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Intro: The dirty little secret in this industry is that it's really boosters who have an overwhelming influence in who gets hired as a coach. You also have a different NIL market that I like to colloquially call it the bagman market, which is essentially money laundering, a talent acquisition or retention fee.
This bagman incentive structure at play get people to transfer as much as possible because they probably can't legally represent them in the pros, but they could get paid every time someone hits the portal. As agents, they could say, we gotta give you 20%. Do you have like a swag of how those dollars kind of broke down?
Uh, this goes to court and the NCAA loses it will literally bankrupt the ncaa.
Intro: Welcome to the Logan Bartlett Show and this episode, what you're gonna hear as a conversation I have with Matt Brown. Now Matt is the author of the Extra Points Newsletter where he dives into the business of college sports.
Matt is one of the preeminent experts of everything going on in the college sports landscape today. So he and I have a discussion about the history. I. Of college sports and how we got to where we are today with the transfer portal, with name, image, and likeness, with revenue sharing, with major conference realignment, and [00:01:00] all the implications for those things going forward.
This is a conversation I've wanted to have for a long time as one of my big passions is college sports and in particular college football and basketball, and so we dive into all the nitty gritty of the sport today and what it looks like going forward. This is a really fun conversation with one of the preeminent experts in college sports and business, and you'll hear that discussion now.
Logan: Matt, thanks for doing this. Uh, so, so maybe, uh, can you give quick background for people that don't, don't know you?
Matt: Sure, sure. So I run a newsletter called Extra Points. I've been doing this full time since 2020. Uh, it's a publication that covers business policy and off the field stories in the entire college athletics industry. From the largest SEC of Big 10 institutions down to division three. And, and N-A-I-A-I, I did that after, you know, seven years of Vox Media when I was helping to run college sports programming for SB Nation and, and had to learn how to [00:02:00] dig into stories that were different from the sorts of things that maybe ESPN or CBS was doing.
'cause we didn't have rights and we were much smaller. And, and learning to how to better understand the math and the finance and, and the, and the public po public policy education policy within everything. Uh, it really helped because there's so many local newspapers that have to be so focused on who's winning this Saturday, who's starting, who's, who's the top, you know, recruit high school kid on the list.
They don't have time to go through the budget or to talk to the ad about anything. And that's where we've been focusing these last several years.
Logan: Yeah. Well, that's great. Uh, when I, when I asked, uh. Uh, uh, people on Twitter, like who I should talk to about college sports. You, you were recommended by a few different people, and then when I said I was doing it, I got texts from people that were, uh, particularly excited about this. Uh,
Matt: I'm, I'm glad.
Logan: your willingness to come on.
So, college sports is such a weird world, one that I am, um, fortunately or unfortunately kind of obsessed with. And so I, I, I would love for people to walk away from this discussion, a little bit of history, uh, you know, [00:03:00] dating way back then, some of the more modern history. And then maybe we can go forward to where we are today and then maybe looking into the future, uh, where, where we're headed.
Logan: So if we could start, like, how did college sports come to be?
Matt: It's a great question because how we do things in the United States, both in kind of the paleolithic era of college sports and how we do things now, are completely different from anybody else in the world. Even though many, many, uh, countries have, uh, you know, higher education, uh, athletic programs, nobody does it anywhere close to the level that we do.
This system started in 1852, like all, all the way back. Football wasn't even invented yet. Baseball wasn't even really a thing. We had a a, a collegiate boat race. Between Harvard and Yale and to kind of set the stage for the same darn things that we've been arguing about since all the way back then. This was supposed to be a purely amateur exercise, but it was sponsored by, uh, a, a a a tourism company.
They were [00:04:00] chartered trains, uh, uh, to, to get people, uh, uh, from campus up to the events they were. There were prizes given away, and once there was an enormous crowd, uh, students at these institutions began to realize like, oh, this is kind of fun. We should maybe branch out into other things. This ties into, uh, what would, would, uh, become a really popular.
I ideology throughout Elite White Society in the Northeast, this idea of muscular Christianity that you would, that, that you would, you know, because we, we didn't, we weren't gonna go off and fight in the Civil War anymore, and people weren't going into factories that we could prepare people for the next generation of, of civic leadership through vigorous and manly sport, whether that was boxing or football or baseball or some of these other things.
So everything started in the northeast eventually. This is where, where the, the early college football games are, are invented and then people who start at Yale or Harvard or Princeton end up moving, uh, and starting a graduate degree at Michigan. And then they start programs or people go to North Carolina or Georgia and they start programs [00:05:00] and it catches fire in a world where professional sports wasn't really a thing or was just barely becoming a thing and wasn't accessible to everybody.
Um, but people loved it. And, and from the very, very beginning though. There were a lot of concerns about, is there too much money coming into all of this? Is it detracting from the sacred academic enterprises? And we can go back and read all these serious think pieces from the late 1920s about, is this, is this too professionalized?
Or we have coaches who are making more money than professors. Oh my God, we gotta reign this whole thing in. And then of course we didn't. 'cause it's fun.
Logan: I, I saw that
Matt: Yeah.
Logan: 1929 called the Carnegie Report,
Matt: Yep.
Logan: that found that one in seven athletes were subsidized, bordering around professionalism. It contend a growing commercialization of intercollegiate competition. Uh, which is, it's 1929. We
Matt: Yeah, it's,
Logan: 10 years ago, five
Matt: it's a shockingly modern document. I think you just have to add a couple of zeros for inflation. But if there's charges of, I think, I think the exact term is tramp athletes, you know, [00:06:00] a pretty popular thing to do. It'd be to go bring a couple of guys off the railroad to come play, left tackle for you ahead of a game.
And if they never took a standardized test or a class or enrolled, well, you know, who's checking right.
Logan: North Carolina's been doing that for the last couple of years. I think. So,
Matt: Allegedly.
Logan: so fast forward, I guess 1950s. Uh, what, what happened in between, um, 1852, the Harvard Yale boat race to the 1950s? The sport just kept growing and picking up and spreading across different geos.
Matt: There, there was that, that was a major reason for it. Right?
Matt: We had popular mass communication technology that, you know, first, first radio, which blows up everywhere. And then as we're coming out of World War ii, uh, television is beginning to become accessible to, to families throughout the country, not just in in markets like Philadelphia or Boston.
And turns out a lot of sports, football in particular looks great on tv. And, and so, uh, this was already the, the live sports as a center of, of social activity and, and a and, uh, and, uh, especially for elites and people loved [00:07:00] going. And we used the Work Progress administration and with these, these federal grants to build great big stadiums everywhere.
But then television really began to supercharge everything. And we had, in the early 1950s, as the NCAA freaked out. And a bunch of school presidents freaked out. 'cause the thought was, if we can watch this game on tv, I'm not gonna go to Michigan Stadium and where it's eight degrees with 105,000 other people and watch it.
And we depend on that gate money. So the NCAA for, for decades controlled all of the national television for college football. And then later for college basketball, they decided who was on tv. You would get one game two if you were lucky. That second game might be Washington Elite, it might be Campbell, might be an HBCU.
It's not, oh, Notre Dame's not gonna be on the television year in and year out, which, because the, as a way of controlling, uh, the money, controlling the, the, the travel and, and, and trying to, to slow down the economic growth of this entire enterprise, which then of course opened up a window for a little something called the NFL to come and take its place, uh, in America's hearts.
Logan: Yeah. In, in [00:08:00] 1950, I guess, was the, the time that the term student, uh, athlete actually came into national parlance, I guess. Was
Matt: Yeah.
Logan: I guess I, I'm curious, was that like a per purposeful term that was actually branded by the NCAA and, and tried to use to work perception in some way? Or was it accidental?
Matt: No, it, it, it was extremely not accidental. And the truth is, I think actually kind of depressing. A lot of people don't know about it. Uh, what happened is there was a, a college football player, uh, a gentleman, I believe Ray Denison, who's, who was playing at, would be considered a Vision two institution now who, who dies, uh, as a result of, of football related injuries.
These things kind of happen and his wife, uh, tries to file a workers' compensation claim in, in, in, which was originally approved. And then the NCAA created the term student athlete as a way of absolving itself from those damages. You can't give workers' comp as somebody's not a worker. There's somebody who's, who's involved in just a very elaborate extracurricular activity that, that we happen to have 30,000 [00:09:00] people behind it here, uh, and, and so and so, or we, we can wash our hands from that.
And then that term, uh, through aggressive publicity from the NCAA and its member institutions kind of wormed its way into popular lexicon and also into the judiciary, uh, cementing this, this amateur ideal, even though that became increasingly div divorced from reality.
Logan: And then 56, uh, athletic scholarships, I, I guess are, they start to be allowed
Matt: Yeah.
Logan: on ability.
Matt: Yeah. So this was also an interesting debate because the, you only had two schools of thought about the morality of an athletic scholarship, you primarily in the Southeast, uh, and, and where large campuses tended to be in smaller cities that were less economically developed, you would have administrators say The most honest thing to do is to give somebody an athletic scholarship, and then they will not be, uh, as predisposed to go chase under the table payments or to do things dishonestly.
We know why they're here. And then you would have the Big 10 and the PAC 12 [00:10:00] predominantly in more, uh, industrialized, larger population centers that would say no, to give an athletic scholarship would be to break amateurism. That makes you essentially a professional athlete. You should be, you should work your way to college like everybody else.
But if you were in Columbus or Minneapolis or just outside of Chicago, there were lots of fake jobs that, that you could take to pay your way through everything. And so it was, it was this was this, this constant debate about what was the, actually the more moral thing to do. In the end, the south won and variations of that debate would continue really for the next 80 years.
About what's mo more honest, uh, keeping the money on top of the table or under the table. Uh, and, and generally the movement has gone continuously to put money more in the open.
Logan: And, and at that point, was there a limit to the number of scholarships that could be provided or what, how did the governing body, uh, uh, that was I guess, the NCAA handle this, uh, this decision?
Matt: Yeah. One thing I think that's important also for people to understand, when we were talking [00:11:00] about the ncaa, especially in the 1950s and the 1960s, the NCAA would've had like three employees in, in, in, in the beginning here, right? It is, it is a membership driven organization, ev even today. So if there's a thing that, that you and I think is dumb or, or that we don't like, or, or a policy that seems confusing, it exists because membership, typically, university presidents voted for and asked for that particular thing.
And the way things would work in, in the fifties and sixties, a lot of those rules would be specific by sport. Um, and sometimes a conference might have a different rule, but especially in college football in the 1950s, sixties and early seventies, you would have some schools. Nebraska was particularly famous for this, but they certainly weren't alone.
Alabama and Texas followed this as well, where you might put 105, 110 people on scholarship. You'd sign 50 kids, uh, a recruiting class, and you do that in part just to keep 'em away from other schools. Then you, you put 'em through hell and you'd recognize that half of them would quit because you're, you're, you're, you're, you're blowing up their kidneys of the squat rack and everything, and, and then you move [00:12:00] forward.
Whereas in the Big 10 and Pac 12 and elsewhere in the northeast, you would generally have smaller rosters. And that was the case until that limit became standardized. Now I'd say 85, about to shift to 1 0 5, uh, for next year.
Logan: And, and, uh, the, the payment, like the concept of, you know, whatever, uh, someone local in town paying you for a touchdown or anything like that, was that happening then? Or, uh, was that something that came later as it got more and more, um, professionalized and the, the incentives were greater.
Matt: So I, I, you know, what you're describing here, the, the colloquial a hundred dollar handshake, uh, or, or, or a booster benefit for, for doing something. Well, that has existed about as long as football has existed. Uh, I, I, I wrote a book about this in, in 2017 that touched on in a couple of chapters. There's a lot of contemporary stories of prep athletes at, you know, at the, at the most elite boarding schools in the Northeast, having these conversations with boosters deciding between Princeton and [00:13:00] Yale.
Um, there were even early NIL deals in this era where, uh, one way to keep an athlete eligible or in enrolled in a place like Yale would be to give that person, uh, the, the unique rights to sell tobacco on campus, or a particular brand of tobacco, or a cut of particular football tickets. You know, just like, maybe not with tobacco specifically, but, but very similar to how deals are structured.
Uh, right now. There, it was always, I. Banned. It was always something that you, that you were not supposed to do. Even a, a very small amount of money. But the idea of giving a little something, something, whether that's cash, a wedding gift, sometimes guns throughout the southeast, sometimes, uh, other presents that was going on since the 1910s.
Logan: And when did, when did the policing of it sort of pick up in a way that, um, obviously people know about SNU death penalty and all
Matt: Yeah,
Logan: at what point did the NCAA start hunting for this?
Matt: this really became more of a thing once we started moving into the late 1950s as the ncaa [00:14:00] as a centralized structure cemented control over television in the early 1950s, that that wasn't really that big of a deal 'cause there weren't that many TVs. But once you had. Different national television deals sold to A, B, C, or to NBC or DuPont or some of these, these other bigger companies.
And then there becomes real money coming in. The one, the NCAA now has a sanction that actually matters. They could say you don't get to be on tv, um, rather than things being controlled by conferences or, or at a, at a lower level. And once you have more money coming in, now you have the opportunity to have the resources to hire a staff, including investigators, uh, or including you, the, the operation necessary to enforce some of these rules for and for a long time.
And you know, if the NCAA's basically running it outta the cubicle outta the Big 10, and it's two people in a secretary, you have no cops. So it doesn't really matter. Once money started coming in, then you had a regulatory state.
Logan: In in 1970.
Logan: Two, title IX passed. Uh, I think people will probably know the, the, uh, name, [00:15:00] title IX and maybe the implications. But can you give a little bit of a background on like how that came to be and what the implications were for athletic departments?
Matt: You know, it, it's interesting, a, as I understand the story of Title IX in through, in the US Senate, that was not crafted specifically with athletics in mind, even though, uh, the, the, that that policy became, uh, interpreted to, to means very significant changes for how sports runs.
Logan: think it was sex discrimination in education programs. I think it was like the
Matt: Yeah.
Logan: of it, which
Matt: Generally.
Logan: became, uh, one of the applica uh, applications of it, but.
Matt: And, and it, and it, I, I do, I do know that it took several years for that really to stick because a lot of administrators, including at the NCAA said, oh my God, this will bankrupt us if we have to start suddenly, you know, offering scholarships for these eight other sports or, or spending some level of parody between men's and women's sports.
And, you know, really until the late seventies, early eighties, that this become more of a standardized thing. But what it in, in, in short, the [00:16:00] complying with Title IX for an athletic department means that you have to offer or be moving towards offering equivalent opportunities for men and women. So it doesn't necessarily mean you have to spend exactly the same amount of money, but you do need to offer, you know, proportionate scholarships.
If your student body is 56% female, um, you can't offer 60% male scholarships and 40% women's scholarships. It means that you, that not only do you have to offer more sports, you have to offer scholarship support for those sports and then backend support, things like trainers and academic support specialists and buses, even now.
Most universities are not completely compliant with Title ix, whether on, on the scholarship side, on the publicity side, on the administrative side, it tends to only really be enforced when there's a lawsuit, and that process takes a long time. But even this kind of baby compliance led to an explosion in opportunities if for, for female sport, uh, participation at elite levels and is a major reason why America tends to do so well in international, uh, athletic and Olympic competitions.
[00:17:00] They, there's, there's a, there's a middle bench developed there that doesn't exist in many other countries.
Logan: Hmm. And so then, uh, as we go through the seventies, popularity continues to grow. And then I guess the, the next point, I don't know if there's something else you would wanna highlight through this period, but the next big one in my mind was, uh, 84 Supreme Court, NCAA versus Board of Regents. Is there anything before that period
Matt: I, I,
Logan: worth note?
Matt: I, I mean, I, I think the only other major tran like, you know, transition from the sixties to seventies would be the, the, the, the begrudging widespread integration of college athletics, which was a huge cultural flashpoint throughout the south. And Intermountain West led to, you know, protests all over the country.
But eventually, uh, you know, whether it was by gunpoint from the US Marshals or because schools just wanted to be good at sports, this went away by the eighties. Just about everybody has had, had moved away from exclusively white rosters.
Logan: Yeah,
Matt: you're right. Yeah.
Matt: Board of Regents is a, I would say a massively important decision and really begins.[00:18:00]
I would say like the beginning of the truly modern era in college athletics. Well, I, what's important to realize right before this, the Supreme Court decision again. All of television for, for college sports was controlled by the ncaa. They would have their one television contract, one preferred partner, and they decided who was gonna be on TV and who wasn't.
Now I, I, I, now we take this for granted because every single college sporting event from division one to JUCO gives televised or streamed in some capacity, and there were more and more companies that wanted to be involved. If you have a competitive bidding process, it stands to reason you're gonna have a higher rights fee.
And some of the larger schools in, in college athletics, Oklahoma and the University of Georgia being two of them, but certainly not the only ones realized they were putting, losing a lot of money and a lot of potential exposure by signing up for the NCAA deal where they had to share everything with Cal State Fullerton, um, then, then doing their own deals.
The NCAA said no. The, the major schools said this would, this was a violation [00:19:00] of, this was an unfair restriction of trade. This should be struck down in antitrust grounds, took it all the way to Supreme Court, and they won. Which then deregulated the control of, of, of broadcast deals. It that this is what allowed the SEC or the Big 10 or anybody else to sign their own broadcast deal with, with an ESPN or a Fox or a CBS.
It took a couple of years, but by the early nineties, suddenly the amount of money that that flooded into college athletics as a, from these major broadcast companies changed everything, you know, order of magnitude, tens of millions of dollars more to each university because of what's available now for major broadcast partners.
Logan: Hey, March Madness is picking up around this time in a meaningful way, and
Matt: Yeah,
Logan: everyone knows the Jim Valvano and, uh, all the, those things that, along with the mass broadcast rights, and I guess it's important to note that the NCAA does control March Madness. In a way that they don't, some of the other properties, which has some implications for, as we look forward and how all this stuff's [00:20:00] gonna play out, um, and think about some of the other stuff.
Um, one of the other
Matt: yeah.
Logan: happened in the eighties, obviously, uh, we alluded to it, but was the SMU uh, death penalty in 87. Um, what was the fallout in your mind from, from that in the implications that kind of trickled through over the course of the next decade?
Matt: It's, it's a banana scandal. There's, there's a really good book on this. If anybody, uh, has some, some, some curiosity called a payroll to meet, uh, written by, by some old Dallas Morning News, uh, reporters that kind of chronicled everything that was happening with S-M-U-S-M-U wasn't the only school and the old Southwest Conference that was breaking amateurism rules by giving money to football players under the table.
Uh, that would've been literally everybody in that conference and virtually everybody that was trying to win at SMU. It was particularly egregious and the, the scandal eventually involved the Governor of Texas that involved this entire shadow business community and, and fake payrolls and trying to hide things from Methodist bishops.
And it, it was, it was enormous. And because. [00:21:00] The NCAA looked at SMU and said, you guys are habitual line steppers. You have been on probation or dinged, or penalized in some capacity for like the last 10 years, and clearly docking you scholarships or finding you is not sufficient. We're going to do the, the, the most serious thing we could possibly think we can do, which is you don't get to play football next year.
And, and then it was, it was ultimately extended for, for another season. They, they didn't have football at all for two years. And then what was a dominant team in the seventies and eighties was awful for really almost all of our lives. Logan, until, until very, very recently, uh, SMU became a, a nationally competitive program again, and, and, and the fallout from that was so significant that uni, that NCAA membership began to think, we can't possibly do this to anybody else again, even though other schools have arguably done worse things than anything that SMU was accused of doing back in the eighties.
Logan: And so through the nineties, obviously a lot of the trends that we're playing that, that we've talked about are playing out. I guess [00:22:00] the, the big things that start to happen, uh, at least, um, in my mind are major conference realignment, some of
Matt: Yeah.
Logan: signs that that start coming. And then, uh, the BCS in, uh, in 98, uh, that was, that, that came to be as well.
Can you give a little background on those two things and how
Matt: Yeah. Yeah.
Matt: I think, I think realignment might is to me is, is is the biggest one. So, uh, college athletic conferences back in the day used to be mostly centered around geography and shared institutional vision. You, you would build a, a, a league around schools that believed mostly the same things that you did about college sports, that were similar institutions.
And it would be kind of nice because these are also the people that you're gonna bump into, uh, on a, on a regular basis. I live in Chicago. I'm a graduate of a big 10 institution. People from Iowa, from Michigan State, from Michigan, Illinois. They're all circulating around here, and you're gonna bump into these people.
What the, and, and, and, you know, mostly leagues that were established [00:23:00] before World War I or after, right after World War ii, were mostly. It was a couple of exceptions, but mostly the same general groups that were existing as we came into the nineties. But as conferences were able to sell the rights for their own media rights packages, they began to realize we can earn more money if we have more inventory to sell to Fox or CBS or Raycom or somebody.
So being a bigger league gives you more opportunities to sell games. And if we are in areas that have, uh, our larger television markets, our games will be in front of more people and they'll be more valuable, and we can, we can make more money that way. And the SEC kind of, you know, got this kicked off when they expanded to 12 teams and added a conference championship game.
They, they struck out on the first couple of teams. They tried to get, they wanted to get Texas and Texas a and m that didn't work out. They couldn't get the, couldn't get Florida State. They ended up bringing in Arkansas and South Carolina. That championship game as a made for TV event was extremely lucrative.
Big 10 expands, grabs Penn State, long time Eastern [00:24:00] Independent, uh, and then now has exposure in Philadelphia television markets and across all of Pennsylvania. And you began from beginning around 91, 92, all the way up until today you have a game of Chicken of Leagues expanding further and further geographically, uh, further and further away from any sense of historical rivalry in the name of trying to create better made for TV television inventory.
Market share, which now leads us to a world where Cal is in the Atlantic Coast Conference and UCLA, Nebraska and Rutgers are all in the same league. And, and it's, it's really frustrating for a lot of consumers. We also had that with the BCS because at every other, almost every other sport that I'm aware of, professional, collegiate, anything else, but you wanna know who's the champion, Logan.
We have a playoff, we have a postseason. There's there, there's a regulated prescribed, uh, pathway to determine who the best team is. We didn't do that in college football for 145 years. [00:25:00] Part of that was we didn't, you know, in the very beginning it was too expensive to schlep everybody on trains, you know, a a across the country.
There wasn't really enough intersectional play. It was done by these, these bowl games that were sponsored by civic booster groups and at least one case organized crime. Shout out the orange Bowl. Uh, but, but, but there was, there was a lot of reticence to breaking this kind of tradition to build a playoff that would, would make sense.
And the BCS was, was seen as kind of a compromise where rather than being forced to play in a bowl game that was tied to your conference based on a decision from 1940, you would have a very complicated computer system that, that that took, uh, that combined coaches polls and reporter polls and staggering ratings.
And, you know what, what quants and, and graduate schools across the country would figure out to create a one versus two matchup for the, the first time.
Logan: this, the way the national champion was declared was you would go to your regional board bowl game or wherever you were signed up. If you were in the PAC 10, you would go to, you would go to the [00:26:00] Rose Bowl or whatever it was.
Matt: Yeah.
Logan: You wouldn't play. The number two team, if you were the number one team, you would have some reciprocal rights with another conference and then they would play.
And then ultimately some group of people, be it the coaches or uh, athletic, uh, um, or journalists would, would vote on declaring who the national champion was. But you'd end up with two, three undefeated teams
Matt: Yep,
Logan: of controversy or shared national titles. I think Allen Am Will to this day claims like 40, uh, or national titles.
And so it, it was very opaque and you'd have multiple people sort of claiming some share of a national
Matt: Yeah, there would be multiple trophies and there would be bribery and there would be scandal and vote trading for all of these things. And some university presidents said you couldn't go to a bowl game two years in a row, so you might go undefeated and you don't get that postseason game. And sometimes you'd be, you'd be one game over 500 and you would get a bowl game.
It was none. None of it was standardized in, in the least.
Logan: So for me as a kid
Matt: Yeah.
Logan: BCS [00:27:00] was a welcome edition,
Matt: Yeah,
Logan: to the world. 'cause at least there were some, I mean, we didn't know what the black box algorithm was at the time, but at least there was some bureaucratic system that then would have the two teams play each other, number one and number two would actually go on the field and play one game against one another, which felt a little more fair.
Matt: it, it, it was, I think, unquestionably superior to the previous system where it would be very rare that you get a number one versus number two game. It would usually require both of them to be independent and you need a little bit of luck. Now, of course, what we found out is that it can be difficult to figure out who the two best teams are in the country.
When you only play 10, 11 games, there's not a lot of intersectional play. Having beat writers vote on this stuff is difficult because if, if you're a beat writer in Lincoln, Nebraska, why are you watching a game that kicks off at 11 o'clock at night? You got, you have to file copy tomorrow, you're, you're just, you're, you're going off of vibes.
Uh uh, essentially. They kept tweaking the formula for the BCS. Like, oh, everyone hates the team that popped out this year. Let's change the math. So Virginia [00:28:00] Tech never gets this invitation ever again, or now we need to change it to, it makes the strength of victory matter more, get rid of the coaches less.
It took a long time before we were able to actually create an on the field playoff, which is something everybody else has figured out in the 1930s. But for the greatest and dumbest sport there is, it was a much more moderate invention.
Logan: that's a great way of describing it.
Logan: Um, all like as this is happening, um, people start launching conferences, start launching their own television networks, right?
Matt: Yeah.
Logan: SEC network comes to be the Big 10 network comes to be, which is kind of tied into all this media licensing rights and all that.
But who is the pioneer of, of making that happen?
Matt: I want to say that technically the Mountain West Conference was the, was the first to actually put something to market. But in the industry it's, it's, it's common. The Big 10 is just typically referred to as, as the real pioneer in this space.
Logan: Yeah.
Matt: big 10, commissioner Jim Delaney, who previously has a deal with ESPN, doesn't like the deal that ESPN offers, [00:29:00] decides, screw it, we'll do it ourselves.
Um, and we'll, we'll roll the dice, we'll, we'll do a partnership where Fox will have a, some stake of the enterprise and we'll build our own studios and we'll control some of this inventory for we, what we would call tier three rights. So not the Ohio State Michigan football game or the Purdue Indiana basketball game that might be on CBS or ESPN or Fox.
But all these other sports and all these, all these, this other inventory that might not be on linear tv, it might be on local television or something else. We'll put that on our own channel. And the Big 10 Network struggled in the very beginning with distribution. I'll, I'll never forget it, like I was living in Columbus at the time, the very first football game that was on BTN.
Was Appalachian State at Michigan in 2007, um, which, uh, you know, you're smiling here. I'll always smile in, in case you didn't know about this. Appalachian State at the time was a one aa FCS school. Uh, Michigan was ranked top five. Appalachian State won. I'll tell you in Columbus, that was very funny. You could buy Appalachian State shirts on High [00:30:00] Street for, for three years after that, but most places didn't have the game.
It was, it, it wasn't part of the standard, uh, the standard collection. We allowed to go to a bar that had like a fancy satellite dish, uh, that had it. But in a year or two distribution was, was standardized almost nationwide. And the Big 10 made so much money that everyone, almost everyone else, tried to emulate that particular model to, to varying degrees of success.
Logan: In the late nineties and two thousands at least I, in my memory, it also starts to be when we start having, uh, a little bit of this arms race of facilities. And
Matt: Yeah.
Logan: um, big projects and the, the, uh, lifting of college, uh, the coaches salaries as well. And then there starts to be more and more a booster involvement in sponsorships, be it, I I think this is around the time Phil Knight started getting more and more involved with, with Oregon specifically, and their football department and the facilities and all that stuff.
But am I fair in sort of placing this around that time for the, for the [00:31:00] arms race that started to happen?
Matt: You know, I would say on some level this, this dynamic existed or in early, even into the 1950s, but once we get into the nineties, you have all this more money coming in. And this is, I think another, just from a business perspective, a major difference between us and pro sports, right? Like my favorite basketball team is the Cleveland Cavaliers.
I grew up in Ohio, and if the Cavaliers have a really good year and they make a bunch of more money from television and they sell a bunch of of Donovan Mitchell jerseys. That money gets to go to Dan Gilbert and it gets to go to the Cavalier's ownership group and they can take profits in college. You can't really do that, but you, 'cause you're not a for-profit enterprise and you also can't directly pay your labor because if you were to give some of that money to the football players, that would be an NCAA violation and you'd be sanctioned to the moon.
But, so if you wanted to compete and get the best athletes possible, which you needed to do in order to win games and, and get all of this money, you had to spend money on them. But [00:32:00] you couldn't do it directly like you would do for literally any other job. So then a lot of that money began to, because you had to spend, it would get spent on.
And so, you know, things around athletes and so that would be facilities, uh, it would go to to coaches because quality coaching does matter a lot more at this level than it does with the pros. And so coaching salaries began to explode. Um, uh, you know, and not just head coaches, but assistants and strength coaches and, and, and administrators begin to make a lot more money in the nineties and early two thousands.
Uh, and then also additional services. So if you walk into a locker room or a football complex and a place like Clemson or Tennessee or Ohio State now, uh, it's not uncommon for there to be a barbershop in that facility for there to be lots of video games for you where you can get virtually every meal and indefinite snacks within this area.
It's, it's kind of like, uh, uh, uh, you know, with the tech year, I used to be during the heyday of, of tech companies where Google would, would do everything from, from do your laundry to, to be your personal chef. [00:33:00] One, to keep the best engineers, and two, to keep the best engineers forever going home so they feel comfortable continuing to, to do stuff.
You would see that a lot for elite college athletics as well. They, the travel and side perks that you would get for Duke basketball or Michigan football in many ways are better than you'd get in the pros. And that's even, that's even true now.
Logan: I think Clemson famously has like a flying
Matt: They do. I have, I have gone down that slide before. Yes.
Logan: mini golf, uh,
Matt: Just
Logan: or
Matt: that.
Just that side. Yeah.
Logan: It just starts to be, uh, like never ending arms race of one upping each other. And I guess, I mean, I think implicitly, people listening hopefully know this, but there's, there's a union that exists in the pros, and these are workers.
And at this point in time, these are amateurs that, that can't be paid. And there's all the litigation that could come after you from the NCAA des sparring you from, you know, being able to participate. If you take. This money. And so all these dollars are flowing around. And then there's also this, this weird element of, because [00:34:00] they're not professionals and they're not unionized in any way, there're still people that care very deeply about the Winnies. And so there's people hanging around the program that, for modest sums of money, can influence where the kids go to school or, um, whether or not the, you know, the, the kid gets rewarded for swearing the touchdown and they're gonna stay around. And so there ends up being these hangar ons that don't really exist in pro sports in the same way.
Both because I guess the unions because the quantum of dollars that the people are making because, um, there's actually an ownership structure in place and there's not the, the tampering and all this stuff that happens behind the scenes in college sports.
Matt: there's very much that, and I, I would add there's, there's a third dynamic that's very unique when we look at, particularly for the biggest schools where they actually get the money to run the department. Television money is, is very, very important for a, a top line, big tenor. SEC school, that's usually the single biggest line [00:35:00] item, but it's not the only one.
The, the Tennessee and Ohio States and Alabama is, they depend on ticket revenue. Absolutely. They depend increasingly on licensing and corporate sponsorships and intellectual property, but they also need donations. Um, they have to have their handout to go fund the, the salaries and the scholarships and, and the administrative superstructure to, to run everything.
So it's, it's not just these boosters that are kind of hanging around to influence decisions for athletes. The dirty little secret in this industry is that it's really boosters who have an overwhelming influence in who gets hired as a coach, who gets hired as an athletic director who gets this kind of parking.
What sports do we sponsor? Um, I a, a lot the level of influence that you might expect, maybe some minority stakeholders or owners to have, um, for, for larger professional sports franchises. When you, when you, when, when you have to depend on extra people to fund the operation, those people aren't just doing it outta the goodness of their hearts or for the tax dodge.
They want some influence [00:36:00] as well. And, and that manifests itself all over college athletics.
Logan: I think it's important to note maybe here as we kind of move into the other element of the conversation, the, the rough profit that comes from the different sports and
Matt: Yeah.
Logan: split, if you're looking at a pie, uh, I think these numbers are pretty publicly released, but my, my understanding today, the, you know, the major universities in the SEC or um, A CC or Big 10 or whatever it is.
I think the major ones, you might be able to correct me on this, are like generating 200, maybe 2 25, maybe up to two 50 a year in revenue, roughly.
Matt: that's about right.
Logan: right?
Matt: Yep.
Logan: in the, in the rough splits of profit, uh, that come from, and it's a little hard to disambiguate because, um, you know, the donations as you, as you highlight it kind of, I think go into a big bucket rather than being, maybe each school is different on this, but discretionarily call out.
Uh, but I roughly in my mind, I, I, uh, I guess you have breakdown of like [00:37:00] what the different splits tend to be from a revenue
Matt: I do, I, I, I do. Yeah.
Matt: This is a major part of the coverage that we do. And, and one thing which, which might sound pedantic, but I feel like I, I'm obligated to, to say this out loud. Every time I get this opportunity, I. Is that it's really difficult to conclusively state who's making a profit and who isn't, because these are nonprofits, which means that they do their, their, their auditing and their accounting differently than many of the tech companies that you might talk about, or the companies where many of you folks listening might invest.
We can't get a p and l statement from Ohio State Athletics. What they do, they're, they're required by federal law and by the NCAA to produce a, like a membership financial report, which, which is standardized. And you have a couple auditing firms that do it, but there's a lot of expenses that show up on paper that are maybe not necessarily real expenses, particularly for scholarships.
And, and, and I, I say that because it's a common talking point that a lot of major schools will use to congress or to judges or to regulators to get out of paying for stuff, saying, but I, you know, I'm just a humble farmer that that [00:38:00] barely breaks even for everything. And like, well, if you had to show a profit or if you were incentivized to show a profit, you would, what I could tell you is like an individual one.
We've got about around 350 or so institutions. I would say that if we make an a, we acknowledge the kind of goofy accounting that they're incentivized to do.
Matt: I would say the overwhelming majority of power conference institutions are generating more revenue than they're spending. Rutgers probably isn't, when Rutgers is pleading poverty.
I believe them. Like that's that they've, they've got their own problems there. There's, there's, you know, a, a few of those and then you have some schools at the bottom. Your right states, your Maryland Eastern shores, your Utah techs that are, are hilariously in the red, you know, it might be generating, actually generating $4 million and spending $26 million.
Uh, and they might say, well, we're not here to return a profit. Nobody asks if the English department's turning a profit, right? Like, we're here for marketing and student opportunities, and that's fine. [00:39:00] As far as sports, when I, when I, when I could, when I could tell you is it is pretty uncommon. For a sport outside of football, men's or women's basketball and baseball, to generate close to the revenue it takes to be self-sufficient.
There are a few examples of this Utah's gymnastics program. Um, there are, the Oklahoma softball program is close. Um, there are some college baseball programs that generate north of six figures from, from, from media rights and, and, and ticketing. But that's, that's, that's not the norm. The norm is, is football, some men's basketball, handful of women's basketball, and then a few exceptions.
Everything else generally costs more than it brings in.
Logan: And, and, and I guess one of the concepts that we'll get into, but, uh, most of those profitable businesses, at least as I think how the universities account for it profitable, uh, sports, um, at least how they account for it are, are conceptually, uh, funding, uh, some of the other ones
Matt: [00:40:00] Yeah.
Logan: the arrangement, I guess, is that a, is that a technical.
Thing that they're actually literally funding, or is that just a conceptual thing at the NCAA that, that the university thinks about?
Matt: Well, I, I mean, it's, it's, if, if you, if you've got a, a, a, a general athletic department bucket for all, for that, that word you're gonna use as, as to, to pay out everything else. And 80% of your revenues are tied to media rights or ticket sales or corporate sponsorships surrounding your football program.
Whether you want to conceptually or technically or explicitly. I, I think that does, that might be a distinction without a difference. Like the money's coming in, coming in from football.
Matt: There, there's one other quick wrinkle I think I, I wanna, we're talking about profits and revenue and everything for the university, I think important to point out, which is athletics as enrollment management, what the athletics and finance world looks like for Ohio State or Tennessee.
It's one thing, but there aren't very many Ohio States or Tennessee's, right? We've got 350 or so of these institutions. A a pretty common thing everywhere across division three. Very common in division [00:41:00] two, common across a lot of smaller division one institutions is to have large athletics programs that mostly exist to generate tuition rather than ticket sales or, or television.
Nobody is going to pay to watch Youngstown State Swim team. And this, I, I say this out of love, right? But there's a lot of people who are on the Youngstown State Swim team who wouldn't be at Youngstown State if they weren't swimming. And if they're a collegiate swimmer, chances are they're probably not a Pell Grant kid.
That's probably somebody who's paying closer to full tuition. And if you're an under-enrolled school, if you're facing demographic headwinds or you're, you're, you're struggling to recruit or retain students, then athletics can can be a great tool for that. And so, Youngstown, I as an example here might say, yeah, on paper our swim team loses hundreds of thousands of dollars a year, but if we step, step outside the athletic department, it's profitable.
And that that calculus is the reason why a lot of smaller schools have stunt programs or rowing teams, um, or, or 50 people on their track roster. It's, it's,
Logan: that's their, that's the [00:42:00] direct, uh, enrollment to, for the sport itself. Then
Matt: Yep,
Logan: I think, what people call the flutie effect after Doug Flutie in Boston College back in the eighties. But
Matt: yep.
Logan: Saban at Alabama is a great example of it. I pulled the numbers when Nick Saban was hired in 2007, Alabama received 14,000 applications a year by the mid to late 2010s that had grown to over 40,000 applications a year.
It tripled in a decade, uh, and even more striking in 2007, about 26% of students were from outta state.
Matt: Yep.
Logan: number is over 60% as well, and I think. People probably understand that outta state when you're a state, uh, university, you pay lower when you're in state than when you're outta state. And so if 60% of your students are coming from outta state, uh, you're not just getting a better caliber of student because of the application, but you're getting one that's willing to pay far more, uh, than the in-state one as well.
Matt: Yeah. Yeah. And in a place like Alabama, that's mission critical because Alabama high schools don't produce enough high level graduates to [00:43:00] support seven, you know, public institutions like they have, Albert and Alabama have to recruit outta state, just like West Virginia does, just like the Montana schools do, or Delaware like, there's, there's, there's, there's not enough people to make it work.
I will say, like we've written a lot about the fluidy effect on, on extra points. Nick Saban, Alabama is, is a great example of this working. Uh, uh, there's, there's academic literature to suggest that this was a real thing for Joe Paterno at Penn State before that story reached. Its, its, its, its, uh, different ending.
Um, and Gonzaga, uh, with men's basketball is an example here. What all of those pla put together is they hired one of the very best coaches in the history of the sport, and they kicked ass for 15 years in a row. There is a temporary spike that happens if you are unexpectedly successful in a high profile sport for one year, but then it goes away, right?
Like St. Peter's is not continuing to dine out on, on beating Kentucky. Um, you know, they, they, they enjoy a huge spike and then it goes away Fairly Dickinson when they beat Purdue and they were the 16 seed spike. And I've, [00:44:00] I've interviewed people at the school, it goes away. And, and this is something that sometimes university administrators, you know, use to justify athletic spending.
They say, this is the front porch of our university. This is our best chance for earned marketing. But you only get that if you win. When you're a low major and you win, your coach leaves and all your players hit the transfer portal, and it's very difficult to sustain it for every Nick Saban in Alabama, there's a whole lot of people that are paying money, like they hired Nick Saban and are hoping that they hired Nick Saban, but there's only so many Nick Saban's out there.
Logan: Makes sense. Yeah. Uh, so, so to the 2010s we're seeing, uh, increased, I guess, um, uh, conference realignment to the
Matt: Yeah.
Logan: that it starts to make less and less, uh, regional sense. You see, uh, a and m and Missouri end up joining the, the SEC as well, you see some more conference realignment happening. I guess.
Anything to call out in your mind? Through that period.
Matt: Uh, I, I, yeah. This, I, if I'm, if I'm getting the years right, this is when you begin to see the cracks of, of the Big East, [00:45:00] which was a made for television conference at first centered around urban Catholic institutions in the Northeast with a focus on men's basketball. Uh, and, and then they tried to build a dual identity where you would have your Georgetowns and, and your Providences and your St.
John's, I, these basketball institutions. But you'd also try to bring in schools that cared about this and football, where you'd have West Virginia and Syracuse and, and Connecticut. And, and, and Miami, Florida, who is a, you know, southern, uh, south Florida school that recruits very heavily in the northeast for their, for their student body.
Um, and that, that began to split as the football schools began to join the A, CC or to, or to pursue other competitive options. And the, the financial needs and interests of those schools were, were different, were harder and harder to square. And this is something that, that you began to see a lot in the, at the tail end of the 2010s and is now a major issue.
Now, if your conference isn't built around shared geography or shared institutional ties, [00:46:00] shared religiosity, shared budgets, if you have, there's less in common there. You have to make a whole lot of money to paper over those differences. And the second somebody thinks they can make more money somewhere else, they'll do that and it'll fall apart.
And it's highly correlated with instability. And, and you, you begin to see this here, and it's even more hilarious when you look at some of the smaller conferences. I think over that decade, I, it feels like every third school played at least one season in either conference USA or the wac. It, it was blown up.
Nobody had any idea what kind of geography that was. It's just a, a bunch of musical chairs.
Logan: We talked about at the conference level of their poaching. But it does also start to play out that Texas is saying, well, uh, I'm bringing all this value to the Big 12 and I have my own television network. Why am I carrying water for, uh, some of these other programs that don't have beer, the national recognition, and we're
Matt: Yeah,
Logan: this pie, and that doesn't feel stare in terms of how it's being allocated because we're, we're this big independent brand.
And I, I think that's always been kind of Notre Dame sentiment of why they stayed independent, all the, all, all this time as [00:47:00] well.
Matt: yeah, sure. For them, USC was threatening to leave the Pac 12 since, well before either of us were born, but before they, they finally ended up doing it because turns out there's a lot more economic opportunity in Los Angeles than Corvallis. Um, and, and there that there were tensions existing in the fifties.
They would only get worse, uh, moving on what we had in pro sports. Is every pro sports team equally valuable? No. Like the Dallas Cowboys are a bigger deal and worth more money and bringing more eyeballs than the Jaguars, um, or the, the, the Browns or, or some of these other places. But you have an almost socialized system of revenue sharing and a shared media contract and, and some, some, uh, universality to, to prevent, you know, the cowboys from saying, actually, we're gonna go join the Premier League, or we're gonna start our own, you know, NFL with just the NFC East or something that doesn't exist in college sports.
And when you add that dynamic to the provincialism and elitism, that's part of higher education, you end up with, uh, uh, [00:48:00] I think some pretty explosive and personal results.
Logan: And so 2 20 14, we had, uh, college football playoff finally gets to be a thing. I think it was rumored at the time. What do I have here? Contract was reportedly about $7 billion over over 12 years. So we're starting to get significant money, uh, being passed around. And I, I think also, was it 2014 that Obama case popped up?
Matt: I, I, I, I think, I think that's right. You've got two, two di two dynamics happening during this decade. Uh, the, they've been, we've been trying to get a college football playoff going since, you know, 1950 finally happens. It's four teams. Uh, and there was, you know, we had a bunch of, a bunch of fighting about who those four teams should be from the very beginning.
Uh, an improvement over two, but, but still lots of arguing. And then you began to see more lawsuits. Puncturing, the, the, the ins, like the historical protection that the NCAA had, had, had, uh, enjoyed.
Matt: So we, we could talk about O'Bannon here [00:49:00] for a second. Um, ed O'Bannon was a, uh, a former excellent basketball player at UCLA and, uh, throughout the, the, the two thousands and 2010s, uh, you could buy video games for that, where you could play college basketball and college football.
Um, the, the, the, the most popular series for college football was the NCAA series produced by electronic arts. There were a few different basketball series produced by 2K, uh, interactive by ea, uh, by, by by Sega Studios and a couple other places. And those video game companies would pay licensing fees for the intellectual property of the universities and the case sometimes with ESPN or broadcast partners or to the NCAA itself to use their marks and everything.
So, 'cause it's a lot more fun to play a video game as the University of Washington. Then Seattle, that just happens to be purple. Um, you know, I think I have a second Genesis game here in my office in the beginning, or you could play college football without those licenses. And it's just like, you're now playing Columbus and it's red and gray and it's a coincidence.
So you could do all of that, but [00:50:00] you would, you, they didn't have the real players. And you play Madden, you could play as Patrick Mahomes and that, that there's his haircut and there's his number and everything. Um, but when you would play a college football game, it would be like QB number seven because you couldn't pay the athletes for use of their IP in these games that would break amateurism.
But Ed o Bandon happened to notice that when you would play one of these college basketball games and that it'd be like the old UCLA teams in there that there'd be a, a gentleman who was the exact same height and weight as Ed O' Bannon and was as, you know, the, the same handedness as Ed O Bannon. It played like Ed O Bannon and even looked like Ed O'Bannon and it,
Logan: Number
Matt: same number, same haircut.
Um, and, but it wasn't Ed O'Bannon. And his kid was like, look, dad, you're in the game. And that, and Ed was thinking like, well, what if I'm in the game, I should be paid for being in the game. Right.
Logan: and be clear, at this time, ed O'Bannon was an early nineties, uh, maybe late eighties basketball player. And this was, they were doing the legacy
Matt: Yeah.
Logan: right? And so he was appearing in the game as a, as an adult now, but it was a version of himself way back when.
Matt: Yeah. You [00:51:00] know, a a a a, an actual basketball game made when Banon was in college would've been like on the, uh, the Commodore 64, and it would've sucked. I bet. Like it's just one pixel. So it, and then he, he, he leads the suit, and then over the course of discovery, turns out that, I mean, of course it was based on EDO and like people at EA were saying, yeah.
In order for us to kind of make sense of the variables during development, like we would call Tim Tebow. Tim Tebow, and we would change him to, you know, Florida QB seven right before launch. Of course, it's based after him and, uh,
Logan: same
Matt: yeah.
Logan: uh, you start to be
Matt: Yeah.
Logan: your, your computer or your, uh, system to the internet, the console, you could go on and download updated rosters that actually had the names themselves. So it also gave you the ability. Day one, you plug it in, uh, you go online, you download the updated rosters, and you have all the players' names in the game for you.
Matt: Yeah, I mean, I don't, I don't know if you did this. I, I was a sicko in college, but before I got a, an Xbox 360 that could connect to the internet, I was [00:52:00] just playing on the PlayStation two era. What you used to be able to do is take your little memory card that you paid, you know, 25 bucks for it at EB games or whatever, and you can mail it somewhere where somebody would manually change all the names, uh, on your memory card to the real players, and then set it.
Logan: was where I would go do
Matt: Yeah. And, and they'd, and they'd send it back and we would do this and this, this was a cottage industry and it became way easier, um, you know, come 20 12, 20 13, 20 14, with with, with, with DLC and internet capability. Um, and that also led to the growth and the profitability of these titles. You know, the, the, you might, you might sell 200,000 units in 2007 of a PlayStation two game.
Now that the, the, the, the consoles became more developed. They became bigger, more flexible, and you could, you could now have DLC, they might sell 1.3, 1.2. So there's a lot of money out there. And if you look and say, well, they're getting a lot of money to be a Madden, they're getting a lot of money to be in FIFA and NBA 2K, why, why am I not getting anything?
And the court system [00:53:00] eventually would say, we agree. Um, and, and, you know, and in my, and in my world, this is, uh, this, this, this is, this is, uh, a, a major story. EA said, okay, we'll pay. That seems fair. Uh, and if anything, we'll probably sell more copies if we can use the real names. If we could dispense with this ridiculous pretend and the NCAA said no, if you pay them, they'll lose their eligibility.
And then multiple schools, including my alma mater, Ohio State, uh, the Notre Dame Washington, a few of the places said, not only that we don't wanna be sued, we're gonna pull our license. And that led to the deaths of the college football franchise, college basketball games, that, and that they weren't especially profitable, but we win a decade without any of those games.
And that o and O'Bannon case, uh, and, and the appeals afterwards began to chip away at some of the, uh, the benefit of the doubt that, that the NCAA enjoyed from the court system.
Logan: I don't know if, if this was the first time, but in 2014 as well, Northwestern's football players tried to unionize.
Logan: Uh, and so now [00:54:00] there's more of these cracks showing up. I think ultimately that case wasn't successful, but I, I think e more and more people are starting to recognize like we're we're essentially employees that being paid.
Matt: Yeah, yeah. The Northwestern case wa it, it, it didn't work. They, they, that, that vote failed and part of that was because of, of a, uh, a huge effort from the Northwestern business community to, to stamp that out. I would say in 2014, I. The idea that a college football player should be an employee and treated as such was, was probably still considered a little radical.
That was at the beginning of my reporting career and a lot of sports writers who, who tend to be more progressive, like, I dunno if I'm ready for that, but it, it is clear that they're being economically exploited. Um, but that was, I think, an example of the Overton window shifting dramatically between video game licensing be between, uh, between, between that aborted situation, between uh, rights fees for conferences exploding.
And if coaches are making four and 5 million, [00:55:00] uh, which they were around this period, now they're making some of them in excess of nine and 10. It became harder to justify not paying people laundry money.
Logan: Is there anything that happens between kind of the O'Bannon case? Uh, that, that's of no, uh, or that you would call out all the way up to Alston.
Matt: I, I think I, I, I think in this terms, the, the, I would, the, the biggest thing is you're beginning to see an awareness of athlete activism on, on campus and some, sometimes that activism wasn't just about employment, right? Uh, Chava Napier of a former, uh, basketball player for Yukon, uh, the year the Yukon wins that wins the national title would go on to have an, a nice career in the NBA.
It had this viral quote, uh, talking about how he went to bed hungry, even though he was a star basketball player at, at a star basketball program. People are like, what are you talking about, Shava? You get a, you get a full athletic scholarship? He's like, yeah, but. The, the, the dining hall closes at 9:00 PM and like I get back at, at, at midnight or one o'clock in the morning from, from some of these things.
And, and I still have to use [00:56:00] my money to fly home to go see my family or, or to all have these out-of-pocket expenses. And, uh, yeah. There are times that we go hungry. Shortly after that, the NCAA says, all right, we're gonna prove unlimited snacks and, and, and we're gonna, you know, be because enough athletes were saying, Chaz has a point.
I know that you guys may not wanna believe that, but there are some real holes in, in what we're getting right now.
Logan: In speaking to the Overton Window, I remember Arian Foster came out in 2013 and said something similar. Arian Foster the teacher, Texans running back, or maybe at the time I guess
Matt: Yeah.
Logan: back. And, uh, Tennessee grad said he used to, you know, he was contemplating stealing something because he didn't have, uh, money for food in college.
And I just remember, uh, the backlash from the Tennessee fan base to, to him saying that, what are you talking about? Why are you spitting on your school? Uh, you know, like, you, you're now making millions and millions in the NFL. Why are you calling attention to this and makes the university look bad and all that?
And I think what he said at the time, the over to window shifted so much [00:57:00] that flash forward six or seven years and everyone's like, yeah, of, well of course that's crazy. Like, uh, he's generating, you know, tens and tens of millions of dollars for the school for his performance. But at the time it was a little, you know, he was attacking something that was sacrosanct.
Matt: You're, you're right. And, and I, I, I think it, we would be neglectful if we didn't point out. That in many of these cases there, there's a racialized dynamic, right? With with there there's, there's white fan resentment. It's like you already get all this social capital, you're already famous, you know, I had to pay to go to college.
How dare you be so ungrateful? And, and I also, I, you know, I think a, a misunderstanding of what the college athletic experience is like. And, and if you are playing division one football or basketball at a premier institution, you don't have the same college experience that you and I did. You can't tell your coach, Hey, I'm gonna go study in Italy this summer.
I'll, I'll see you later. No, you, you, you have to be on campus and you have to be practicing and lifting with your team. You don't get to pick what you major in. You don't get to, you have very little autonomy. You don't get to join the same clubs or, [00:58:00] or work the same jobs that, that may, that maybe we had.
Uh, and, and I, I think a lot of the athlete advocacy during these couple of years to, to, to put that in a more human touch eventually shifted some, some minds among reporters, among some fans, and then ultimately to the activists and, and lawmakers that pushed for some pretty meaningful changes.
Logan: So, so 2021 Alston case. Can you give a little bit of a history of how this came to be, and then ultimately what the ruling was?
Matt: Yeah. So there are, beyond a scholarship and beyond, uh, some, some other very limited, you know, cash disbursements. There, there was, there was a, a movement to allow universities to pay the full cost of attendance, uh, which, which, uh, would, it might include laundry money or some other incidentals or books that might be not, might not fall under an athletic scholarship.
And then there was, uh, a policy of, of being able to provide a, a level of, of educational awards, right? Like, can we buy somebody a laptop? Um, and, or, or you know, if they get really good grades, can we, can we pay [00:59:00] lab fees? Or something like this. And you had an antitrust case in, in, in Austin about whether, um, it was you, you could, the NCAA could impose a cap on, on what those educational awards might be.
And the, there, there was a, a judge in California said like, we, we can't cap it at zero. We let's cap it at like 5,600 or something. And the NCAA said, no, no, no. We're gonna appeal to the Supreme Court, the supreme, the, the we, we've won in court before talking about, uh, the, uh, student athlete experience in our ability to impose, uh, limits on athlete compensation.
Um, this will be our tool to defeat activist judges and everything, especially as the, as the conservatives begin to take on more of the Supreme Court. And of course in Austin they lose nine nothing. You have Brett Kavanaugh, Brett Kavanaugh's famous like concurring opinion, where, you know, he basically says that the attire NCAA model right now would, would be illegal.
Um,
Logan: it up here as we were talking. The NCAA's business model would be flatly illegal in almost any other industry in America. Nowhere else in America can businesses get away with agreeing not to [01:00:00] pay their workers a fair market rate on the theory that their product is defined by not paying their work workers a fair market rate,
Matt: yep. Yeah. For you.
Logan: pretty scathing.
Uh,
Matt: Yeah. And
Logan: or not many? I, I don't know. I mean, you don't hear about too many Supreme Court cases that, uh, has such consensus these days, especially
Matt: it, it was, it d it demolished everything. And, and there it's a misnomer that this is what led to NIL, like NIL and, and paying athletes for recruiting compensation or, or, or perform labor. Athletic labor was not part of this case, did not change the NCAA's immediate ability to, to regulate, um, at like other kinds of compensation.
But when they got destroyed that thoroughly, one, this opened up precedent for other lower courts to consider additional antitrust claims against the ncaa and some, you know, many of which went, went against them. Uh, and it completely changed how activists and state lawmakers looked at athlete compensation too, and that once, once they, they got [01:01:00] smashed that thoroughly stopping NIL stopping, uh, a lot of the things that are happening now be, became impossible.
Um,
Logan: And
Matt: w it w.
Logan: I guess I didn't appreciate that point. So narrowly, what did Alston allow, if not the name, image, and likeness? I,
Matt: Yeah, that it was,
Logan: to it.
Matt: it really was just about the, the limits of educational, uh, uh, bonus awards like this allowed schools to buy laptops for people or to cut checks that are tax free for, for really good grades if they wanted to, to opt into all of that. But once people saw that, then they realized, well, if they can't stop me from doing this, they probably can't stop me from doing, uh, from, from, from prohibiting NIL.
And then state lawmakers in California and in Florida, uh, in particular put enormous pressure, uh, on to, to force the NCAA's hand, realizing that like, if, if you lost this badly in Austin, don't want to pick another legal fight over this principle, it's better to abdicate ahead of time.
Logan: So, so name, image, and likeness, uh, really came to be, I think of it as July 21. I don't know if[01:02:00]
Matt: Yep.
Logan: timing.
Matt: Officially, I.
Logan: Officially July 21. And, and so what did that then entail? What, what ultimately changed, at least by the letter of the law at that moment in time.
Matt: Yeah, so it, it's funny there, there's real, there's when you talk, when you talk about NIL, even in the 2021 era, I always say there's really two different NIL marketplaces. By the letter of the law we're talking about publicity rights, something that, that you and I enjoyed in college and that everybody, like outside of the armed forces and some other very specific circumstances, everyone else has presumed to, to enjoy you.
You can do an endorsement deal, you can profit, uh, you know, from, from somebody using your own ip, uh, for something else. Previously in college, like we talked about, you couldn't do that. You'd lose eligibility even if that had nothing to do with your identity or performance as an athlete. So if you were, as an example, a cross country runner.
You had a YouTube channel about gardening and you wanted to turn on monetization for that YouTube channel in 2020, you could not do that [01:03:00] before you would lose your track, your your running eligibility, even though those two things really don't have much to, to do with each other. So by permitting athletes to take advantage of these deals, it allowed athletes to, you know, play guitar at a bar for money to hold other jobs, and then to sign endorsement deals, uh, to, to give, uh, paid instruction at camps, um, and, and, and to participate in group licensing or individual licensing.
Um, you also have a different NIL market that I like to colloquially call the bagman market, which is essentially money laundering through corporate or partnerships or nonprofits or charities, uh, a talent acquisition or retention fee. Um, where somebody might say, you know, this left tackle is very important to us athletically, he might have 60 Instagram followers and his posts are terrible.
We're gonna pay him a hundred thousand dollars to go speak at the Boys and Girls Club here. It's not, 'cause he's famous, it's not because he actually has a name, image of like his marketability rights. It's 'cause we wanna pay him to play left tackle for us. [01:04:00] Um, and that was something the NCAA would look at and go, whoa, whoa, whoa, whoa, whoa.
That's pay for play. And the agents and the economists and, and, and collectives and, and fans would say, try and stop me. And, and it really, they couldn't, legally speaking, they've lost a couple of those fights. So you have, you have both markets.
Logan: Who are you to say, um, I, I am Walmart or Tyson's Chicken and I'm in Arkansas, and who are you to say what I'm paying him for? I maybe, I think him doing this commercial or him stopping by the local Walmart and shaking hands maybe. I think fair market for that, for this running back who happens to be a five star and, you know, I think can be a stud maybe.
I think that that's worth a hundred thousand dollars. And, and you would say, well, are you paying anyone else to shake hands to, you know, sit outside of Walmart for a hundred thousand dollars? And you're like, well, who are you to meddle? In my business, I
Matt: Yeah,
Logan: marketing and I wanna pay them that. And so.
In some [01:05:00] ways there's not a lot of industries outside of collective, you know, collectively bargaining. Uh, there's not a lot of industries that you could limit what people actually are able to make. someone wants to pay him that.
Matt: yeah. I, there's a lot of public sector employees that do have some of these restrictions and you have to document and report outside income. But the key word there is that they're employees, um, as of right now, and certainly as of 2021, college athletes, were not employees. And so to, to have a, a, you know, a, a document that would have that kind of restriction.
Would in many cases trigger an employment test as, as we go back to what the courts have said previously, you designate somebody as an employee, which is the thing that the universities have desperately not wanted and have fought against since Denison way, way back in the fifties. And that's one of the major legal tensions we have here still today.
Logan: And, and you mentioned this in passing, but the concept of collectives come to be around this time. What, what
Matt: Yeah.
Logan: What are they doing? What role are they playing?
Matt: So let's go back to that Arkansas example, right? [01:06:00] You know, Arkansas, you could theoretically have Tyson's Chicken or Walmart or Dillard's, uh, or you know, a couple of other companies that have lots of money do marketing spends to go to, to, to, to pay athletes. But Arkansas
Logan: directly the, the BP of marketing,
Matt: sure.
Logan: brand partnerships at, at Walmart is saying, okay, I'll go call up, um, this running back and say, you know, here's a hundred thousand
Matt: Sure. Or, or I'll call up the associate athletic director at Arkansas and you tell me who you need and we'll do a deal with them. But in Arkansas, not blessed with the gigantic corporate culture. You've got five or six really big companies and some resource extraction and, and not a lot else. What if I am a partner at a law firm or if I'm a dentist for a hospital or, I, I, I don't own a string of, of, of car rental places, but I, I, I, I, I, I'm highly employed.
Uh, you don't make a lot of money in this space. Um, and I can't hire somebody to individually do marketing for me. Um, well, I can't just give somebody a check for a hundred grand, but if I pay this new 5 0 1 [01:07:00] C3, I established $50,000 and I get 30 of my high income buddies to do the same. Then that group could sign an athlete to a marketing deal or to, or to, to, to set up some kind of charitable partnership or something.
And that's called a collective. And I, I would, I would say, think of it as a college sports super pac. Um, the, the comparisons between that and campaign finance loopholes, i, I are, are very apt. Is, is this what the, the spirit of the law says you should be able to do with the ca with the super pac? No. Uh, but there's a letter of the law says you can.
And so almost everybody began to do that.
Logan: And that starts to be the, the central entity that dollars are going in. But at the time, I guess based on state laws. has to be arms length, uh, uh, relationships between the university and the entity itself. And then that starts to break down certain states pass laws that you can actually coordinate together.
And there's also laws that [01:08:00] the concept of inducement where you can't, uh, you can't monetarily incentivize someone to come to your university by, uh, giving, you know, for, for discussions ahead of their, uh, enrollment. That is a theoretical thing that's obviously happening in practice across the, the, the university landscape.
But there's, there's like these distinctions that get tested in court or NCAA keeps pushing on thin lines, trying to wield some power, and they keep losing.
Matt: And there, there, I think again, the comparison between this and Super pacs is pretty apt, right? Like for a super pact there, there is supposed to be some independence between who's running that group and the candidate. But you and I and God all know that these are coordinated spending campaigns that that happen hand in glove with the candidate and these associated pacs.
And, and that would happen by and large with collectives, not always. And sometimes you'd have tension between the guy running the collective and, and the school. They might not like each other. They might not [01:09:00] trust each other. Um, but they are fundamentally working for the same principles. And then state laws would change quite a bit.
Um, particularly in the South where football recruiting is a civic religion of some sorts, and there is a long tradition of the state be willing to put its thumb on the scale to help out old state u Uh, and so you would see a lot of regulations change and if Georgia changes something, well by God, Texas and Mississippi and Alabama have to as well, even if no one's really read the law yet.
Um, you know, for a lot of these part-time lawmakers didn't really understand i, I, I think what they were creating. But, but you did have that dynamic. And, and so by 2024. The functional difference between school and collective was really broken down.
Logan: Were you analyzing through this? Like what, what the buckets between the two, the bagman as you described, and
Matt: Yeah.
Logan: true sponsorships, do you have like a swag of, of how those dollars kind of broke down for some of these programs? I.
Matt: Yeah. We, we were able to get some of this information through some of the software companies that process these [01:10:00] deals, but I don't mind telling you, like, part of what kind of shaped my, my thinking about this was my own experience. 2021 and 2022, I did a bunch of these NIL deals. I figured, well, I run a business, I'll pay some athletes to endorse extra points, or I'll pay some athletes to be interviewed or, or, or to, or just share their thoughts and stories here.
And I did, I did that for a, a, a wider swat of institutions. I, I'm an Ohio State graduate. I, I did pay a couple athletes at Notre Dame in Michigan, and it wasn't because I'm secretly a gigantic fan of Notre Dame Pole vaulting, or BYU cross country or Ohio football. I looked at this and thought. I think by, by participating in this market, I can report about it a little bit better, and maybe I'll, I'll stumble into somebody who's a good affiliate marketer.
And what I found is that none of those deals came close to, to, to breaking even financially. And what I began to see as I would reach out to other brands that did larger ad spends, uh, or engaged in this world, is that the value you'd get would be from the earned media announcing the campaign, [01:11:00] not from the campaign itself.
And so when the campaign no longer had a novelty factor about it, and, and, and, and, uh, every, every university was, was announcing some of these deals, there was no point in renewing. Because if you wanna get into influencer marketing. It's better to hire a mom blogger or a fashion influencer, or somebody who's been doing this for a while who understands what CPM is and campaign deliverables and has owns a ring lights and knows how to track some of this data.
Versus a 20-year-old who just happens to be good at volleyball and knows more about Call of Duty than she knows about actually doing this work. Um, and I began to kinda see that anecdotally through many of the other, you know, people on the university side or collectives or, or brands that I talked to.
There are some exceptions. There are some legitimately marketable athletes, and there's a couple of industries that I think did a good job spending into this. But the, the people that work in university compliance, the people that work in compliance software that process these deals, they don't tell you the same thing.
That, that the [01:12:00] overwhelming majority of NIL activity was centered around talent acquisition or retention rather than marketability. And that's just because they're not good.
Matt: They're They're not. They're not, they're, they're, generally speaking, 20 year olds aren't really great than dependable campaign partners.
Logan: Do you think it, I mean, does that equate in your mind to 95 5? Does that, is that 90, I mean, it sounds like their ROI was low, but in terms of the dollars themselves, uh, where the intention behind them was. Do you have any perspective
Matt: I, I, I think, I think we're looking at 80, 85 of the total marketplace and it's different depending on the sport. I, for a lot of women's sports, it's probably closer to 70 40 or 70 30 in, in line of marketing. And that's just 'cause there's not as much fan demands to bribe your way into a great volleyball program.
And by and large, young women tend to be better at social media from a brand marketing perspective than young men are. Um, but, uh, uh, on the totality of the market, which is dominated by football and basketball money, yeah. 80, 85 [01:13:00] and perhaps more are concentrated in the bagman world.
Logan: And, and, and then there's also the, the transfer portal come to be a thing around this time, which exacerbates all the tension that, um, I think was kind of a cow, uh, powder keg
Matt: Yeah.
Logan: speak a little bit about that?
Matt: Sure. So when URI, if we're an undergrad and we decide that we don't really like our program or where we're going to school, generally speaking, we could transfer to any other school that will accept us and take our credits and go. We don't owe our previous institution anything and, and our old schools, uh, has limited opportunity to block us as long as we can get into the other place.
And, uh, in order to, to defend itself against these employee acquisitions or, or classifications, NCAA and university leaders would constantly argue in court that college athletes are college students and should be treated like college students. Well, if that's true, and they should be able to transfer.
And what used to be the case for football and men's basketball and a lot of other major sports is if you [01:14:00] decided to transfer, you were ineligible for a year before you could go play again. Which was something that athletes and their advocates and, and some lawmakers thought was an, an unfair restraint of trade and clearly demonstrated that these are not like regular college students.
So, uh, eventually that rule gets rescinded and so everybody then can transfer. Uh, you can't play for more than one school in one season, but you can leave at these designated times to go wherever you want if somebody will accept you. We had something called the transfer portal, which is essentially a gigantic spreadsheet that tracks people who are looking for a new school, uh, and schools who are then looking for somebody else to fill in, fill in these gaps.
So when you mix that with this growing bagman market, which you have now created, is perpetual free agency and a cottage industry of agents and, and agencies and and marketers that will try to get somebody at one school to jump into the portal and go play somewhere else for potentially more money.
Logan: And, and, and there's [01:15:00] tons of brokers around these people now that are popping up acting as middlemen of who knows what. I think famously there was the example of Pam Newton and his parents, uh, and what maybe his dad knew about potential payments. That were
Matt: Sure.
Logan: for him to go to Auburn. So this has always been kind of a history of who knew what and the complicit, uh, nature of, of behavior and all of that.
But now you actually have these people that can be doing the outreach on the behalf of the students saying, Hey, uh, you know, Mr. Head coach, I would be interested. I'm finishing up my, uh, sophomore year and I'm gonna enter the portal potentially in a, in a few weeks here. Would you be interested in me? And so all this stuff is going on both ways, through social media, through handlers, and so it's perpetual tampering, I guess is the term that gets used a lot, but meddling in other people's rosters.
Matt: Uh, yes, and I think there's a, there's an important distinction and, and the, the [01:16:00] example of Cam Newton, I think is particularly apt, right? If we're talking about, say, the NFL. Just about everybody in the NFL has an agent who helps negotiate salaries, helps procure and negotiate and set up licensing deals and sponsorship opportunities and everything else.
If you wanna represent somebody in the NFL as an agent, you have to be certified by the NFL Players Association. Um, and that generally requires you to have a graduate degree or a law degree, some element of professional experience with not, with, with, with negotiations, passing an ethics exam or, or in some way certifying that you are a competent professional.
Same thing's true with the NBA Major League baseball, most other major sports, but there's no union. College athletics because they're not employees and they've never organized or sought for one of those things. And most of the laws on the books that regulate sports agencies at the state level or the federal level have no enforcement mechanism kicked in.
So there's basically, there are not really any rules. So what that means in PR and practice, Logan, [01:17:00] is that you and I could hang up the phone when we're done with this conversation, change our LinkedIn bios and become college athlete NIL agents. Today there's, there's no form we have to fill out, and I don't have to go register with any Secretary of State.
I don't have to prove that my, you know, I know my butt from the hole in the ground. I can be that. Which means that the handlers that we talked about a lot in the seventies, eighties, nineties, two thousands, uh, there are sometimes referred to, uh, as uncles in, in the college sports world. Right now they're agents.
And now as agents, they could say, you gotta give you 20% of, of, of, of what you're, of what you're getting. And especially because in the pros, you might only get 3% of a salary. There's no salaries in this world. They're all marketing deals, even if they're actually salaries.
Matt: So the agent could charge a much higher percentage, so they're now, you have an incentive from the handlers to get people to transfer as much as possible because they probably can't legally represent them in the pros, but they could get paid every time someone hits the portal.
And so you have a lot of economic incentives to to, to push for constant turnover.
Logan: And, and because these [01:18:00] aren't contracts and they, tech technically can't be paid a play in, in nature. Uh, I guess maybe they're contracts, but they're marketing contracts. There's no enforce. Ability around, uh, you can't have incentives for performance at all. There's no, hey, you must, you know, appear in these number of gains or whatever to get this.
And so you have this perverse incentive structure at play where people, uh, constantly wanna renegotiate, constantly want to transfer, and there's not a ton of, uh, or capability that, uh, the people paying ultimately have around. If it's this bagman incentive structure at play, it's tough luck.
Uh, it's if the, you know, what happened, the person doesn't want to do what you want them to do.
Matt: There's, there's a lot of truth to that there. There's a couple of ways that, that more savvier organizations to try to protect themselves. They might say like, you [01:19:00] still have to be a university, uh, a student in good standing at this school or for your, your marketing make goods. They have to be done in this zip code.
So if you transfer to a different state, are you gonna go drag your butt every July 1st to come here and go cut an ad even though you're, you're playing in Oklahoma or like, probably not. But you can't really protect yourself if they suck or if they get hurt. Um, only if they get a DUI or if they somehow get suspended from the school.
And so and so that did, that did happen. And it was, that's part of the reason why there's some donor fatigue in, in this world because not only do you are, are, are donors asked to pay more, um, to support this, this, this, this, this ecosystem. Um, there's a lot of dead money floating, floating around.
Logan: heads eye win, tails eye lose thing where if you have a five star recruit coming in as a freshman and you gave them a certain amount, uh, in their first year, that's, and let's say it's a three year contract or whatever it is, that's the minimum you're paying them because if they [01:20:00] perform really well, they're coming back and renegotiating with you for no more money.
If they don't perform well, then they're gonna keep taking what they gave, uh,
Matt: Yeah,
Logan: agreed to early on. And so it's this, it's this weird thing that the contract you sign and the NBA or the NFL or whatever other organization, there's some enforcement of fulfilling the job, uh, that you signed up for in this.
It's, um, it, it, that's, that's a minimum you're sort of agreeing to and that if you outperform it, you better bet that they're coming back and asking for more or going to a different school to try to get it.
Matt: that, that's definitely a part of it.
Matt: And, but I would say that risk really does run both ways, right? Because if you sign, if you sign up and say, okay, the collective's gonna pay me X, Y, or Z, then that collective goes bankrupt. Um, you're often SOL we, we've had a lot of examples, uh, publicly of people saying, I did not get what I was promised.
Um, because the, you know, the organization folded with somebody else. I've had a couple of ads tell [01:21:00] me, and I haven't publicized these examples. They were like. Our, our collective was funded by two guys since they found themselves not as liquid as they were before. And so all the payments came in late.
This happens and you don't have a meaningful recourse. So over the last couple of years, I would say there is a meaningful con, consumer protection angle and a buyer protection angle because there's, you know, there's no FDIC of the BAGMAN world, right? Like this, this is all existing outside of traditional support infrastructure.
Logan: The mess. Example, I guess was the Jayden Rashada,
Matt: Yep.
Logan: in Florida where a high school senior, uh, enrolled at the University of Florida under, or I guess, did he ever actually enroll? I,
Matt: He was there for like three days. He, yeah.
Logan: under the pretense that he was gonna get some amount of money, and there was a lot of finger pointing about who signed off on the amount of money and what the deal actually was.
And so ultimately he withdrew from the school and, uh, and with the Arizona State, uh, subsequent to that, uh, for, for, I think, [01:22:00] I mean the numbers that were reported was he signed a, I think a $13 million deal on the way into Florida and then, uh, at Arizona State, I think he got a couple hundred grand at, at max.
So it
Matt: Uh, if, if that, and then he leaves Arizona State after one year for Georgia. He's left Georgia, he's currently still suing Florida. I, I wanna say he's now, I think at like Western Kentucky
Logan: Yeah.
Matt: or, uh, a a Yeah.
Logan: story of, of, you know, I mean, some probably bad advice, some miscommunication and probably some malice
Matt: Yeah.
Logan: you know, the participants' side of things.
Matt: This,
Logan: so
Matt: happens. I would, I would not say this is frequent. But it does happen. Um, and it happens more than, than ultimately gets reported. Um, generally not. The numbers generally aren't as big as they were for Jaden Rashada, who is a top five quarterback recruit in that class, but it does happen every year.
Logan: and so, so as we move forward to today and start looking to this future, so we're, we're coming up on universities themselves, actually getting involved in [01:23:00] paying student athletes. So how did that come to be? How is that playing out in, um, in, in Congress and I guess, what are the derivative implications for that?
Matt: Yeah. So we should probably talk about the house settlement then here real quick. So, um, over the last couple of years, there were multiple antitrust lawsuits. Filed among different classes of athletes against the ncaa. Some of them were, uh, wanting damages for missing out on NIL opportunities because they played before 2021.
Uh, some were, were complaining about, uh, missing out on abilities to monetize NIL associated with broadcast deals for, you know, playing on tv and then for the NCAA continuing to artificially limit what they might be able to earn. And, uh, these cases were, were, were combined. It's, it's, it's called House the NCAA after a swimmer at Arizona State.
But there were lots of other, uh, athletes involved and, uh, they power conferences. And the NCAA negotiated a settlement that [01:24:00] would've paid back damages north of a billion dollars. Would allow universities to pay up to, I think the cap is like 20.5 million for this year, and will will grow from there directly to athletes to essentially say, I'm going to buy your NIL rights.
I'm going to pay you $200,000 if you're playing basketball at my school, and I can use you in billboards and I can use you in radio ads or something, but I'm going to pay you rather than, you know, Bob Chevrolet in Mesa, Arizona necessarily going to pay you. Now this settlement has not been completely finalized yet.
There was, there was a, a hearing on April 7th. It's likely to be finalized this month. Universities are acting like it's going to be finalized and, and they'll, and they'll be paying outwards. They wanted to do it because if they, if they, this goes to court and the NCAA loses and they have to pay treble damages, it will.
Literally bankrupt the ncaa. We'll be looking at damages north of five, $6 billion. Nobody can afford to pay that. And then that's, that's the end of the game. Uh, so the, the hope here [01:25:00] is to let some steam, you know, uh, outta the kettle a little bit, regain some control over this ecosystem, pay some back damages to previous athletes, and then the hope is from the NCAA and power conferences that they can get Congress to give them a limited antitrust exemption to allow this to function essentially as a collective bargaining agreement.
Because if they don't, someone else is gonna sue 'em three days after the settlement is approved and, and you're, you're right back at square one,
Logan: And so the implications for that, then there's, there's this $20 million that I think is it in July that it's
Matt: July, July
Logan: to.
Matt: one, assuming this is approved this month.
Logan: And, and, and so the way that that will play out is, uh, each school theoretically, but ultimately each conference gets their, uh, gets to decide how they're gonna allocate those dollars.
And
Matt: Yep.
Logan: 20 million. Is it across, like, who does that include? Is
Matt: It includes everybody, not just the football team, it's your whole athletic department.[01:26:00]
Logan: But school-wise, is that just football programs or is it all 350 programs?
Matt: Well, and so everybody that's up in a, one of the power leagues is mandated to opt in. Everybody else in division one can opt in if they want to. And so what you're seeing from a lot of the schools that don't have football is they'll say, we're gonna opt in. We don't have to pay $20 million. We could pay four, and we're just gonna, we're gonna spread that smaller amount of money among a, a smaller amount of athletes.
There are some schools, yeah.
Logan: uh, we're gonna opt in and we will pay, we'll pay eight to basketball only. Uh, which for the other schools that have a football program, there's kind of this
Matt: Yeah,
Logan: decision of how do you split the pie. And uh, I guess as you think about like the revenue, we sort of talked about, uh, high level, the different components and the profit associated with it, but revenue generation, do you have a rough back of the envelope of how
Matt: I do.
Logan: of break down?
Matt: So I, I actually, I think this is a, it is a fascinating conversation because the, the [01:27:00] motivations really do vary a lot from school to school. There is a kind of rough back of the napkin formula that a lot of power schools are using, which is we're gonna do roughly 75% for football, roughly 15% for men's basketball, roughly five for women's basketball, and five for everything else.
I.
Logan: Which generally tracks as I understand, uh, directionally that that's the revenue split ish
Matt: Yeah. Ish. Ish. Yeah. But I'll, I'll give, I'll give you an example. You know, not far from my neck of the woods, right? University of Wisconsin, um, does not have a women's basketball tradition of note, and they're in a very, very competitive women's basketball conference. However, Wisconsin has a dynamite women's volleyball program, will compete for national titles, sells 9,000 tickets plus, um, is you, it will be on Fox, you know, will be on FS one will be on linear television.
Very big deal. They're also the current defending national champions in women's hockey and they've [01:28:00] been a top two, top three program for the last five, six years. That's very important to Wisconsin as as a school. So do you look at this and think maybe I give my women's team, my women's basketball team almost nothing.
Because I could give them 5% and they'll still get turned into hamburger by Iowa, Ohio State, Indiana, and UCLA. But I could take that money where it could go further towards my championship aspirations in volleyball or, or hockey. Uh, Iowa has a wrestling program that is generates revenue, that that's on pay-per-view, that's on linear television wins national championships, and, and is a ly very important thing there.
I was gonna have to spend a million bucks on men's wrestling if they, if they wanna be successful. And I, I think ano another kind of, you know, Moneyball angle to all this would be some schools out and say the big West, your, your uc Irvine's, your Riversides, your Long Beach states. And these schools have basketball and sometimes they're okay.
Every once in a while they win a tournament game. But you're, you're not, you're not [01:29:00] likely to make the sweet 16 out of the Big West, but they have great college baseball. They host regionals. Um, in our lifetime, big West teams have won national titles in baseball. Do I expect Long Beach or Fullerton or, or, um, you know, Santa Barbara to have a bigger baseball budget than Penn State or Ohio State whose baseball sucks ass because it's winter until like late May here in the Midwest.
Yeah. Um, so I, you have, uh, you have this written out in pencil, but I, every school has to then figure out beyond do I have the infrastructure to pay this to the right people, but how do I, how do I move it around? Yeah,
Logan: The SEC C'S mandating, I think. I think they, they all agreed to a certain split. As I, as I understood it, uh, but how, or maybe not, maybe I'm wrong.
Matt: no, as I understood what the SEC said was, um, we're all gonna offer the same number of football scholarships you can offer up to 105. For this year, they're all gonna stay at 85 and I expect very, very few schools to go to 1 0 5. But the, the SEC schools [01:30:00] also offer different sports. And so some like LSU for example, might decide we're gonna spend more on women's gymnastics.
Arkansas will probably spend a little bit more on baseball. Who knows what Vanderbilt's gonna do, right? And, and, and, and it'll, it'll move around a little bit and there will be marketing dollars and stuff outside the cap to, to fill in some of those gaps. I, I don't think this is gonna look exactly the same everywhere, but I can't imagine anybody, certainly in the power of forest saying we're only gonna give 20% to football.
There's just too many people on the roster like, you have to allocate a disproportionate amount of your salary cap 'cause you gotta pay 85. Guys.
Logan: And how does the, the bagman world, uh, play into this as you sort of look forward and there's the concept of an NCAA clearinghouse, like how do you think that world ends up evolving? I.
Matt: Logan, it's a great question and here's my honest to God answer. Anybody who tells you they know exactly how it's gonna work is trying to sell you software. Um, we don't really know. We know that there is a [01:31:00] clearinghouse that's gonna be administered by Deloitte, and that's empowered by the major conferences that's supposed to track every single NIL deal over $600, make sure it's lines up with fair market value and potentially invalidate deals that do not.
And then there's a
Logan: give this specific example we talked about there's a
Matt: Yeah,
Logan: million pool that's getting broken up. However, we decide through the university directly and university needs to come up with ways of paying that theoretically they should be able to do it 'cause they have television rights and
Matt: sure.
Logan: some people are putting logos on fields and whatever.
There's a bunch of different ways to get that. Then there's this true marketing, uh, but that's essentially a pay to play
Matt: Yeah.
Logan: And I think at an individual level, the schools get to allocate that both within the spurs, but then within the players as they
Matt: However they want. No, there's no, no fair market value analysis for anything that comes directly from the school,
Logan: The
Matt: only outside the school.
Logan: end up making yeah, you know, whatever, 50% or 30% or something akin to the NFL maybe, who knows how that's gonna end up playing out, at least within the football. But they'll, people will make [01:32:00] different decisions there. Then there's still this concept of traditional name, image, and likeness deals and the actual marketing rights.
If people have ever seen Heisman House or Dr. Pepper commercial or
Matt: Yeah.
Logan: things are, and the, the enforcement of this is going through this Deloitte Clearinghouse entity, which theoretically will go back to Tyson's Chicken or Walmart and say, Hey, you know, you signed here for a hundred thousand dollars for this running back to show up, uh, and shake hands and kiss babies.
And that's not fair market value based on his social media followers. And we're, we're sort of back to limiting the earning,
Matt: Yeah,
Logan: potential of a, of an individual in some ways here.
Matt: that's right. So here, so here's the question. On one hand, what you described. Uh, I imagine the, the second that clearinghouse goes to Walmart and says, Hey, couldn't help but notice you paid Bru Mars $90,000 to give a concert, and you're paying $125,000 for this running back to sign autographs like [01:33:00] I I call bs.
As soon as they flag that deal, there's a lawsuit. And it's entirely possible that a judge will say, yeah, that is an unfair restraint of trade. Like, there's, there's no CBA here, throw this whole thing out. Or, um, Congress might say it's okay. And they might, they might basically turn that house settlement into federal law.
Uh, Congress could pass a law that says, I don't care what the court system says, college athletes aren't employees, and the NCAA doesn't enforce this stuff. Now, the Federal Trade Commission does. And, uh, the NCAA has been asking for that for a couple of years. It wasn't possible in split Congress, but Republicans control everything now.
Uh, I don't think I'm being particularly partisan when I say this particular Congress, not big fans of organized labor, uh, not big fans of parliamentary procedure. So if the White House says this is a priority, or if Ted Cruz says this is a priority that could really happen. And then the, the clearing house is, is empowered somewhat by the federal regulatory state and it becomes a thing we really don't know.
Uh, I I think that [01:34:00] that adds to some of the, of some of the, the frustration or risk management here on behalf of schools or agents or anybody else, whatever the rules are now might not necessarily be the rules in four or five months. It would be like trying to, to run a business where you're doing imported exporting outta Vietnam right now, I don't know what the rules are gonna be.
Logan: And, and looking forward to that. I mean, there's the decisions on how much the players, uh, are going to make. And you have, you still have examples of there's this $20 million pool, but X, Y, z person who makes, uh, is worth a couple billion dollars if they wanna pay to have the best running mat on the team.
It's still back to this concept of who are, who is the NCAA from an enforcement body to, to limit this. And as you're making these decisions or recruiting these players as we sit here in equal of, of 2025, you're people are promising deals.
Matt: Yeah.
Logan: under some mixed, people are told. Totally by the letter of the law saying, Hey, we're [01:35:00] gonna pay out exactly those $20 million and then what we can actually get to in terms of true marketing deals as well.
And you know, some people, Phil Knight at Oregon are saying, who are you to tell me what Nike can spend on these players? And they're saying, well that $20 million number is great, but me's another 10 50, $20 million on top of this that, you know, fulfill the rest of the roster. And so we're sort of headed to this and who knows on the playoff, maybe these players will be ruled in now, well maybe go be stale payments that end up coming through.
It's just, we're sort of back to in some ways the opacity of the grayness that we had over the last couple years at least. Uh, the chaos was free market and now we're sort of heading back to some more control. But there's gonna be weird distortions that end up playing out.
Matt: I think, I think that's exactly it. We've, we've shifted to post-Soviet economy, right? Where it's, [01:36:00] there's some of it's planned, some of it, it depends what the state ends, ends up doing. Uh, a, a, a lot, a lot of uncertainty. And you know, I, I joke I didn't have some of this. When I started, you know, getting on this beat and, and half of what I do is I'm talking to athletic directors or coaches.
I, I joke that part of what I do is, is be a, serve as an unlicensed therapist. We will, we'll turn off the recorder. And if you don't want, if you wanna just yell for an hour because you're trying to make policy when you have no idea what the regulatory rules are gonna be, it's very frustrating. And, and I think people that have covered other industries where that, that that's been the case are frustrating that that's where we are in college sports right now.
Logan: Are we having to a world of, um, athletes, no longer being students in your mind?
Matt: I don't think that's as likely, but I, I, I, I don't think it's an impossibility, you know, at, at, at some point we all kind of have to sit and be really honest with ourselves about what are the red lines that make college sports, college sports, and a fundamentally different product [01:37:00] from, from the NFL and, and for and, and.
For a while, uh, you would hear people say like, no, it's, it's, it's because they're playing for the love of the game or for all state, you rah rah rather, rather than, than for money. And now they're playing for money and people still seem to like college football just fine. I don't know if, if they just, if they're no longer students at, at any level, if that changes things or if Florida State becomes, you know, the, the Florida State Football Club as part of this BlackRock sponsored Super league that just pays a licensing fee to Florida State University for the IP and playing at Bill Campbell.
I don't know, maybe fans won't care. Maybe that becomes a, a red line and if we evaluate the football in just like a pure quality of products, they'll find it inferior to the NFL and, and you, you have a decline. I don't think anybody knows the answer to these questions yet.
Logan: other one that, I mean, is an obvious one that keeps coming up is like there's, there's eligibility limitations or a number of years that you get to. A on a given team, and traditionally it was [01:38:00] four and then it became four plus one, and then it became, you know, some of the covid years. And then you end up with some injury exceptions and
Matt: Yeah.
Logan: shirts and all that stuff.
And you can make a very easy intellectual argument that like, Hey, Diego Pavia, the quarterback of Vanderbilt this past year is a, uh, probably objectively maybe five 10, a quarterback who happens to be a very good college quarterback, but has no potential to go in the pros. And so he can come back and make. A million dollars a year playing at Vanderbilt and running around and helping them win games. And who's to say that he shouldn't be allowed to play when he is 24, 25, 26, 27, 28, 29. Like where is the bright line of what we're talking about here? Because you literally are limiting his earning potential by saying, Hey, you can no longer play college football.
Matt: Uh, yeah, and, and, [01:39:00] and, and in the past, the courts would say that there's some pro competitive benefit for having some of these eligibility rules and would give the NCAA some deference that's been shipped away a little bit. You know, part of Diego specifically, his argument is, you know, I played part of my career in juco.
That's not even an NCAA Co. The thing, nothing else. Just don't count that year. Just like, you know, we, we wouldn't count, uh, playing in like Oak Park or like a military prep school or something necessarily.
Logan: Yeah.
Matt: And then if, okay, we're gonna do that. What about division two, where, you know, I had to paint the lines on the baseball diamond before I got to go play.
And, and that's, that's clearly not the same thing. I can't predict what a future judge would say, but, but what your argument here is not dissimilar from what many of those athletes are saying, where they, this is the peak of their earning potential. And you might be missing out on hundreds of thousands of dollars the way you solve this.
Or one way that I'm aware of that you can solve this. I'm a reporter, I'm not a labor attorney, but the, the, the most common way is through A CBA, um, like the NBA has, the NFL has. And that's why you [01:40:00] have age limits and eligibility standards and everything. But then you need to be able to negotiate. And if you wanna have that kind of protection and that antitrust exemption for college, you need.
Federal legislation either that allows them to unionize or that doesn't allow them to unionize, but, but, but gives you the benefit of a CBA one way or the other. Um, whether they get that or whether this particular crop of lawmakers are up to the task of doing that think is an open question. 'cause I, I don't think I'm gonna be accused of being too partisan here if, if I admit this, the kind of people we have in the Senate right now are not typically the kind of people that live and die with Tennessee football.
These, they, they are not single issue voters that are, that are, are responsive here. This is not an industry that by and large, with some exceptions, that they really care about that much, uh, which can make for some bad policy.
Logan: And so, so do you have any idea, I mean, does it feel like we're on the precipice of. Something in the next couple years, we're moving to the more [01:41:00] widespread antitrust exemption with CDA. Like if you, if you were forced to pick a timeline, in my mind at least, and I don't know if you agree, like that feels like the only solve for the sport to have some guardrails and some agreement, otherwise it's gonna keep getting legislated and different state courts and you know, it is gonna keep bubbling up with X, y, Z thing.
And ultimately, uh, as I think people are well aware, there's 50 states who don't necessarily agree on different laws. And so now you have different conferences across the country with different political leaders and different political environments, and so it's pretty hard to keep everyone marching to the same drum.
And so I guess one, do you have a timeline of, of thinking about when something like this could happen and two, do you think that this is the only solve ultimately, and we're kind of putting a bandaid on the bullet hole until we get there.
Matt: Yeah, I, I, I differ from some of my colleagues in that I actually [01:42:00] think the single most likely outcome is in the next 18 months. Congress gives the NCAA a limited and conditional antitrust exception. I. I actually don't think that's the best policy. I think that that will end up hurting economic prospects for a lot of elite athletes.
Um, but Ted Cruz is in charge and, and Ted, and this is something that's really important to him, and a
Logan: literally in
Matt: Ted Cruz is the ranking member of the Senate commerce committee that will be taking the lead on drafting this kind of legislation and getting it down to the house. And he has flat out said, I do not think athletes should be employees.
I am, I am using my intellectual gifts and energy to get very deeply involved in this issue, which he has and, and, and wants to provide the, the best, you know, like the most success for the highest number of people, which like, in his view and his staff's view is a conditional limited antitrust exemption.
He asked Republican lawmakers who would love to go back to 1983, probably in a lot of different ways, but particularly on, on, [01:43:00] on, particularly on college athletics, right? And, and you had a lot of democratic lawmakers who were really adamant about allowing for employee status and that softening a little bit.
I could be wrong, right? The house is, has a what, three seat Republican majority right now. Uh, and depending on who's dead or who's, who's traveling or who's sick or something, or it's, it's, it's, it's difficult to corral that group into doing anything if that, if the House and Senate and the, this White House don't pass an antitrust exemption, then in the next 18 months, I believe we will see a federal court, probably in, in, in Pennsylvania and the Johnson v NCAA case rule that some college athletes should be employees.
And if not, then after this house settlement, when they're clearly getting million dollar checks from the universities to pro provide labor, it it'll be harder to say that they're, um, that they're contractors or that at they, that they are employees. So either, yeah, whether, whether Congress is proactive one way or the other, or the courts make this decision for them.[01:44:00]
You can't keep kicking the, the can down the road forever. Like eventually somebody's gonna force the issue.
Logan: Do you think, uh, we head to a world of, of breaking off in some way at some point, either with, um, SuperConference for college, uh, football, maybe? Um, I guess there's different considerations for. NCAA basketball because of the tournament, but what's your perspective on that?
Matt: You know, I, I, I think it's possible. I'm not ready to say it's inevitable or even the most likely outcome. And, and I, I think part of that is we, we've now had a couple of private equity groups and institutional investors kind of kick the tires on this, and I, I've listened to some of their pitches and I've some of their pitches and read those.
But part of the challenge is if you're gonna make this kind of investment into a super league or to buy, you know, you know, a chunk of, of the assets of an athletic department, you're doing this to make money. Unless you're the Saudis, when you're doing it for sports washing, and then it's pretty hard to buy a US [01:45:00] state asset, the, the, the same way.
But if you're, if you're, if you're BlackRock or somebody, you're trying to, to make money doing this, and then when you look at the actual balance sheet of some of these athletic departments and you really look at the real numbers and you go, oh my God, this is worse than I thought. And then can I flip this?
What's the liquidity of this kind of investment? Who can I sell this to? Um, because you can't buy 15% of Florida state football. You could buy 15% of, of a new LLC, that Florida State spins off that, that can contains its media and ticket and sponsorship assets. And that can get complicated. And I think the, the, the in intellectual idea of institutional investors fronting a super league and then actually doing it are two different things.
If I was an institutional investor and I was interested in, in, in getting into the sports market, I would think that buying a fractional share of an NBA team or potentially doing this for the NFL, once that becomes allowed, or European soccer. Where American investors have flooded over the past couple of years.
I think that's an easier investment than [01:46:00] trying to force the issue in college sports. Could it happen eventually? Sure could happen eventually. I know the American athletic has been very aggressive in trying to, to lock down, um, institutional funding and, and, and, and splitting off a share of their assets.
And, and maybe that's where, where things go. I think that that raises a lot of operational concerns for college sports. Um, but they've, they've done dumb things before
Logan: I what I found that what can be, uh, sold off and collateralized in some way, ultimately, we'll, we'll find a way
Matt: at at least once. Yeah.
Logan: yeah. And, uh, it, it seems crazy to me that you would buy into the annuity that is, uh, you know, Florida state's TV rights deals, but in some ways they have a unique set of circumstances that they want out of their conference.
And, uh, and, you know, they
Matt: Yeah.
Logan: a bunch of, it's not dissimilar to the SaaS contract. In some ways. They have long term locked in, uh, contract. And if they can [01:47:00] take 90 cents on the dollar, 80 cents on the dollar to today versus waiting for it to pay out over the course of the next 10 years, uh, they, they might be willing to do it.
And so I.
Matt: Yeah. And because the specific to Florida State, and which might be different from a SaaS investment, uh, maybe not, you know that better than I would, but it might be a 40 year deal. In four years, the president of that school's gone. The athletic director's gone. All of the coaches are fired. Anybody that had any siblings that crafting the deal on the university side's gone.
The people on the other end, they're still there. Um, and you might get all the glory for cutting the ribbons and doing the SEC press conference, and then you bounce and then your predecessor sits in there and realizes like, oh my God, what have I done? Uh, and you know, I think about this a lot 'cause in Chicago we did this with our parking meters where we sold everything for like a 99 year lease to the, to the UAE.
Then once we spent the upfront money and now we're stuck forever and, and, and you can't close down a street or if you do street parking, it goes to, to somebody [01:48:00] in a foreign country. Or we have that with toll roads. Didn't stop the lawmakers in the beginning. Might not stop Florida State now.
Logan: Anything else that you're thinking about right now? Uh, that we. He didn't hit on.
Matt: Yeah, I think, I think we got to a lot o over the, over the last two hours, right? Like this is, I I would say it can be frustrating if you're in this industry or if you're reporting on it and covering it because things change so much and because the financial and accounting rules are very different from some of the other industries that, that, that you might be familiar with, you might be covering.
Um, but like with anything else, when there's a lot of chaos or, or, or, or changes, there's also some potential opportunities. Uh, I think in the investing world, there's a lot of people that are now trying to create software. To help schools navigate some of these specific problems. If you are an investor or a developer or a company that can help with revenue generation, that can help with customer data, that can help with front or back office, uh, player evaluation solutions, many of the kind of things that [01:49:00] everybody in the NFL has been doing to make money for the last 20 years are still completely novel to the college world, which is kind of still run like a mom and pop shop.
So it could be very frustrating to be in AD right now, but it might be a very good time to be in, say the, the ticket sales software solution world and, and, and maybe some people from outside of college sports can help fix some of these problems.
Logan: Well, Matt, thanks for doing this. This was a lot of fun.
Matt: It was my pleasure. Thanks for having me.