NIL impact on Madison?

The name, image, and likeness era could have a profound effect on Madison’s economy, but will it be a win, a loss, or a tie?

Barry Alvarez, the retired University of Wisconsin football coach and director of athletics, once said the UW athletic program is woven into the fabric of not only the Madison area, but the entire state of Wisconsin, and he had the economic data to back that up. At the time in 2019, the athletic department had just produced an economic impact study that showed Badger sports had a $610 million statewide impact, a figure that was updated last fall when the department said the Badgers have a $757 million total annual economic impact, including 5,640 jobs, statewide.

Both reports took into account the economic benefits that the university’s 23 athletic teams and support organizations generate through hosting sports competitions. They also accounted for direct spending by athletic department operations, capital investments, attendee spending, ancillary spending, and its broader societal impacts. The most impactful events come on fall Saturdays at Camp Randall Stadium, as each home football game now provides $19 million in total economic impact statewide.

For the city of Madison alone, the 2022 report notes that the Badgers provide a $462 million total annual economic impact, including 3,360 jobs, but what will be the local economic impact of a student athlete’s ability to leverage his or her name, image, and likeness? The observers IB interviewed believe that NIL could prove to be a boon to the Madison economy, especially as new marketing and branding opportunities emerge to strengthen the bond between town and gown.

“NIL really has opened up a new area of economic activity, especially for the communities in which universities with major sports programs are located, in that student athletes now can work as brand and community ambassadors on behalf of companies, organizations, or even on behalf of themselves to help promote products and services in this city and beyond,” says Madison attorney Megan Jerabek. “This allows student athletes to earn money, but it also allows companies and organizations to expand their marketing efforts in a way they could not do before.”

In this look at how NIL could impact the Madison economy, we spoke to Jerabek, a shareholder and the head of the Sports Law Section at the von Briesen & Roper law firm; attorney Richard Verstegen, a partner with the Boardman & Clark law firm; Rob Master, executive chair of the Varsity Collective, which was established to support UW student athletes in the NIL era; and Mitchell Pinta, deputy athletic director at UW–Madison.

Badger brand

In 2021, the U.S. Supreme Court, in a unanimous decision in National Collegiate Athletic Association vs. Alston, forced the hand of the NCAA when it came to compensating student athletes. The organization was not only required to distribute as much as $5,980 a year to athletes in education-related compensation, the nation’s high court also ruled that some of the NCAA’s strict restrictions on the compensation of college athletes constituted a violation of antitrust law. The NCAA responded by allowing student athletes to be compensated for their name, image, and likeness.

Just as student athletes are responsible for their own game — academic and athletic — they now are responsible for their own brand. One of the first examples of this brave, new NIL world was running back Braelon Allen’s endorsement of Iron Joc athletic gear. Since that moment, UW athletes have served as brand ambassadors for products such as Degree deodorant (Chucky Hepburn), Pepsi-Cola of Madison (Tyler Wall, Johnny Davis), and others.

Whether it’s as a brand ambassador or an influencer for a private brand or a nonprofit organization, NIL allows local and national businesses to reach different audiences by utilizing student athletes. To the extent those companies aren’t located here, Jerabek notes that their reach brings additional dollars into the market, and since student athletes live in this market, they spend those endorsement dollars here.

“The effect that it has on Madison’s economy is really broad and seems to be growing each day,” Jerabek states. “If you look nationally at how much money is being injected into NIL deals, you’ll see that there’s an injection of money into what athletes are doing, but also that companies are recognizing early on the impact that the use of athletes as brand ambassadors can have on companies, their sales, their market reach, and the way they resonate with their customers and clients.”

In the first year of NIL, college athletes earned an estimated $917 million, a figure that’s only expected to grow, according to NIL facilitator Opendorse, but one of the biggest misconceptions is that these deals are by definition expensive. While there are large, six-figure deals being negotiated for the most recognizable names, the average Division I athlete received $3,711 in the first year.

Jerabek says the entry point is everything from a couple hundred dollars up to thousands of dollars, which the Madison business and nonprofit communities should be excited about. “And so, the entry point of NIL may not be as high as businesses and organizations think.”

Reaching out

Another misunderstood aspect of NIL is how to take advantage of a student athlete’s reach. Many believe the possibilities are limited to a commercial (product endorsement), a billboard, or an autograph signing, but it can also include appearances at corporate or community events such as a company’s holiday party or customer appreciation event, a social media engagement, or speeches on behalf of companies.

The UW–Madison has created the YouDub platform, a dedicated NIL marketplace that permits anyone in the community to request items or appearances from their favorite student athletes. According to Pinta, the YouDub marketplace is a starting point for businesses to directly connect with UW student athletes, and it can be accessed through uwbadgers.com/NIL, where rates for appearances, social media posts, and signings of various UW athletes are posted. In addition, business and nonprofit operators can fill out an NIL interest form to get the ball rolling.

“What YouDub does is serve as a landing page for businesses to identify what they’re interested in, and which student athletes in which sports they want to work with,” Pinta explains.

Meanwhile, the Varsity Collective was created to help athletes maximize their NIL opportunities and to understand the responsibility that comes with it. There are two parts of the Varsity Collective, and one is centered on a 501(c)(3) organization focused on charitable outreach. The collective has not yet facilitated NIL deals with business brands, but it has helped more than 200 student athletes work with charitable causes such as Ronald McDonald House and the Boys and Girls Clubs of Dane County, and it has received good feedback from these organizations on how they help with food drives, donation drives, and other initiatives, according to Master. As the collective heads into year two, he says there will be more emphasis on positioning the student athlete as brand ambassadors for business brands.

In addition to gauging the students’ interest in specific charitable brands, the collective has brought in a host of speakers to address topics such as getting an agent, negotiating contracts, filing taxes, and using social media as a platform to be a brand influencer. “We brought in someone from TikTok, a Badger alum, someone from Meta, a Badger alum, and someone from Twitter, a Badger alum, to help them understand that this is the best way to use these platforms,” Master says. “A lot of it has been more behind the scenes to promote and drive their capability building.”

While at Unilever, the multinational consumer goods company, Master recognized the marketing power of tapping young voices and the different perspectives they offer. Whether it be business or charity brands, leveraging young professional athletes, their appeal, and their passion was a powerful way for organizations to grow their brands. “I’ve seen it first hand for years,” Master says, “and part of our strategy is going to be to help encourage businesses to tap student athletes in that capacity.”

So far, notes Pinta, NIL deals have not only gone beyond high-profile athletes, but also high-profile sports as successful athletic programs such as UW women’s hockey and volleyball also have gotten a piece of the NIL action. “We’ve had women’s hockey student athletes develop a TikTok campaign for Kwik Trip, and we’ve had a bunch of student athletes serve as social influencers for Forage Kitchen, which is on State Street and bunch of other locations,” Pinta notes. “So, it’s really run the gamut.”

Agents of change

Another misconception, according to Jerabek, is that if a business wants to reach out to an athlete, it’s probably going to have to negotiate with a sports marketing agent. While there are a number of local athletes who are represented by sports marketing agents, she says the vast majority are not — it really depends on who you’re working with. “If you’re working with the highest-profile athletes, then you will likely be dealing with a sports marketing agent who likely will have more experience with negotiating larger deals and have established rate cards or other benchmarks for athlete’s rates. They will communicate what is expected for this kind of appearance or that kind of engagement,’” Jerabek says. “But for the the vast majority of deals by the numbers … there is not a sports marketing agent involved.”

For those lower-dollar deals, a business operator could negotiate directly with the athlete. Sometimes an athlete will use an attorney or somebody who is not a sports marketing agent to help them (as will the business), and some are putting these deals together totally on their own.

Businesses entering into this space should look for attorneys who are knowledgeable about the NIL space because while the rules are not overly complex, there are both NCAA guidelines and university rules. One example is that you cannot tie the compensation to an athlete’s athletic performance or, with the transfer portal in mind, his or her participation in a certain sport.

Some states have passed applicable NIL laws that also must be considered. Due to this patchwork quilt of regulation, there have been calls for Congress to set uniform standards for NIL, but they have yet to advance. Wisconsin does not have a state law on NIL, which means deals should be structured based on institutional policies and NCAA guidelines.

Verstegen, whose brother Mike was an offensive lineman on Wisconsin’s 1993 Rose Bowl team, says congressional intervention could be needed as state legislatures pass laws that give their state schools an edge in the NIL space. At the federal level, Verstegen says the challenge is that there are competing proposals, and congressional delegations of certain states could block a federal bill from interfering with state laws that give their jurisdiction an advantage.

Even if legislation passes, he is not certain it will solve all the issues. “Two years ago, I’m not sure if anyone had collectives in mind, so by the time Congress passes the legislation, there may be an entirely new landscape that they did not foresee,” he states. “There are other issues that may play into this as well, including whether student athletes may be classified as employees somewhere down the road. At some point, it’s likely that we’ll have federal legislation in this area, but whether it solves all the problems is a different question.”

Volleying for brand ambassador

During her collegiate volleyball career, Devyn Robinson has obtained many roles and designations — student athlete, All Big Ten, All American, national champion, and brand ambassador. The latter was made possible when the NIL era was launched shortly before her sophomore year, and she’s been the face of local and national brand campaigns.

Robinson, a middle blocker and right-side hitter for a team that still has national championship aspirations, has combined her athletic profile with her social footprint on Instagram, TikTok, and Twitter. She’s styled for American Eagle Outfitters, had the honor of having a FreshFin Poke Bowl of the Month named for her, pitched tasty pasta dishes for Barilla, and still touts the benefits of BUBBL’R antioxidant sparkling water.

Robinson might not carry the same NIL value of a football star like Braelon Allen, but she stands out as the epitome of an NIL brand ambassador. “Devyn is an absolute all-star in what NIL can be,” says Brian Mason, director of NIL strategy for Wisconsin Athletics.

And with more deals in the works, NIL is everything Robinson thought it would be. “I feel NIL has been exactly what I thought it would be for an athlete of my stature,” states Robinson, who has not yet used a legal representative. “Obviously, as I keep progressing in my career, I get a little bit more exposure. On TikTok, sometimes I’ll have a video go viral, and that boosts my followers, and then more companies reach out to me.”

So far, Robinson’s collegiate volleyball career also has been everything she hoped, and she still has two more seasons ahead as she plans to exercise the option to play an extra year due to the COVID-19 pandemic. Given her optimism about the 2023 team, she’s obviously a brand ambassador for UW women’s volleyball as well. “Oh, definitely, we’re a national contender,” she states. “We have things to work on, but we’re a pretty strong team, and we have the tools to get done what we need to get done.”