. Soon afterward, new rules and codes of conduct will be put in place.
But the possibilities of powerhouse schools using brands and money to recruit the best players could ruin the competitiveness across different sports and conferences. Time will tell. Right now it’s a free market. And it’s a bull market for student athletes with large followings on social media.
The big man on campus is about to become the rich man on campus. Someone get them a financial advisor and invest that cash in some target date funds.
P.S. If you know a student athlete interested in signing a deal, tell them Ramp Capital will sponsor them (for the right price, of course).
Performance Update:
Now let’s see how the People’s Portfolio did this week…
We clawed back all of the losses incurred last week as the overall markets closed at another all-time high.
If you were looking for a dip, Monday was your chance, but you had to act quickly. To start off the week, the Dow sank 725 points—or over 2% for the purists who hate when I quote it in points—as the spread of the delta variant led to a sharp rise in Covid cases in the U.S. and around the world. At least that’s what the media was reporting as the reason for the drop. But that doesn’t explain why we rallied 4 straight days after the Dow’s worst single-day performance in 8 months as Covid cases continue to rise.
This upcoming week is a big one for big tech earnings. Facebook, Apple, Amazon, Tesla, and Google all report this week. I’m looking at these stocks as the bellwether for the next move higher or lower.
On Friday, we voted Exxon Mobil (XOM) to remain in the portfolio for another 10 weeks. XOM is -6.4% over the past 20 weeks.
Disney (DIS) is on the chopping block next week for the 1st time. We’re currently holding onto a 2.20% gain over the past 9 weeks. Disney stock has pretty much been in a steady decline since March. However, it popped last week after a strong release at the box office from Black Widow.
Our portfolio is currently -2.22% on the year. We are still getting destroyed by the benchmarks as there appears to be only a small chance for a path to outperformance this year. We really got burned on some of the trades that worked so well last year.
Keep an eye out for the new Twitter poll every Friday. Follow along in real-time with nearly 300,000 others on Public.
Portfolio News Highlights:
The biggest stories affecting our portfolio this week:
Crypto gains after Musk reveals he owns Ethereum, revised Bitcoin stance (Yahoo)
Chip shortage is an ‘all hands on deck type situation’ for automakers: Analyst (Yahoo)
Shopify Stock Hits a New High. Wall Street Is Boosting Targets Ahead of Earnings. (Barron’s)
Square Goes Down the DeFi Rabbit Hole; What Does It All Mean? (Yahoo)
Why sports gambling won't see a boom during the Tokyo games (Yahoo)
What Else We’re Reading:
Blogs/Articles:
DeepMind says it will release the structure of every protein known to science - Will Douglas Heaven (MIT Review)
The Highest Forms of Wealth - Morgan Housel (Collab Fund)
Americans' Life Ratings Reach Record High - Dan Witters and Sangeeta Agrawal (Gallup)
How Science Lost the Public’s Trust - Tunku Varadarajan (WSJ)
Books:
The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion - Eliot Brown and Maureen Farrell
Need new reading material? Visit my Amazon page for my most purchased book recommendations.