Pretty interesting discussion about some of the real-world implications of the NIL. Sounds like the video games and things that we as fans want are still a ways off, until the student-athletes form an entity to handle their licensing as a group. My theory is that in the beginning you are going to have national deals for the biggest stars (that weren't coming here anyways) and then a bunch of local car commercials and things like that where TTU can be very competitive. I remain, unworried.
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| Good morning, and thanks for your continued support of Extra Points. We're a few weeks away from the kickoff date for dozens of state-level NIL bills. The bulk of those bills are centered around the ability of individual athletes to secure individual deals for themselves. Soon, individual athletes in specific states will be able to give sport lessons, monetize their social media channels, sign sponsorship arrangements and sign autographs, all without NCAA penalty. Athletes in the NAIA have been doing this for months, and soon, all college athletes will have this ability. But those aren't the only potential deals for college athletes. There are also deals that involve group licensing, a vehicle that current state legislation doesn't really address. If you don't work in college athletics but are familiar with group licensing, it's probably because of the popular EA Sports College Football video games. EA secures the IP of various college athletic departments through group licenses, and if they want to include the actual names and likenesses of current college athletes in future games, they'll also need a group license. Individually signing up thousands of athletes for one project isn't really logistically feasible. I reached out to Malaika Underwood, a former college athlete at North Carolina and current Senior Vice President at OneTeam Partners, to better understand what this marketplace looks like in a sea of continued regulatory uncertainty. Group licenses. Not just for the video game!Underwood told me that group licensing will need to be the mechanism to secure athlete IP for all sorts of consumer facing products. "If we are going to see athlete names on the back of jerseys, t-shirts, or other products, it will have to happen through group licensing."Securing individual and variable deals isn't a sustainable model for a massive brand like a Nike, Fanatics or a Champion, she added. Those brands need efficiency and scale to produce goods across the country, and that requires a group license. Physical collectables, like trading cards, would also likely fall into this category. Another potential Group Licensing category would be digital goods. While it's unlikely that every college sport would get a massive, AAA video game like college football, it's entirely possible that other sports could license athlete likeness for mobile apps or smaller gaming projects. You couldn't create a Soccer Manager but for College Athletes, or a digital trading card game but for College Basketball, without a group license. Some athletic administrators say that isn't possible right now. But Underwood sees a way.Last month, I asked Big East Commissioner Val Ackerman about the possibility of collegiate group licensing. She told me she didn't think it was feasible, primarily because unlike professional leagues, college athletes don't have a union. Without a legally recognized bargaining agent, Ackerman told me, schools would be at risk for potential litigation if athletes were not satisfied with their licensing deals.The other big challenge, Ackerman told me, is that a group licensing project for a consumer good proposal would involve intellectual property from both the athlete and the school. From our conversation: "Yes, very much so," Ackerman told me. "This goes back to my pro experience. Let's look at a pro league group license. That combines league intellectual property with athlete intellectual property. Each of those sets of rights have value. How do the two entities divide that revenue, seeing as they both provide value? That negotiation is held between the league and the union." "Then we have the question, 'how do the athletes share the revenue?' Is it shared equally, or do the athletes that get featured more earn more money? In the case of the pro league, that would be managed by the union. And that agreement would be recognized and legally protected, because the union is the legally recognized bargaining agent on behalf of the players." "That way, you don't have a pro athlete coming back and suing, saying that the distribution isn't fair." But Underwood doesn't see things that way. "The model that I think Val is talking about here did exist at one point in the NBA, where the league controlled both the team rights and the player rights. In recent years, the Players Association has pulled those collective group rights of the athletes back into the Players Association." "So now, you've got the league representing the league and team IP, and you have a separate entity negotiating on behalf of the players. Now, that entity happens to be the union, but these Player's Associations also have commercial arms that are tasked with negotiating the collective value of those athletes. It doesn't have to be the union." So theoretically, Underwood told me, college athletes could voluntarily opt-in to a completely different entity that would negotiate on behalf of those interests. One example of this might be what UNC recently did. UNC set up a voluntary licensing program for former college athletes, including Tar Heel greats like Danny Green, Tyler Hansbrough and Mia Hamm. That way, UNC can sell Mia Hamm jerseys or shirts, and Hamm gets a cut of the profits. Underwood told me that other schools have reached out to her expressing interest in a similar program to UNC, and that such a model could work nationwide. She also said that hypothetically, a program like the National College Players Association could serve as that agent. The most important factor in this arrangement, according to Underwood, is that whatever entity the athletes use would need to be independent, and one working explicitly on behalf of the athletes. If the school used the same licensing company that they use for their own IP, it could create conflicts of interests. This way, not only does the athlete know that their negotiating agent is working on their behalf, the school can be shielded from potential liability. In this scenario, according to Underwood, If an athlete doesn't think their deal is fair, they wouldn't sue the school. Still, there are some logistical challenges.Most professional leagues only have around 30 teams, and most also have unions and collective bargaining agreements. Even at just the FBS level, there are 130 schools, which means there are thousands of potential athletes to sign up. Without a union, there's also the risk of multiple, competing negotiating agents."The scale and the diversity and the broadness of the college landscape is much greater than the pro space." Underwood agreed. She also noted that the group licensing marketplace has the potential to start fragmented, with multiple groups competing, but "if it remains fragmented, the opportunities for athletes are going to be limited." Underwood doesn't see think this needs to be an adversarial processMost state level NIL bills are mum on group licensing, and I believe only Sen.Murphy's bill explicitly calls for it on the federal level. While Underwood would welcome more lawmakers championing the idea, she doesn't think it's required. "I think because we're approaching this from what will amount to be an opt-in scenario, I think the current framework will still allow for group rights."Regardless of what various governments decide, Underwood wishes that more administrators would share her belief that group licensing can be a win-win for all parties, including schools. "I think we've gotten caught up in the don'ts, instead of the do's. Instead of creating solutions, we're just trying to create boundaries. And I think there's an opportunity to create solutions here." After all, a successful EA Sports video game, or nationwide trading card campaign, or consumer good package, would all financially benefit schools, not just athletes. More expansive branded apparel and jersey offerings could be a formidable new way to market women's sports. Younger audiences might engage with college sports fandom in different ways, and being able to offer new experiences and new products can help not just make a few extra bucks, but build new fans. Group licensing could help address all of those goals. Underwood added that with so many other demands on administrator time and focus right now, some might "easily dismiss group licensing, because they don't understand the mechanics of it. It's not necessarily complicated, but it's just not something a lot of people are familiar with." Changes in state or federal law might make that easier, but perhaps only a mindset change is required. If you want to play as your favorite college football player in the next EA Sports Video Game, you should hope that enough minds eventually change, since likenesses wouldn't be included without a group license deal. But there may be other opportunities out there as well. Like almost everything else related to NIL, the regulatory uncertainty just needs to be cleared up. |
