Yesterday the NCAA released a statement proclaiming that it was starting the process to allow student-athletes to be compensated for their name, image and likeness.

Sadly, though it is at least a step in the right direction, it leaves loopholes that are big enough to drive a football equipment truck through.

While it is nice to see the NCAA finally taking any type of action, its own statement raises many of the exact issues that I predicted as trouble spots in my October 4, 2019 posting: California’s Name, Image, Likeness Law Won’t Solve All Problems with NCAA.

Since that time, New York, Florida and Illinois have also proposed legislation that addresses these areas.

• New York
• Florida
• Illinois

A peek at the headlines that littered Twitter and the sports journalism landscape yesterday included the following headlines from high profile and reputable sources:

• CNBC: NCAA to permit athletes to profit from their name, image and likeness
• USA TODAY: NCAA Board of Governors opens door to athletes benefiting from name, image and likeness
• CNN: NCAA says athletes may profit from name, image and likeness
• ESPN: NCAA clears way for athletes to profit from names, images and likenesses
• CBS: Inside the NCAA’s move to allow athletes to profit from name, image and likeness rights

None of those headlines seem to accurate capture what the NCAA actually said in its statement. The NCAA did not set any clear timeline nor clear guidelines nor an indication that it was going to do anything other than “examine” the process and find a way to make some change. In my opinion, when you look at the words: “in a manner consistent with the collegiate model” you start to see the problem?

You have visions of enforcement nightmares and the bureaucratic inefficiencies of the NCAA coming to mind. Most people in sports (and elsewhere) agree that the collegiate sports model is broken. So now you have the leading organization telling us that the Name, Image and Likeness issues need to be handled in a manner consistent with a broken model? Obviously, that makes little sense.

The NCAA is hardly perceived as a bastion of fairness when you see how much trouble it has enforcing relatively simple regulations like transfer waivers. Some players like Ohio State’s Justin Fields are granted immediate eligibility. Others like Wisconsin basketball player Micah Potter are now told to sit out what amounts to three semesters of basketball despite having the support of the school he was leaving in his the petition for immediate eligibility (which isn’t even really immediate eligibility because it is already after having sat out a full season).

Fortunately for us (and unfortunately for them), the NCAA even lays out the manner in which it intends to treat this initiative. You can see in its own language, how difficult it is going to be to enforce these guidelines:

Take a look at all of the wiggle room that is identify in each of these guiding principles

NCAA GUIDING PRINCIPLES ON NAME, IMAGE, LIKENESS COMPENSATION

►Assuring student-athletes are treated similarly to non-athlete students unless a compelling reason exists to differentiate.

Wiggle room: “treated similarly” and “compelling reasons” Who is going to make these evaluations?

►Maintaining the priorities of education and the collegiate experience to provide opportunities for student-athlete success. 

Wiggle room: “priorities of education”–Whose priorities? “opportunities for success”–What type of success? Defined by who?

►Ensuring rules are transparent, focused and enforceable and facilitate fair and balanced competition.

Wiggle room: “transparent, focused and enforceable” and also “fair and balanced” These are virtually impossible to enforce fairly.

►Making clear the distinction between collegiate and professional opportunities. 

Wiggle room: What exactly is that distinction in the current world?

►Making clear that compensation for athletics performance or participation is impermissible.

Wiggle room: Of course you are getting paid for performance or participation. You only have value if you are on the field and being seen by the consumer! So the better you play and the more you play the higher your market value.

►Reaffirming that student-athletes are students first and not employees of the university.

Wiggle room: This is a pure CYA (cover your ass) move by the NCAA and the universities. They don’t want student-athletes positioned as employees because that causes all kinds of tax issues, liability issues and potential health-care issues.

► Enhance principles of diversity, inclusion and gender equity. 

Wiggle room: How is any of the name, image and likeness going to address these larger issues? Nice as a theory, not practical as a way to determine what is permissible.

► Protect the recruiting environment and prohibit inducements to select, remain at, or transfer to a specific institution.

Wiggle room: Recruiting environment already a problem and played on an uneven landscape. This will only make it worse. Virtually no way to distinguish what is a payment to select, remain at or transfer to a particular institution compared to what is a payment for “name, image and likeness” while you are at that institution (i.e. an athlete has no value to a business in Columbus, Ohio unless they are playing in Columbus and not in Tuscaloosa).

Can you honestly imagine the NCAA finding a reasonable way to enforce these issues? I could literally come up with 100 problems with these guidelines but let me just share a few of them to highlight the difficulties the athletes, schools, conferences, NCAA and businesses are going to have with this process:

PROBLEM #1

Problem #1: Do you trust the NCAA to handle the intricacies and nuances of regulating this process?

Answer: No chance. The NCAA has not proven itself to be transparent and explain its rulings. I believe that the hidden nature of the NCAA proceedings has been an enormous detriment to the organization and more importantly to the goals of the organization. It seems to be against its own interests to keep the rationale secret because that uncertainty undermines the process. If you really look at the multitude of issues that will arise under any potential legislation, you are now asking multiple parties to be part of the process, further complicating an already complex set of issues. The student-athlete, his/her university, the conference, the NCAA, the state laws and the business desiring to contract with the athlete all have their own interests. Toss in sports agents, attorneys, marketing agents, financial advisors and many other and you will quickly see how implausible it will be for the NCAA to properly govern these issues.

You don’t believe me? How about NCAA President Mark Emmert? The USA Today article above quote him as saying that threading those general principles into meaningful rules changes for for Division I schools will be challenging.

PROBLEM #2

Problem #2: When are the players going to get paid?

Answer: There is no guidance on this issue. Some people suggest that the NCAA’s solution is going to be that the funds go into some form of trust until the player either graduates or leaves school. That somewhat defeats the purpose of allowing an athlete to have a stream of income that they might need for their survival or to help support their family members (or even–GASP–for them to be able to enjoy the fruits of their own labor). Paying them immediately does not necessarily remove the problems because now you have teammates competing together, only some of whom are getting paid (see below). What happens when the star QB, WR, RB are getting some lucrative endorsement deals, but their offensive linemen are not? Does this internal jealously create rifts on the team? Are the stars allowed to “share” their compensation with teammates? In the NFL, QBs and other stars are more highly paid than their teammates. But the teammates are still pulling in mid-6-figure incomes (or more). Additionally, there is no restriction on the QB buying dinners, vacations, watches or other luxuries for the guys who help them succeed. Leaving this in the NCAA’s hands to monitor this process is just going to create a mess.

PROBLEM #3

Problem #3: Who is representing the players?

Answer: Historically, the NCAA has prohibited (with a few exceptions), college athletes from having proper representation. The NCAA’s perspective has been that the representation of the athletes makes them a professional and therefore, no longer eligible for college sports.

With the array of regulations and drama that is going to accompany a change of this magnitude, it only seems fair for us to allow the student-athletes to retain an agent or an attorney to help understand and manage this process. If we are moving towards a free-market solution, then why not go all of the way to the free market. Asking student-athletes to navigate these murky waters alone is entirely unreasonable, especially given that everyone else in the process has extensive representation.

PROBLEM #4

Problem #4: How many players really merit compensation on the open market?

Answer: It depends on how you define “merit”. If you truly use the concept of “name, image and likeness” then only a few college athletes would reap benefits. Take out QBs, RBs, WRs and a few high profile defenders, and the estimate is that fewer than 10 players on a Power 5 football team would have “true marketability.” Others that are paid compensation would be getting it in order to attract them (or retain them) at a university. These payments may be disguised as Name, Image and Likeness payments, but they would violate the NCAA’s own guideline language.

PROBLEM #5

Problem #5: What happens when some players on a team get paid and others do not?

Answer: What happens when the star QB, WR, RB are getting some lucrative endorsement deals, but their offensive linemen are not? Does this internal jealously create rifts on the team? Are the stars allowed to “share” their compensation with teammates? In the NFL, QBs and other stars are more highly paid than their teammates. But the teammates are still pulling in mid-6-figure incomes (or more). Additionally, there is no restriction on the QB buying dinners, vacations, watches or other luxuries for the guys who help them succeed. Leaving this in the NCAA’s hands to monitor this process is just going to create a mess.

PROBLEM #6

Problem #6: This process will not help protect the athletes or the universities

Answer: Correct. Athletes can still be taken advantage of. Unscrupulous boosters and agents will still have ways to get at the athletes. Unrepresented athletes will be susceptible to entering into contracts which are not in their short or long term interest.

From the university side, the competitive landscape will become more ruthless. Instead of negative recruiting or recruiting players previously committed to other schools, the universities will have to contend with a whole array of compliaance issues, booster issues and competitive issues. The recruiting process will start looking like a bidding war, only it will be diguised to fit within whatever parameters the NCAA establishes.

The bottom line, is that I could keep going and going and going. There are more problems in this NCAA statement than what possibly is solved. We are going to be in for huge changes ahead in the college sports system. Many people will not like them because there is really no middle ground.

Tune in tomorrow to read our next article when we look at the reality of the landscape in college sports. Truly, there are only two options: 1) Try to maintain a level playing field; 2) Completely open up college sports to the free market.

Neither solution is perfect and each has its own pitfalls. Check back and read our analysis tomorrow and then tell us which side you choose. Remember, there is no middle ground and you are forced to choose one side of the other! It will be interesting to see how you all vote!

Wow.  I rarely say that in response to anything on TV these days (unless it was the replacement officials’ absurd call in the Packers-Seahawks game).

But after watching ESPN’s outstanding 30 for 30 Broke” there is not much else to say.  I guess you could say it is sad, scary, disturbing or any of another dozen negative thoughts.  I did not expect to be overwhelmed by it since this is a field with which I have a lot of direct experience.

I have met numerous athletes who have been defrauded  by their agents, financial advisors, attorneys and friends.  Many of them have been victims of ponzi schemes and other types of scams that were perpetrated on them due to their high profile, great wealth and relative lack of sophistication in dealing with these issues. 

I know attorneys who have filed lawsuits to recover the funds from these ponzi schemes, but unfortunately, the scammers have typically spent and used most of the funds for their own personal benefit, acquiring expensive homes, cars and jewelry and also taking exotic vacations and trips.  While it might make the victims feel a little bit better when they find out that the people who defrauded them have been disbarred, indicted, convicted and sentenced, the reality is that they rarely recover their funds.

When I discuss the cases with the attorneys who have filed the lawsuits on behalf of these athlete victims, they almost universally say that the athletes were defrauded by their own advisors, and that the athletes were too ashamed to come forward sooner to get authorities involved or get attorneys involved early in the process.  The athletes (and their advisors) typically did too little (if any) due diligence on the transactions and on the people who are promoting the transaction.

So while we wonder why this occurs, the reality comes down to one point. TRUST.   Athletes really do not know who to trust.  They rely on the information that is put in front of them by their advisors and their friends.  But who are the ones most often responsible for getting athletes into these ponzi schemes or other scams?  These same advisors.

The trick here is for the athlete to develop and implement a large team of independent advisors that can work together to help the athlete conduct due diligence.  This is where the stories from Broke” were the most disturbing. 

One thing that Broke” made clear is that a lot of the problems arise from the athlete’s feeling of invincibility.  We have read that hundreds and thousands of times relating to physical issues whether it is physical altercations, domestic violence, bar fights, drunk driving or others.  

Yet, we expect these same young athletes to exercise better business” judgment, even though none of them have actual business experience (and few of their families have that experience either).    When you think of who most people rely on when they need help, it is the people closest to them.  Their family and their trusted advisors.  The difference with professional athletes is that they do not grow” into these roles over time.  They do not advance in their careers before their earn big dollars.  They do not develop relationships with advisors while the stakes are small and have that relationship mature over time.  Instead, they are left extremely vulnerable to their agents, their attorneys, their family, their friends and their financial advisors.

One disturbing element in Broke” was how often these players described just handing out money to other people.  The sums of money are so large that they lose ALL perspective to the value of money.  Yet, if you asked them how much money they could earn in a year in any job other than professional sports, that perspective might help them understand their spending habits.

But would they listen?  If you go back and watch broke and listen to the stories from Andre Rison, you will see a tremendous attitude of I do what I want.”   And that comes at an extreme price.  It means that the athletes do not even want to listen to the people who really do want to help them.  Everything in their life is about competition.  About bigger and better.  About  having the best.  So it is easy to see why that also applies to their investments.

You want me to take conservative investments.”   Why should I?”   My teammates just invested into a deal that is getting him [10/20/30%].”

And that is how it happens.  The perpetrators of the scams and the ponzi schemes only need one access point.  They find one athlete that they cater to and cultivate a relationship with, and then they use that person to gain athlete to pro teammates, college teammates, high school teammates, etc.  You can see why the ponzi scheme format is so powerful in this environment.  It connects all the victims and they all feel insecure about the investment loses and they do not know who to turn to.  Many of the athletes write off their loses without even pursuing legal remedies.  And by doing so, they do not bring enough attention to the problem.  Lawsuits against these dishonest advisors would facilitate getting federal and state authorities involved.   Given the limited resources of the FBI, the postal inspectors and the US attorneys offices, they are unable to investigate and pursue all of the claims that are out there.  But with some help and with high profile victims, the lawsuits could help institute the proper administrative and disciplinary proceedings against those operating the ponzi schemes and other scams.  By having cooperative witnesses, supporting documentation and good attorneys leading the way, the opportunity to recover funds before they are all squandered would increase dramatically.   Because ultimately, the players really want a few things:  1) to get their money back; 2) to get their vengeance by having the scammers disbarred, indicted, convicted and sentenced; and 3) to not have this situation take over their life.

Hopefully for most athletes, these losses to fraudulent schemes do not constitute the bulk of their wealth.  But many lose money in other ways.  You saw the descriptions in Broke” talking about how many of them lost money in bad” deals as opposed to fraudulent deals.  At the end of the day, the financial impact is the same even if the emotional toll is not the same.

But perhaps the most difficult losses” to overcome are not those from ponzi schemes, fraudulent investments or bad investments.  It is the result of bad decisions by the athletes.   The amount of money spent on cars, homes, jewelry, gambling, strip clubs, alcohol and other luxuries is way beyond proportion to their financial status.  Athletes do not have the same length of earning career as the average business professional.  In football, the average career is approximately 3 years.   That means that most of the athletes never even make it that far. 

In our next feature, we will look further at how the athletes can overcome these negative habits and what advice they should be given early in their career by the agents and families in order to protect them from slipping into the Broke” mentality.

We honestly hope that Broke” becomes required viewing for the all athletes who have professional sports aspirations.   Because we know that many athletes will NOT listen.  But we also know that the more often they hear the message, and the more often it is from neutral” sources, the more likely they are to give it some credence and give much stronger consideration to the steps that are necessary to prevent the losses to ponzi schemes and other fraudulent scams.