The Future of College Sports: NIL Meets Tech
College sports is getting interesting, with athletes and companies leveraging the power of NIL and technology.
Up until a couple of years ago, NIL had little meaning. But today, it is changing the world of college athletics as we know it.
On top of it, Web3, which refers to a decentralized and more secure internet, brings a new era of sports.
Today, we’ll delve into the intersection of sports and technology and how this combination is allowing key stakeholders to benefit from them. So, let’s get started!
Understanding NIL: Name, Image, and Likeness
NIL, or name, image, and likeness, is making all the waves today. And for good reason.
For years, there has been a heated debate in college sports — whether student-athletes should be compensated for playing collegiate sports, which has finally been resolved. Today, paying student-athletes is a common reality.
But why?
The Division 1 Board of Directors has approved an NIL policy. Under this new policy, all NCAA D1, D2, and D3 student-athletes are compensated for their NIL as of July 1, 2021.
This is regardless of whether the state has a NIL law in place or not.
However, it’s important to remember that the NCAA NIL rules do not override state, college, or conference-specific NIL rules.
As for states with no NIL law, student-athletes have the freedom to receive compensation for their NIL however they see fit. This is as long as they do not get financial incentives to sign with a program or violate pay-for-play.
So, where did NIL come from? It all started in 2009 when former UCLA basketball player Ed O’ Bannon along with 19 others, filed a landmark lawsuit against the National Collegiate Athletic Association (NCAA).
The lawsuit claimed that the organization violated United States antitrust laws by not compensating athletes for the use of their name, image, and likeness (NIL). O’Bannon and other defendants won the case in 2015.
Now, the NCAA's policy changes allow athletes to make money from their NIL.
But how exactly? So, NIL is the way for college athletes to receive financial compensation.
It refers to the use of an athlete’s name, image, and likeness via promotions such as social media posts, autograph signings, product endorsements, and more.
But it is of note that NCAA rules still prevent schools from paying players directly.
Now, the question is, if anyone is really leveraging NIL? Well, a wide variety of athletes are taking advantage of their NIL potential in many ways.
For example, twin sisters Hanna and Haley Cavinder, who play for Fresno State's basketball team and share millions of followers on social media, struck a deal with Boost Mobile and Icon Source within hours of the NCAA instating the new NIL rules.
Then there’s Shaun Shivers, who partnered with Yoke, a platform that lets fans play video games with athletes.
Another example is Olivia Dunne, who has $3.5 million in NIL deals and is third on the NIL 100 list, according to On3.
But NIL isn’t issue free. The lack of NIL regulation has resulted in the formation of collective groups, which is a way of a betting war for recruits across the country.
Tech in Sports: The Rise of Web3
The sports industry is known to be not so technology friendly. However, ever since the pandemic, technological innovations are transforming different aspects of spots, both on and off the pitch.
Performance analytics, advanced streaming techniques, fantasy leagues, immersive training, smart stadiums, and influencer marketing are some of the most popular trends.
Artificial Intelligence (AI) is really seeing its place in the sports space.
Cameras, wearables, and sensors use AI to process data to deliver forecast models. AI is also assisting coaches in optimizing athletes’ performance. It is further providing athletes with the ability to live stream or upload their matches or training sessions. Stadium entry, drone cameras, and smart ticketing are also currently controlled by AI.
In the sports industry, Web3 technology, in particular, is leading to a new digital transformation era.
But what is it? Web3 is a new and better internet.
While Web1 was read-only and Web2 is read-write, Web3 will be read-write-own. At its core, Web3 uses blockchain, smart contracts, and crypto assets to give power back to users.
Web3 is guided by a few core principles:
Decentralization: Instead of a handful of centralized entities like Facebook, Google, and Twitter controlling large swathes of the internet, ownership is distributed amongst its builders and users.
Permissionless: Everyone has equal access to Web3. You just need an internet connection, and you are good to go. No one is excluded here.
Trustless: Instead of relying on trusted third parties, it operates using incentives and economic mechanisms.
Web3 offers college athletes and other stakeholders innovative opportunities to earn revenue and exciting ways for fans to engage with their favorite athletes in ways that were unheard of before.
For example, Burrst is a platform for student-athletes entering the Web3 Sports industry. It provides the tools to capitalize on their talents, monetize their NIL rights, connect with fans, and gain worldwide brand recognition.
Now, we’ll explore different ways this technology is helping student-athletes leverage their NIL.
The Intersection of NIL and Web3 Technology
As the world becomes more digitized every day, Web3 is evolving the current technologies to make them better. Here’s how it’s helping athletes:
Virtual Trading Cards
NFTs or digital collectibles are unique tokens that cannot be replicated. A standard digital collectible is a virtual trading card, usually in the form of a profile card or an athlete’s highlight.
Interestingly, 17% of NIL deals are between brands and athletes using digital collectibles as trading cards.
These cards take advantage of the novelty that comes with crypto while offering advantages of increased variety and utility, minimizing the depreciation of value, and hassle-free authentication process over traditional cards.
NBA Top Shot is a blockchain-based trading card system where basketball fans can buy, sell, and trade officially licensed video highlights called “moments” with their favorite players.
Tokenization
The brutal truth is only one out of 16,000 high school athletes turn pro. What this means is an athlete needs to monetize early in their career. And this is exactly what tokenization aims to achieve.
Creating their own coins is one-way college athletes use their NIL rights. They are not only enticing athletes for their profit potential but also to fans as a way to get a piece of their favorite star and access to even more exclusive items and experiences.
UCLA star basketball player Jaylen Clark was among the first to do that. He created the $JROCK coin to capitalize on the potential of his 80K+ fans on YouTube and Instagram. He added value to his coin by making it a ticket to exclusive content, raffles, and giveaways.
Digital tokens representing assets or ownership rights also support use cases linked to identity management and loyalty revenue streams.
Ticketing
Not only is Web3 improving the current technologies, but it also helps prevent fraud and provides more revenue.
For instance, sports NFT tickets contain a unique and unfalsifiable QR code to provide access to an event, keeping out unauthorized individuals and streamlining the experience for legitimate customers.
Using NFTs for ticketing offers the benefits of enhanced security, immutable ownership, transparency, traceability, scalability, efficient ticket management, seamless transferability, elimination of paper tickets, simplified verification process, reduced administrative costs, increased customer engagement, enhanced fan experiences, access to exclusive content, and secondary market opportunities.
The National Football League (NFL) gave away a commemorative NFT with each ticket sale in 2021.
Sponsorships
Many crypto companies are taking the traditional route with NIL, brokering deals with athletes to sponsor athletes through various NIL platforms.
For example, Yummy Crypto partnered with deal-making platform Dreamfield for deals with the FSU football team and the Miami basketball program. Now-defunct crypto exchange FTX also made team-wide sponsorship deals with both FSU softball and Kentucky men’s basketball.
Crypto was actually the second-highest spending sector in NBA sponsorships and had its revenue rising to a record $1.6 billion in the 2021-22 season.
The NFL also allows teams to partner with blockchain tech companies for sponsorships. For now, such deals can’t be for more than three years though.
From Fan to Paid Friend
Under the new model, the creator economy is being worked upon by removing the middleman. This helps both the athlete and the fan.
Currently, you can follow an athlete on social media platforms. But instead of taking lopsided cuts, creator platforms like Substack provides creators with additional monetization options.
Now, the next evolution is fueled by web3, where fans can directly connect with their favorite athletes.
This is often achieved through NFTs, which offer athletes the benefit of monetizing directly with their fans, providing their fans with more access and transparency on who the early fans are. Meanwhile, for fans, this means fewer advertisements to deal with, more access to the athletes, digital proof of fandom, and upside potential.
Unique Experience
For fans, digital collectibles can be a form of investment as they can resell tokens and earn money from them. But that’s not all!
A survey of 3,250 sports fans by the National Research Group found that 59% of respondents believe the “true value of NFTs will be in the experiences they provide.”
The most coveted experiences include meeting or interacting with a current or former player, sitting in an exclusive area, access to in-stadium perks, and the ability to relive key moments.
Web3 has the ability to offer a heightened connection between fans and athletes by offering them a more immersive experience beyond simply watching a game. This presents opportunities for sports companies to get serious about investing in fan communities.
Future Outlook
NIL is impacting college athletics in a big way.
While the rollout of NIL has been disjointed with little standardization and a patchwork of state laws, it is clear that NIL presents a massive opportunity for college athletes to monetize their personal brand, pursue endorsement deals, and capitalize on their athletic achievements.
Thanks to NIL, athletes can now gain financial empowerment by leveraging their own likeness while maintaining their amateur status.
In the future, we’ll also be seeing the advancement of tech-focused companies such as Alphabet and Apple in this space. Amazon has already jumped with Prime Video’s NFL Thursday Night Football coverage.
With the emergence and growing popularity of smart contracts, fungible tokens, NFTs, AI, AR/VR, metaverse, and DAOs, Web3 can help reshape many aspects of the sports industry.
From fan engagement, ticketing, and admission, sports collectibles and memorabilia, athlete endorsements and sponsorship, live streaming and virtual events, athlete monetization and revenue sharing, and sports ticket marketplaces to content creation and distribution, sports media and broadcasting, analytics and data tracking, athlete management and contracts, merchandise and e-commerce, governance and regulations, athlete health and performance tracking, betting and gambling, and fan communities and social platforms, Web3’s impact will be seen everywhere.
This is not to say, Web3 is without any problems. For example, to leverage the power of Web3, you need an audience, and the easiest way to do that is through Web2 platforms like TikTok, Instagram, Twitter, and YouTube.
But this makes it even more beneficial for sports, particularly at the collegiate and amateur levels. This is because the industry is currently going through a massive shift with NIL and player empowerment.
Not to mention, the young generation is the most acclimated to the technology and are the early adopters of the new trends.
Final Note
The NIL landscape is rapidly evolving. It will play a crucial role for current and prospective student-athletes and other stakeholders. After all, it allows individuals and organizations involved in collegiate sports to generate significant revenue.
Technology will further allow these stakeholders to leverage NIL to its utmost potential. And as we move ahead, technology like Web3’s involvement within the sports industry will only grow.
It’ll be fun and exciting to watch new technologies, and sports collide to create a better future!
