Itâs beginning to imitate the world soccer system in many ways, now including transfer fees paid to the old team.
If I were representing the athletes, Iâd say that if the buyout money is counted against the acquiring school, but not added to the pool limit for the originating school, itâs taking money out of the system for legal payments to athletes.
I do understand the counterargument that money is fungible and that the NIL pool is an upper limit, not a minimum spend requirement, so the money doesnât have to be spent that way, so maybe it doesnât matter.
I think it would matter to a school like Virginia that likes to adhere to the rules, even if it puts itself at a disadvantage. If we have 20.5 mil to spend, weâll stick to that, but if we have 20.5 mil plus whatever we wouldâve gotten for Fields and maybe a couple other football players plus the entire basketball team plus most of the baseball team, weâll spend up to that higher amount.
I donât see it. The athlete is getting something of value: the ability to transfer (and break the initial contract), and presumably more $$. The receiving school is getting something of value: a kid they want to play for them. The sending school gets the extra $$ and the freed up rev share.
I donât see the argument for letting the initial school be able to spend the extra $$ as rev share above the cap. And practically, in the likely case where this is a kid moving up a level or so, then the sending school is probably not at or near the cap anyway.
Sharper point: Itâs not taking $$ out of the system; itâs allowing some of the $$ to go towards something else the athlete finds of value (mobility).
This lawsuit will be removed to federal court almost immediately. No way Miamiâs going to keep this in Wisconsin state court.
I wonder how non-compete clauses in NIL contracts will hold up under Federal or Wisconsin law. The Biden FTC pretty much banned them, but some state sued them to stop it and that was unresolved at the time of Presidential shift.
If it were a state school doing this instead of Miami, could Wisconsin even sue or would they be preempted by sovereign immunity? Or would it be considered a dispute between states where the US Supreme Court has Original Jurisdiction and would act as the trial court in the matter?
I agree with the last point around how informed the decision being key for judging how predatory their practices are. I read that at least 50% of their investment/loan/not-loan-payment deals are with athletes from Latin American countries and the economic situations in some of those countries bring up questions for me about vulnerability of the athletes, especially at the young ages where these deals are being signed.
(Also, somewhat tangentially, the quotes Schwimer made in that WaPo story give me the ick)
A typically legible description of what the legal grey area is here:
One more technical point. Nobody bought your stock, because you are not a company and you donât have stock. But somebody did give you money, and you signed a contract promising to give them money later. What was that money, if not an equity investment? What would you call that contract? Your first instinct might be to call it a âloan.â It is an unusual loan â instead of paying back a fixed amount with interest, you agree to pay back an amount that varies depending on your future income and that could be zero â but I donât think it is crazy to characterize it as a loan.
This is a problem, because there are consumer-protection rules requiring disclosure of loan terms, and many states have usury laws capping the interest rate on loans. If you get $500,000 from an investor for 10% of your future earnings, and then end up making $500 million and owing $50 million to the investor, that is going to work out to an annualized return that is way way way higher than the usury cap. And the investor will say âno, see, I was taking equity-like risk on a portfolio of athletes, and this was the only one that worked out, and itâs not a fixed rate of return at all.â But you might say ânope, technically a loan, you canât charge me more than 16%.â And this can work: We talk from time to time around here about transactions that are characterized as roughly equity purchases, but that then get recharacterized as loans and subject to usury rate caps.
For tax purposes, you often have the opposite issue. Something a taxpayer considers a loan is recharacterized by a taxing authority as an equity investment.
About the expected amount of talking their book for this sort of thing.
I am idiosyncratically interested in their âPerformance Output Scoreâ which is some in-house impact metric for basketball that they made forâŚreasons? And then I saw they unnecessarily chopped up a continuous variable into a categorical variable
The underlying article is worth a read and has a slightly different vibe than the âdurr-ur-err, I donât know what this meansâ vibe from the football coaches.
Eg, I didnât realize Kessler still has a pretty robust ongoing role:
To me, these things are more notable than football coaches pulling their âaw shucks Iâm just a dummyâ routine for the millionth time, which Dellenger chose as his headline:
Huh. I guess this isnât surprising, but this seems like a bad contract to sign!
Dillingham said heâs seen contracts that also permit schools to end or reduce a playerâs salary over the course of the deal, something reported earlier this spring by Yahoo Sports via Illinois law professor Michael Leroy, who uncovered more than 90 different player contracts through open-records requests.
âThese NIL contracts read like employee handbooks that reserve a right of employment at will for employers,â he said. âThey donât use âat willâ but the concept is, they can terminate the contract.â
"[school] shall have, until the end of Student-Athleteâs NCAA eligibility, dependent, successive options to extend the Term under the same terms and conditions as the existing Term, unless the Parties mutually agree in writing to a change in such terms and conditions, for additional periods of one year by providing written notice of such extension (e-mail is sufficient) to Student- Athlete no later than twenty (20) days prior to the expiration of the then-current Term of the Agreement. Under such an extension option, the Total Compensation payable to Student-Athlete for the one-year extension period shall be a pro rata, annualized portion of the compensation set for the initial term.
Yes. Except in the NBA, team options can only happen once during a given contract. Here FSU could sign a HS recruit to a cheapo contract and just extend indefinitely.
I guess the question is whether the player can âopt outâ by entering the transfer portal, or whether this language precludes that if the team wants to keep the player.
