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$8 Million NIL Deal

ok. University of Tennessee is gonna be paying $0.00 of this 5* QB 2023 recruits alleged NIL deal. Just like Stoops & Cal, the money comes from private doners willing to give it.

And if someone is willing to give this high school kid the money, guess what? that's fair market pay, that is free markets & capitalism at work. NCAA sat on their butts & let college sports get to this place, and I doubt anybody can put the genie back in the bottle.

It's only fair market if something of exchange is given in return. Otherwise it's just a gift and not part of commerce.

What would be given in return? Performance (term of art) of some sort either in the form of attendance and participation in a particular athletic program or a guaranteed number of advertisement/endorsement/appearances. The former is prohibited but the latter is allowable and could well be a valid marketing expenditure for a company.

All these arrangements need additional scrutiny to make sure it's the latter, but the NCAA so far shows little/no ability to provide any such scrutiny.

So we're left with a mess.
 
It's only fair market if something of exchange is given in return. Otherwise it's just a gift and not part of commerce.

What would be given in return? Performance (term of art) of some sort either in the form of attendance and participation in a particular athletic program or a guaranteed number of advertisement/endorsement/appearances. The former is prohibited but the latter is allowable and could well be a valid marketing expenditure for a company.

All these arrangements need additional scrutiny to make sure it's the latter, but the NCAA so far shows little/no ability to provide any such scrutiny.

So we're left with a mess.

I posted on the HOB I would be very hesitant to tell a business owner that a huge NIL payment to a HS ball player would be considered a deductible "ordinary and necessary" business expense, and could be well considered a gift, triggering the obligation to file a gift tax return by an individual (Caveat, I am not a CPA or tax attorney)
 
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I posted on the HOB I would be very hesitant to tell a business owner that a huge NIL payment to a HS ball player would be considered a deductible "ordinary and necessary" business expense, and could be well considered a gift, triggering the obligation to file a gift tax return by an individual (Caveat, I am not a CPA or tax attorney)

It absolutely could be, if they didn't have to do anything in return for said payment.

Of course they have to do something in return. That "something" is or should be the subject of much scrutiny
 
It absolutely could be, if they didn't have to do anything in return for said payment.

Of course they have to do something in return. That "something" is or should be the subject of much scrutiny

And it would have to be deemed reasonable compensation, I think that you can't even deduct executive pay from a corporate tax return if it is deemed unreasonable compensation.
 
And it would have to be deemed reasonable compensation, I think that you can't even deduct executive pay from a corporate tax return if it is deemed unreasonable compensation.

Not a tax expert but I'm fairly certain advertising like this would be deductible. It's no different than any other celebrity endorsement as long as you actually get something in return.

Is it a wise spend? I don't think so but companies spend a fortune on this stuff. Look how much the Verizon "can you hear me now" guy or progressive's flo made. It's nuts.

Of course that's all assuming the groups aren't set up as a 501c3. That's an entirely different animal and some very gray area. I actually suspect at least some of them are
 
And it would have to be deemed reasonable compensation, I think that you can't even deduct executive pay from a corporate tax return if it is deemed unreasonable compensation.
It has to be significantly out of line with similar "businesses". There are some very highly paid actors and social media influencers.
 
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Not a tax expert but I'm fairly certain advertising like this would be deductible. It's no different than any other celebrity endorsement as long as you actually get something in return.

Is it a wise spend? I don't think so but companies spend a fortune on this stuff. Look how much the Verizon "can you hear me now" guy or progressive's flo made. It's nuts.

Of course that's all assuming the groups aren't set up as a 501c3. That's an entirely different animal and some very gray area. I actually suspect at least some of them are

I think one could easily make an argument that it is different, paying Tiger Woods or Tom Brady $10M for advertising is reasonable, especially for an international company like Verizon. Paying Joe QB at home state U $10M to make appearance every once in a while at your car dealership is not reasonable and would not be deductible.

But I could be wrong, my wife will tell you I am usually wrong.
 
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I think one could easily make an argument that it is different, paying Tiger Woods or Tom Brady $10M for advertising is reasonable, especially for an international company like Verizon. Paying Joe QB at home state U $10M to make appearance every once in a while at your car dealership is not reasonable and would not be deductible.

But I could be wrong, my wife will tell you I am usually wrong.
My wife used to be the secretary for a founding partner in a tax attorney firm. He would have no issue setting this up so there were no tax issues. He beat the IRS like a drum. I can assure you there is at least one attorney like him in the background. There won't be any issues.
 
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I think one could easily make an argument that it is different, paying Tiger Woods or Tom Brady $10M for advertising is reasonable, especially for an international company like Verizon. Paying Joe QB at home state U $10M to make appearance every once in a while at your car dealership is not reasonable and would not be deductible.

But I could be wrong, my wife will tell you I am usually wrong.

I think we're arguing two different things. I don't think it's a good ad spend either. Let's use Buick and tiger woods as a great example:

i have no idea what the margin is per unit for a Buick vehicle. Let's say the margin is $5000 and tigers deal was $10,000,000. That means to break even, tiger would need to be solely responsible for the sale of 2000 additional units. Are 2000 more people buying a Buick solely because tiger said so? I can't believe they are.

However from a business standpoint it's defensible especially in modern era because of the social media aspect. Look at Zion for example. Even beyond his value as an athlete, he had an incredibly engaged social media following. Same thing with some of these college athletes (ie will Levis). With high school kids, it's more speculative but part of the deal can even involve social media management for growth. All those interactions have a certain marketing value as well, if you believe some statistics out there. That's how we get the ridiculous emergence of the social media "influencer".
 
My wife used to be the secretary for a founding partner in a tax attorney firm. He would have no issue setting this up so there were no tax issues. He beat the IRS like a drum. I can assure you there is at least one attorney like him in the background. There won't be any issues.

LOL, you may well be right, but a difference of opinion makes for a horse race and a lawsuit - and around these parts, occasionally the first leads to the second :D
 
LOL, you may well be right, but a difference of opinion makes for a horse race and a lawsuit - and around these parts, occasionally the first leads to the second :D
Funny. I'd imagine argument #1 would be that this is new territory. Market values haven't had time to settle out not to mention there is an emotional connection to these college athletes which makes them much more valuable than a celebrity or influencer.
 
I think we're arguing two different things. I don't think it's a good ad spend either. Let's use Buick and tiger woods as a great example:

i have no idea what the margin is per unit for a Buick vehicle. Let's say the margin is $5000 and tigers deal was $10,000,000. That means to break even, tiger would need to be solely responsible for the sale of 2000 additional units. Are 2000 more people buying a Buick solely because tiger said so? I can't believe they are.

However from a business standpoint it's defensible especially in modern era because of the social media aspect. Look at Zion for example. Even beyond his value as an athlete, he had an incredibly engaged social media following. Same thing with some of these college athletes (ie will Levis). With high school kids, it's more speculative but part of the deal can even involve social media management for growth. All those interactions have a certain marketing value as well, if you believe some statistics out there. That's how we get the ridiculous emergence of the social media "influencer".
Yes and remember this is a "group". There is no telling how many businesses and organizations are involved. It's probably dozens which brings each one down to a more "normal" scale.
 
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Hard to see us competing with some of these NIL numbers in football, at least for the time being. But if this is the way it’s going to go I don’t really care.
 
How much did UK football "compete" in the rest of CFB history when recruits were bought under the table in smoky backrooms

Besides, ask UT fans, they grumble frequently now about how we are willing to "play the game" with Nashville recruits. Or ask UL fan about Aspirations Gym.
 
All I can say is there must be a whole lot more rich people without any sense than I ever thought possible. I can't believe there are but a handful of businesses that could really benefit from association and promotion by a college football player or basketball player. And certainly not to the tune of $8M.

This NIL really is no different than horse racing, i.e., the sport of kings, only we are now in an era to determine which set of millionaires can fund the best football team, and the stakes will probably get higher as time goes by.

What is it about about being a millionaire you don' t like - it is not that much money anymore. I am a millionaire and will send $100 to the offensive line. I hate to think Ky. is so poor and without a pro team that business can' t support us. This is a pittifully take on Ky.
 
I'm ok with it because donors will only want to pay top dollar for a hand full of top recruits every year, allowing other school's donors to do the same, thus evening the playing field.
 
I'm ok with it because donors will only want to pay top dollar for a hand full of top recruits every year, allowing other school's donors to do the same, thus evening the playing field.
Depends upon what you mean by a handful.

Texas A&M's #1-rated 2022 class include 7 of the Rivals Top 25 players and, as I understand it, 17 of the Rivals Top 100. It was the highest rated Rivals recruiting class of all time...closely coinciding with the introduction of NIL. Hmmm....

With programs like Bama, UT (both of them), OSU (both of them),Oklahoma, Oregon, and other NIL deep pocket programs, vying to match or exceed A&M's accomplishment each year, the pickings will be slim for the rest of us when they're all done NIL-feasting.
 
I'm waiting for players to start selling stock in themselves. Get like 1,000 people to invest $1,000 and when the player goes pro you get a return on your investment. If they blow up big time then you might get two or three times the return on your money. If they end up not making it in the pros then you are just out the $1,000.
Hell, think I will start selling stock in myself, of course I am 84 next month but I was pretty fast back in the day. But then when I went to try out for the Ft Bliss track team I saw this 5' 9" guy that didn't run he floated, so I immediately switched to the 440. Made the Ft Bliss track team too. Later found out that guy was in the race where the world record at the time was set (Sime or Marrow) in 9.3 and he was second in 9.4 seconds. Unbelievable to watch him run.
 
What is it about about being a millionaire you don' t like - it is not that much money anymore. I am a millionaire and will send $100 to the offensive line. I hate to think Ky. is so poor and without a pro team that business can' t support us. This is a pittifully take on Ky.
Good for you, and me as well. I give about 10 times that much to the K fund for my football tickets every year. That's plenty for me to give to a college football program. You obviously feel different . . .
 
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Welp, the 5* recruit everyone speculates the $8 mil contract was signed by has now verbally committed to Tennessee this morn.

Will be fascinating to see the fallout. Do other highly regarded Vile recruits say "hey, where's mine???". Do schools at the top like Bama & Ohio St say "ok, if this is what it takes now, let's crank it up".
 
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Do schools at the top like Bama & Ohio St say "ok, if this is what it takes now, let's crank it up".

You know the answer to that Q, of course they will. This is going to be ridiculous.

TBH, the better deal would be to simply pay a proven QB, e.g., Will Levis, to just enroll at UT this fall, could probably do it for a million or so.
 
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Welp, the 5* recruit everyone speculates the $8 mil contract was signed by has now verbally committed to Tennessee this morn.

Will be fascinating to see the fallout. Do other highly regarded Vile recruits say "hey, where's mine???". Do schools at the top like Bama & Ohio St say "ok, if this is what it takes now, let's crank it up".

And where is the NCAA? They're largely to blame because they're sitting by while people are openly violating one of the few rules on nil
 
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And where is the NCAA? They're largely to blame because they're sitting by while people are openly violating one of the few rules on nil
But they are not breaking any rules. The NCAA left a gaping loop hole in this. The school can play matchmaker (player to money) legally, they just can’t offer it themselves as an inducement to sign. That’s the basic idea I think Smart and Saban were calling into question last year. They left this thing wide open.
 
But they are not breaking any rules. The NCAA left a gaping loop hole in this. The school can play matchmaker (player to money) legally, they just can’t offer it themselves as an inducement to sign. That’s the basic idea I think Smart and Saban were calling into question last year. They left this thing wide open.

They are absolutely breaking the rules. There are only 2-3 things that are prohibited. Nil to entice attendance to a particular school is expressly not allowed.
 
Aside from legality of it just seems like a bad investment. A lot of good high school QBs don’t pan out. Seems a better use to spread that money around build a well rounded strong class.

Also, we’re going to have a much lower “salary cap” than other SEC schools for football. Do we even have one of these collectives out there talking to recruits?
 
Every pro sport has salary caps
Except baseball and the anti-trust exemptions go against our free market principles, which is my point. Also, I didn't say I am patently against salary caps, as there is an argument they provide for the greater good (maybe), rather I just like to point out hypocrisy if I see it. A lot of people cry free market/libertarian idealism when it benefits them, then cry for regulations and guard rails when those would.
 
They are absolutely breaking the rules. There are only 2-3 things that are prohibited. Nil to entice attendance to a particular school is expressly not allowed.
The way they left it, all they have to do is say, “here are the types of opportunities that would be available to a player of your caliber in Knoxville”. No money changing hands to attend, just opportunities that could/would/will be there for a player like you.
 
My observation is considerably broader than you suggest it to be.

I submit that, in its current manifestation, the NIL phenomenon is, rapidly, destroying CFB as we have known it and (here's the important part with regards to your response to my post), in the bargain, destroying the NIL Collective business model.

I have maintained since the advent of NIL that only a handful of teams will be able to sustain an elite level of NIL funding - and those teams won't necessarily be comprised of the traditionally elite programs of recent years. As a natural consequence, in short order, only a handful of programs will field teams that can, realistically, compete at this new super team level.

At that point, the old conference affiliations and the CFP that we have today will no longer make sense. Instead, those super teams might as well, and likely will, form their own nationwide league.

As to your free market allusions, ours is no where near a pure free market or pure market economy - and for good reason.

In pure free markets, in the absence of sensible regulation, the profit motive, inevitably, leads to diminished competition as, over time, monopolies and oligopolies are all that are left standing. Given the opportunity of no regulatory restraint, the more powerful players will choose to run their competition out of business through means that regulations would, otherwise, render illegal.
https://www.businessinsider.com/sherman-antitrust-act

NIL is a pure market right now. There are virtually no sensible regulations to prevent the outcome of CFB being "owned" by an oligopoly (just a handful of NIL collectives) - and headed toward the same end as any other Positive Feedback Loop system for which the output (i.e., product on the field and consumer interest therefore) becomes destablized.

Some structure/regulation/guidelines could result in a sustainable NIL model - a model that is better for more NIL beneficiaries and for whatever CFB is destined to become.

As an aside, enlighten us as to why you felt compelled to include in your post the provocative rhetorical question of "Do you think about what you are typing before you press the keys?" The comment added nothing of value to your post. So, why? In fact, I do.

By the way, I did chuckle at your impressive superman-like leap of logic: "Since you are posting here, it is more likely than not that you are a Republican/conservative..." You have an undeniable gift. Bless your heart.
I owe you an apology, as I did jump to a conclusion, by assuming what philosophy drove your comment. I should have come from curious, which I normally do, and I failed to here. And as I mentioned to another poster, I am not against putting sensible guardrails that provide for the greater good. My comment was strictly about hypocrisy of philosophy and it was ill advised because because of my hasty assumption.
 
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I owe you an apology, as I did jump to a conclusion, by assuming what philosophy drove your comment. I should have come from curious, which I normally do, and I failed to here. And as I mentioned to another poster, I am not against putting sensible guardrails that provide for the greater good. My comment was strictly about hypocrisy of philosophy and it was ill advised because because of my hasty assumption.
Wow. Much appreciated, but, tbh, unnecessary. It's all good. Still, thank you.
 
And where is the NCAA? They're largely to blame because they're sitting by while people are openly violating one of the few rules on nil

Like you I don't think there is any doubt rhe vols bought him. Listening to someone on Finebaum who said the same thing. But reading over it there was nothing in the contract about the kid signing anywhere in particular. There is nothing in the contract that assures he.will sign with UT. According to this guy he can take UT's money and sign with anyone.
 
He can and he can also be in breech of contract and not receive any of his nil money. The way I understand it the player signs his rights with a company like spyre and that company controls their image and rights from that point on. Not the school. If said company has deals in place with local businesses and businessmen and those comapnies and people want a player representing that school for their product then that player has to do that to get their money. Be hard to collect if a Knoxville based car dealership says no to an Alabama player doing a commercial for them.
 
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Like you I don't think there is any doubt rhe vols bought him. Listening to someone on Finebaum who said the same thing. But reading over it there was nothing in the contract about the kid signing anywhere in particular. There is nothing in the contract that assures he.will sign with UT. According to this guy he can take UT's money and sign with anyone.

Could but I doubt it. Noone is paying that kind of money without a guarantee. It might be in an ancillary contract, to keep it out of the main deal. But surely it's guaranteed he's going where they want.
 
Could but I doubt it. Noone is paying that kind of money without a guarantee. It might be in an ancillary contract, to keep it out of the main deal. But surely it's guaranteed he's going where they want.
This is way more money than the arrangement I was told about a couple of months ago. In that one, there was a handshake and a nod, nothing was put in writing, that kept in compliance with the rule. I don't like any part of how this is set up but it was left wide open so team could get around the rule.
 
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This is way more money than the arrangement I was told about a couple of months ago. In that one, there was a handshake and a nod, nothing was put in writing, that kept in compliance with the rule. I don't like any part of how this is set up but it was left wide open so team could get around the rule.

It's mostly wide open, but this is one of the very few rules that exist. It isn't just UT. People aren't even hiding it.
 
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