Understanding NIL: Valuations Are Not Earnings
This content originally appeared in the March 26 edition of NIL Corner, my monthly column in Sports Business Journal.
💥 The NIL/edu newsletter is now just $5/month or $55/year. 💥 You will receive full access to 4 NIL/edu newsletters per month, free access to the leading digital course - NIL/mba course (usually $150), and the archive of the Top 50 most popular newsletters I’ve published since 2020.
NIL is a case study in the “illusion of truth effect”
If you’re reading this, you’re probably not a cognitive psychologist, nor do you study social cognition or social psychology. Me either. But as a sports marketer for most of my career, I am fascinated about how people perceive and respond to information, including how beliefs are formed.
When I began as an NIL educator more than 3 years ago, I never thought name, image, likeness would serve as a case study in how our beliefs can be influenced by repetition and source credibility. But here we are, living in a world where most college sports fans believe that they “know” the NIL earnings of student-athletes.
It’s what cognitive psychologists call the “illusion of truth effect.” The illusion of truth effect says that repeated information is perceived as more truthful than new information. It’s compounded when the untrue information comes from a respected or authoritative source. And that’s exactly what’s happening when dozens of articles are published every day citing specific student-athletes or groups of student-athletes as “top NIL earners.”
Individual compensation data is not publicly available
NIL compensation is an attention-grabber and I understand the public’s interest in it. When student-athletes started to earn income in the summer of 2021, sports fans wanted to know “how much?”
The public’s interest has pushed the media to report on it. The problem is that the only way to verify NIL income is to ask the student-athlete or the brand partner involved in the deal. But few student-athletes or brands have disclosed that information. And when a handful of student-athletes - or rather their representatives - have revealed the details of their NIL agreements, those disclosures have often been, let's say, exaggerated.
And what about the universities? Don’t they have compensation data? Yes, but universities have no obligation to divulge it and many have maintained that they cannot disclose the information, citing the Family Educational Rights and Privacy Act (FERPA) and various state laws.
And what about the NIL Marketplaces like Opendorse, INFLCR, MOGUL, and NOCAP - don’t they collect compensation data? Sure they do. They compile aggregate data (sometimes even publishing it), but it does not include a student-athlete’s individual compensation data.
Become a paid subscriber to NIL/edu to read the rest of this newsletter and get info on:
> % of student-athletes looking for networking, not $
> The number of sources tracking & publishing NIL earnings data on specific athletes
It’s now just $5 per month. Paid subscribers get 4 NIL/edu newsletters per month, immediate free access to the leading digital course - NIL/mba course (usually $150), and the archive of the Top 50 most popular newsletters I’ve published since 2020.
Keep reading with a 7-day free trial
Subscribe to NIL/edu to keep reading this post and get 7 days of free access to the full post archives.