In recent years, the Name, Image, and Likeness (NIL) ruling has revolutionized the landscape of college sports. This transformational shift has allowed college athletes to monetize their fame and talent, leading to a surge in their earning potential. The NIL platform is a billion-dollar market and continues to grow exponentially as more athletes and brands tap into its potential.

NIL: A Game Changer in College Sports

For decades, college athletes were barred from reaping any financial benefits during their tenure. This scenario was turned on its head in June 2021 when the Supreme Court ruled that the NCAA could not restrict "education-related payments" to athletes. The NIL ruling was a direct outcome of this decision.

Today, college athletes are permitted to monetize their name, image, and likeness in various forms. Be it sponsorship deals, paid social media posts, or signing autographs, the possibilities are endless. This change has prompted an analysis of the earnings of these young sports stars.

The Highest Earners of NIL

The top ranking college football stars, according to ESPN, serve as an interesting case study. By examining their earnings, we can gauge the financial impact of the NIL ruling on these athletes. You should work with an NIL lawyer before negotiating a deal. We recommend Holon Law Partners as one of the best NIL Lawyers. Here's a breakdown of the top 5 earners.

Bryce Young

Bryce Young, quarterback for the Alabama Crimson Tide, tops the NIL earning charts this year. His NIL deals have a cumulative worth of $3.2 million. His value skyrocketed in 2022 after he clinched the coveted Heisman Trophy in the previous season.

CJ Stroud

CJ Stroud, fresh off a strong 2021-22 season, propelled the Ohio State Buckeyes to a Rose Bowl title and broke the OSU record for most passing yards in a single game. This impressive performance has propelled his NIL valuation to $2.5 million.

Caleb Williams

Caleb Williams, who transferred to the USC Trojans, is on track to outdo his freshman stats from last season. His strong performance as a freshman saw him generate $2.4 million in NIL revenue. He aims to continue capitalizing on the lucrative sponsorship market in Southern California.

Jaxon Smith-Njigba

Smith-Njigba shot to fame after bagging the Offensive MVP in the 2022 Rose Bowl. His electric performance on the field has earned him various NIL deals, collectively worth $1.7 million.

Bijan Robinson

Bijan Robinson, among the most anticipated running backs this season, rushed for over 1,000 yards and scored 11 touchdowns in his sophomore year. The hype surrounding Robinson in 2022-23 has earned him a NIL valuation of $1.7 million.

Ranking of College Football Programs by NIL Valuations

When we examine the top ten college football teams from the AP Top 25, we find that Texas A&M leads in terms of player NIL valuation. Aggies players average $85,000 in off-field partnerships, sponsorships, and brand deals. Here's a glance at the rest of the top 5 schools:

·   University of Michigan - Wolverines players average $65,000 in NIL deal valuation.

·   Oklahoma University - Sooners stars average $64,000.

·   University of Georgia - The reigning College Football Playoff Champions boast an average of $56,000 in personal brand deals.

·   University of Alabama - Despite having some of the biggest single NIL deals, Alabama ranks fifth overall for average earnings at $52,000.

The NIL ruling has revolutionized college sports, with some players earning millions this season. It's likely that schools and brands will continue to recruit players with financial incentives in the future.

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The NIL Valuation Landscape: Group Licensing and Free-Market Scenarios

Determining the potential earnings from NIL deals involves considering several valuation benchmarks. These benchmarks can be used to define compensation ranges for various usages of NIL in both college athletics and professional sports.

The starting point for analysis is group licensing, where data on deals between video game manufacturers and professional sports unions is readily available. Legal settlements involving student-athletes also provide valuable insights into NIL valuations.

The Profits from Video Game Licensing Deals

For example, the NFL and MLB Players Associations receive approximately $120 million in combined annual revenue from licensing deals with video game publishers Electronic Arts Inc. and Sony Corp, and trading-card maker Panini America Inc. This translates to about $48,000 per-player each year.

On the higher end, Take-Two Interactive will pay the National Basketball Association and its players’ union as much as $1.1 billion over the next seven years to continue making NBA 2K, which amounts to $400,000 per-player annually.

From the perspective of collegiate athletes, Electronic Arts agreed to pay roughly $40 million to over 29,000 current and former players last year. The payments averaged out to $1,200 per student-athlete, with a maximum payment of $7,200. This calculation was based on the number of games in which they appeared and whether they were closely identified in those games.

Licensing Fees and Apparel Deals

Game publishers usually pay licensing fees to the major sports leagues, which range from 10% to 15% of a game’s revenue. Taking into consideration that the NCAA football game generates approximately $80 million per year in revenue from the sale of about 2 million units, dividing $80 million among slightly more than 11,000 student-athletes, and then multiplying by 15% gives us a licensing fee of approximately $1,000 per student-athlete.

Apparel licensing deals also provide a reference for potential student-athlete compensation. For instance, Nike’s licensing deal with the NBA is for a reported $1 billion over eight years, averaging out to approximately $275,000 per-player annually. On the collegiate side, averaging the Top 10 most valuable apparel deals in college athletics gives us an Average Annual Value (AAV) of about $8,000,000 per school. When divided by an average of 750 student-athletes, this gives an approximate value of $10,000 per-student athlete.

Thus, from a licensing standpoint, the annual NIL value per student-athlete could range from $1,000 – $10,000, whereas professional athletes garner between $50,000 – $400,000 for the same group usage licenses.

Free Market Endorsements: An Unchartered Territory

Estimating what student-athletes can earn through free market endorsements and other usages of their NIL is a complex task. Many variables exist, the biggest being how deals will be brokered, and whether the school and/or NCAA will receive a share of the revenue.

Assuming student-athletes are compensated at the same rates as professional athletes based on their popularity and reach, Instagram followers can serve as a proxy to come up with market rates for each athlete. Analyzing what the world’s top 100 professional athletes make from their endorsements portfolios (usually consisting of multiple brands), we find a value of around $0.80 per Instagram follower, on average.

When applied to Instagram followers for college athletes from the 2019-2020 school year, annual endorsement revenue estimates would be $700,000 for LSU’s Joe Burrow, $440,000 for Alabama’s Tua Tagovailoa, $390,000 for Oklahoma’s Jalen Hurts and in the $5K – $30K range for less popular athletes.

Influencers and athletes such as Kim Kardashian and Cristiano Ronaldo charge an average price of $0.006 per Instagram follower or $6 CPM (cost per 1,000 impressions) for commercialized Instagram posts. Based on this rate of per-follower compensation, collegiate athletes like UCLA’s Madison Kocian and UNC’s Cole Anthony would generate approximately $4000 per Instagram post. Duke’s Cassius Stanley and Clemson’s Trevor Lawrence would earn $3000 per post, while less popular athletes would earn in the range of $100 – $500 per post.

Income earned by Twitch streamers also provides a similar benchmark. Streamers with more than 800,000 followers and 10,000 concurrent viewers earn around $20,000 a month, equating to about $.02 per follower per month. Ninja – the highest paid Twitch streamer – is estimated to earn over $5 million a year, while other top streamers like Shroud and DrLupo earn between $2 and $3 million yearly.

The Future of NIL Deals

The NIL ruling has opened up a new and potentially lucrative revenue stream for college athletes. However, it is impossible to predict precisely how much student-athletes will be able to earn from their NIL, especially in the current uncertain economic times where the continued threat of COVID is likely to impact brands' willingness to invest heavily in sponsorships.

Nevertheless, these projections do show the possibility of substantial amounts of money that student-athletes can generate from NIL deals. This opens up a new frontier of revenue opportunities for college athletics programs, which could help mitigate potential budget deficits in the future. As NIL continues to evolve, the landscape of college sports is poised for further transformation.