A new company is offering college athletes upfront cash in exchange for a portion of their name, image and likeness deals, an arrangement some consumer protection experts and financial advisers say could prey on young athletes.
From what’s been posted of the contract, it seems like a terrible deal for the firm. I don’t see how they would stay afloat unless they’re extremely discerning when picking athletes.
The maximum they can make back is a 14% return rate for 7 years. The firm is literally better off putting the money in an index fund instead of investing in these kids.
Nilly’s investors are a mix of institutional funds and high net worth individuals, Ricciardi said, but he declined to share specifics about how much they have raised. The company last month announced that investment firm Harlan Capital Partners would commit up to $200 million to Nilly contracts.
To pay the players their upfront money, Nilly raises funds by offering investors the opportunity to buy a share of a pool of contracts. The concept — which alleviates the risk that a single athlete might not be successful — is similar to mortgage-backed securities or collateralized debt obligations; Ricciardi was deemed the “grandfather of CDOs” by the Wall Street Journal for his role in popularizing the investment while working at Merrill Lynch in the 2000s.
These are not the type of people who typically make losing bets. So the fact that your first thought is “this seems too good to be true” is why I said in one of the other replies that alarm bells are going off in my head.
Venture capital types don’t typically just roll over and take it on the chin if they can help it. Especially in a situation like this where there’s such a vast gulf in power dynamics between contracting parties.
I would not at all be surprised if there’s fine print language defining any professional sports contracts (like with the NBA/NFL) as NIL, or hell arguably even any employment contract with any company (basically wage garnishments).
Theres also that part at the end where they have a “boilerplate clause” for conduct that allows them to nullify the contract and seek repayment. Imagine this group had signed the entirety of the Georgia football team to their NIL pay-advance deals. We all know the legal troubles that have been surrounding that team from more minor stuff like speeding to more serious stuff like assault and battery. You think this group wouldn’t be looking at that and saying “okay, the guys who are performing and getting paid we leave on their deal - cash is coming in. The ones who are buried on the depth chart? Conduct clause them and get our investment back.”
How many college athletes have incidents that could be considered conduct clauses? Hell, even if they didn’t, again with the power dynamic, many might feel like they couldn’t fight that in court.
There’s just so many ways that this goes south and gets gross really quickly. It all just feels so slimy and exploitative.
Especially since there was that quote about how Perkins has mostly been relying on word of mouth advertisement so far. This is on ESPN’s website - his employer btw - which is arguably the biggest possible platform they could get.
From what’s been posted of the contract, it seems like a terrible deal for the firm. I don’t see how they would stay afloat unless they’re extremely discerning when picking athletes.
The maximum they can make back is a 14% return rate for 7 years. The firm is literally better off putting the money in an index fund instead of investing in these kids.
From the article:
These are not the type of people who typically make losing bets. So the fact that your first thought is “this seems too good to be true” is why I said in one of the other replies that alarm bells are going off in my head.
Venture capital types don’t typically just roll over and take it on the chin if they can help it. Especially in a situation like this where there’s such a vast gulf in power dynamics between contracting parties.
I would not at all be surprised if there’s fine print language defining any professional sports contracts (like with the NBA/NFL) as NIL, or hell arguably even any employment contract with any company (basically wage garnishments).
Theres also that part at the end where they have a “boilerplate clause” for conduct that allows them to nullify the contract and seek repayment. Imagine this group had signed the entirety of the Georgia football team to their NIL pay-advance deals. We all know the legal troubles that have been surrounding that team from more minor stuff like speeding to more serious stuff like assault and battery. You think this group wouldn’t be looking at that and saying “okay, the guys who are performing and getting paid we leave on their deal - cash is coming in. The ones who are buried on the depth chart? Conduct clause them and get our investment back.”
How many college athletes have incidents that could be considered conduct clauses? Hell, even if they didn’t, again with the power dynamic, many might feel like they couldn’t fight that in court.
There’s just so many ways that this goes south and gets gross really quickly. It all just feels so slimy and exploitative.
Especially since there was that quote about how Perkins has mostly been relying on word of mouth advertisement so far. This is on ESPN’s website - his employer btw - which is arguably the biggest possible platform they could get.