College Sports Pay: NIL, the House v. NCAA Settlement, and What Athletes, Schools, and Brands Need to Do

Transcript

Lightly edited from auto-transcription, ad reads removed, paragraphs grouped, speakers attributed via heuristic. For exact attribution, listen on Apple Podcasts, Spotify, or via the embedded player above.

Brian Elliott: Y'all Street Law is here to help you thrive in the Lone Star State. Great. We would have been together, but for all the crazy weather in Texas right now. But it's good to have you here.

Chuck Kraus: Shannon, you're calling in from where? Houston at this point? Houston, yes. Excellent.

Brian Elliott: Excellent. Well, we want to talk about all things sports, but first, how did you... Give us a little bit, Shannon, of your background as a lawyer and anything before that undergrad? I think some of those undergrad themes play into what we're going to talk about today.

Chuck Kraus: Okay. I will say what I always say. I never intended to become a lawyer. I wanted to be a sports agent, so I went to law school because that was one of the requirements.

Brian Elliott: You I was a poli-sci undergrad, so business school's likely out of the question. So I went to law school hoping to work in sports long-term. So while I was in school, I did a lot of sports-related work, working with agents. I worked with an arena football team, which was really cool.

Chuck Kraus: And just various... Even in undergrad,, I had an internship with a gentleman in Gainesville who sold insurance policies to the athletes. So I've kind of always tried to stay connected to sports one way or another. And when I got out of law school, getting into the sports world was a little bit more difficult than I had hoped.

Brian Elliott: And everyone wanted me to work for free, which is great when you're in school, but not so great when you have a bunch of student loans. So I had to get a job as a lawyer. And I went into working in bankruptcies and foreclosures initially in Florida. And that was not great, didn't love it.

Chuck Kraus: So I kind of looked around, tried to figure out what other areas of law I could get into. I had some really great mentors and some awesome opportunities to work on intellectual property. And I started kind of creating a little niche for myself of clients that are content creators and so I eventually decided to go solo and in my solo practice I was focusing on working with content creators and protecting their IP and helping them build their businesses and you know things like that and that sort of naturally led into NIL and working with athletes when in 2021 when that all changed because athletes were able to capitalize on their own personal brand and so yeah that's kind of where I'm at today and working towards building an NIL practice here at SCALE that hopefully we can get more attorneys involved and bring that meet that the whole practice group. It's a fascinating twist and turn right wanting to work in sports that avenue is difficult to break into so you go into going to IP and and then all of a sudden the name image and likeness we'll talk about it presents a path for convergence.

Brian Elliott: Now you said Gainesville. Yes. Gators. Go Gators.

Chuck Kraus: Go Gators. Yes. I'm a huge Gator obnoxiously so I was there during the good years that we won two basketball championships and two football championships which have probably played into why I was so obsessed with college sports. I mean I always was my dad sort of raised us to be addicted to sports but I was raised in Texas and I don't think well I was an Aggie growing up so A&M wasn't really good at much.

Brian Elliott: We're gonna have to edit that out of the All Street podcast. Sorry but when I went to Florida and we were really good and just that atmosphere and you know it was a really good time to be on campus that's for sure. Yeah well I think one of one of the things that's that's so attractive about about all of this is these sports fans and particularly collegiate fans are very passionate very loyal there's a lot of following and so I think that's one of the things that makes this so interesting. Well it brings it into as a very topical Texas topic right we've got you know it's a it's a fantastic sports state and and you yourself Shannon you're you're an athlete yourself right?

Chuck Kraus: Yeah well I caveat I don't know some people say yes or no but I'm a competitive by well retired at the moment competitive bodybuilder and powerlifter for many years and I well I used to be a cheerleader too that's kind of what I grew up doing and then when I got into college and law school I kind of missed that competitive outlet and so I started doing bodybuilding and powerlifting and been doing that ever since. Just help us help us understand that a little bit for the for the layperson who's listening to this you're talking about benching how much squatting how much. Yeah. power lifting squat bench and deadlift yes um for me my maxes were not i mean nothing crazy impressive i was a better better at squatting than deadlifting so my max squat was around 320 and deadlifts i could barely break the three three hundreds which is kind of bad for a girl i'm getting on it it's competing um and my best bench was one i think in competition 170 something right um so but that's been years i had back surgery in 2020 and so i kind of had to give up um the heavy lifting well i'll tell you shannon even with those stats you are the you're the most accomplished um power lifter we've ever had on y'all that that doesn't say a whole lot but all right so let's let's back it let's back it way up um before we get into the details of everything new with nil just give us an overview of the landscape before anything changed in terms of you know i think i think people generally understand there were restrictions on the ability of athletes to receive any compensation relating to their status as as collegiate athletes right just set the landscape right so since the beginning of time the ncaa has pointed the term student athlete and so athletes were unable to receive any sort of payments um outside of scholarships while in college participating in their sport and so you know there have been arguments for years over whether or not athletes should be certain employees or should they be should they be able to be paid can they receive a free sandwich from you know the sandwich shop down the street um and there have been a lot of things that have happened and players have been punished and police been punished and all of that and we kind of all have a little bit of an understanding of that history and then in 2021 um a little before that california and then florida um decided to take it upon themselves to open up the ability for athletes to earn compensation um initially the idea was they could earn compensation similar to a social media influencer or even another athlete would from a marketing perspective they would be able to do brand deals they would be able to sell their own you know products and service so then they would be able to sign uh a you know photo of themselves and sell that without repercussions and it has sort of divulged into now where we are looking at schools directly paying players um a certain level of compensation for playing on the field um prior to that it was more so you know you you you you We're not paying you to play your sport, but we will allow you to do what any other student at school can do, which is make a living.

Brian Elliott: So now we're kind of in this dual zone of we have NIL in the traditional sense where a student athlete can capitalize on their personal brand and then the school directs and pay. Yeah, it's fascinating. So if we just go back to sort of pre-development of any of this, what were the main reason or two that it was the view, this should not be allowed? I'm trying to get it.

Chuck Kraus: What was the foundation previously? Why did it crumble? I think, well, I think the foundation was fake. I think that the NCAA and the universities wanted this idea of amateurism and allowing a student athlete to earn compensation in any manner would, you know, go against the whole idea that they are students first, athletes second.

Brian Elliott: They're amateur. They should not be compensated. But also part of that, the legal history of all of that goes that really the NCAA and universities didn't want athletes to be seen as employees because they didn't want to offer certain benefits to the athlete. And so that's really when they started pushing that the idea of amateurism and that that's, you know, to keep the sports pure and all of these things that really I don't think were true.

Chuck Kraus: I think it was more so that they didn't want to have to offer employment benefits. So they really, you know, drove that amateurism home. So, you know, can you give us an idea of like scope, the, the economics for us? Like what kind of money are we talking about?

Brian Elliott: That's at stake here? What's the, what's the size of this market? Billions of dollars. I don't have the exact numbers in front of me, but it's a billion of dollars.

Chuck Kraus: I mean, if we're speaking about just the house settlement in general, which, you know, we'll get into a little bit, but that's each university that wants to offer. Often they'll have sort of a salary cap of, it's around like 22, 23 million dollars. So that's just per year. And that's just from the school paying the athletes.

Brian Elliott: Um, that doesn't include money, you know, brand deals that, uh, that some of these athletes are doing and, um, things like that. So it's, it's millions of dollars at this point. It's amazing. And as, as you were saying, it's, it's now changing, not just from sort of the emperor status.

Chuck Kraus: I personally can monetize my, my name, image and likeness, but now it sounds like it's, it's competing with, and even surpassing the scholarship draw. That would remain economic reasons to choose to pursue collegiate sports or to pursue one school over another. Give us a sense just on, on that. Thank you.

Brian Elliott: Thank you. um it sounds like it's it's way way beyond the scholarship what kind of what kind of dollars are we talking about in you know for an athlete for example who's oh right yeah a top athlete could garner a couple million dollars um and that's not for to pay for school it's just money in their pocket um so yeah it's a pretty it's a pretty amazing opportunity for some of these athletes um but then also even lesser known athletes and playing sports that aren't necessarily as high profile as you know football and basketball um there's still opportunity there they may not get that directly from the school and i think again we can go into some of this but i think schools will have to start providing ways for athletes to learn how to build a business and monetize and all of those things if they want to get the right uh people in there you know in their sports okay yeah there's really there's three constituent constituencies i'm thinking of here that really need to understand this and that are potentially in need of advice about this there's we've been talking about the athletes number one but i guess the second big big one is the schools needing to understand how how they need to change in order to be competitive yeah if this is available and other schools in the conference uh or in the stage or whatever are doing there and then the third opportunity is brands themselves i suppose seeing this opportunity and how do you how do you effectively engage here you talk a little bit i guess in reverse order like how how are how do you think schools need to start thinking about this or when you're advising what are the what are the first things that schools need to understand about the landscape well that's a great question um i think schools right now are they have to pick who they want to accept i think whether it's the ncaa or um the actual government so i think in that sense you're going to you're going to pick the battle with the ncaa so if the school is going to do um make a decision for their athletes or for their program that isn't necessarily currently in compliance with ncaa rules and standards that's better than running afoul of what maybe the department of justice feels about how athletes are treated um because there's there's a lot of um energy behind the idea that athletes either are employees or at least some athletes are employees and they need to be compensated um and you know appropriately taken care of and that's coming and that's coming from sort of the legislative government side of you There recently,, the DOJ, I think I read this last week, maybe sent a letter to or they basically took interest in this out settlement, stating that if it is approved, they want to reserve the right to go after the NCAA for any trust violations. So, from the university's perspective, you're better off right now towing the line of what you think the government will probably approve or want you to do as opposed to what the NCAA wants you to do. And that said, that means you have to plan on paying your athletes in a way that aligns with their value, maybe there's this whole idea of market rate and if they are an employee, you know, what is the value on that employee.

Chuck Kraus: And then just all of those things aside, I do think universities, in order to stay competitive, they're going to have to offer more than just payments. They have to have systems in place to educate the athlete and connect the athlete to important players, whether they're brands or representatives that can help, you know, help them with their negotiations, help them with their businesses and things like that. And I think if schools don't offer that, they're just putting themselves, you know, behind the curve because, and it's kind of crazy to me that not all schools are operating that right now. I would assume that was one of the first things that you would do, but it doesn't seem to have, I think the universities are so obsessed right now with how much money they're going to be allowed to directly pay the players that they're kind of losing sight of some of the other parts that they should be focused on.

Brian Elliott: Yeah. Interesting. There's these payments from the schools. I was more focused on payments perhaps from brands that want to associate.

Chuck Kraus: Can you talk, describe a little bit that, that dynamic, I guess that's the other constituency that I asked about is the brand. So you're, you're a brand, you want a partner, you want to be identified with the sport, are, are you focused on the conversations with the schools or are you, are you more focused on the athlete? How, how do brands think about this opportunity? It seems like brands are coming out this from, you know, the bigger brands are coming out this from a traditional sense as they would with any other professional athlete.

Brian Elliott: Um, we've seen some really cool deals with, you know, athletes and Nike, you know, getting to create their own shoe, which is like the first of its kind, um, as far as deals are concerned for female athletes. And then, you know, things like, uh, we've done, she's a gymnast. She has a deal with, uh, she has a ton of different deals, but the Ori active is one of her main campaigns. Um, and so we see a lot of the larger brands associating with the more popular athletes whether they're they're popular because of the way they play their sport or popular online and going directly to the athlete or their representative to you know set up these deals and then we have smaller brands more localized brands um that will go to the school and there are one or two individuals you know I would give this example because I think it's mind-blowing University of Florida has one guy in their NIL department within the school and he is responsible for connecting athletes to potential brand deals they have other outside there's a company called Learfield that sort of manages a bunch of athletic departments across the country but Learfield isn't you know directly associated you know within the university so there's just one guy his name is Ben he's great um and he is reaching out to other brands and small large brands small brands whatever that looks like to get all of the athletes at Learfield um and so that would be thousands of athletes like that that's it it sounds like an impossible job something something you need a department for not not just one person right so and I think again this kind of goes back to their the schools have been so hyper-focused on just the one aspect of NIL that they have not put in place any of these uh mechanisms to facilitate something like connecting thousands of athletes to brands um so and UF is just one example of that and I'm sure it's similar across a lot of the big schools yeah yeah so Shannon that that's this is a fascinating background um let's let's shift gears a little bit talk about the uh the legal developments right so we can you tell us how you know what what are the major changes that are happening now that are shaping NIL and the way we should be thinking about it so right now the main uh question everybody has is regarding the house versus ncaa lawsuit and the proposed settlement so it is um it I believe april 7 is the day that uh judge wilkin is going to either approve or not of this settlement um there's quite a few moving parts to the settlement but the main one being each school that opts in would have certain uh roster limits and a certain amount of money that they would then be able to distribute amongst all athletes um and directly pay you know their athletes and so everyone's kind of waiting to see whether or not this gets approved a lot of the athletes don't love this settlement um they would like to see a mechanism put in place for or to have some sort of representation um like a collective bargaining agreement in place for them so they're looking they're looking at the same time so they're looking at the same time so they're looking at the same time so they're looking at the same time so they're looking at the same time so they're looking at the same time so for an athlete-run organization where they can all, you know, join in the union and represent their interests.

Chuck Kraus: But because right now, so right now what happens is schools have what we call collectives. These are third-party, not necessarily associated with the school, third-party nonprofit organizations that donors, alumni will donate to, and then those collectives will give an NIL deal to an athlete that they want to bring to school. Of course, there are things involved, like maybe you will show up for an appearance, or maybe you will sign some autographs in exchange for that NIL deal. With the house settlement, that won't be necessary anymore because it will just basically allow schools to say, we are going to control what the payments are.

Brian Elliott: The other, the main, one of the big questions is how Title IX plays into all of this. A lot of schools, their idea is if they opt into, and there was a development today I just read, all the IDs are not opting in. They have decided they will not, and we can discuss why maybe if we have time. But if the school is to opt in, you know, they receive, they're estimating about 23 million.

Chuck Kraus: And then most schools have decided that they would split that up based on true revenue share, based on what sport brings in the most money. They're going to get a large chunk and dole it out that way. But that obviously seems to probably conflict with Title IX, because most institutions, your higher earners are football or basketball programs, which leads women's sports getting a much smaller piece of that pie. So there isn't really a consensus on how they plan to handle that.

Brian Elliott: I know that there was a letter, I believe there's a letter from the Department of Education saying, you can't do this, you know, violates Title IX. But there isn't really any teeth behind that letter at this point. And we don't know what, you know, the house settlement doesn't speak to Title IX. And we don't know maybe what the government, how they're going to deal about that.

Chuck Kraus: So right now, it's just trying to decide whether or not it's going to be approved. And if it is, what schools will opt in. And then we'll have to deal with the, how are they going to split up that revenue? Yeah, so it sounds like if that settlement was approved, or when it's approved, there's going to be a group of schools that are down that path, but it's a, but it's a, it's a, either way, a small number of schools, and it's going to be, I imagine, version 2.0 of this at some point.

Brian Elliott: Right. Yeah. Yeah. And I mean, I think it's interesting, I mean, putting roster limits, Which I understand.

Chuck Kraus: But I think that for a lot of schools, that isn't necessarily a good, you know, they don't like that idea. So they want to opt out. And maybe the thought is eventually, this is all going to go away. Or the government will put in, you know, there will be a uniform regulation across the board for everyone to look to and to follow.

Brian Elliott: So you don't need roster limits. And the house limit, I think it's only, it would be for the next five years. So we don't, you know, after that point, then what? Right.

Chuck Kraus: So, yeah, it's definitely going to be changing rapidly. And I'm not sure how long what does get approved. You know, I think that NCAA will probably get sued again very quickly. And, you know, dig all this back up.

Brian Elliott: Yeah, that's interesting. So there's been sort of an initial flow of the dollars among the constituencies. It sounds like all the participants are still trying to figure out the best way to do that. And it will likely change from what has been and what's under the settlement.

Chuck Kraus: I think athletes should have a, you know, their organization, they should be able to tell the university, okay, here's what, you know, what we want to do. So, obviously, each sport will be handled differently, just like pro sports are handled differently. Some, you know, have salary caps, some don't. How all of that works out, I think, is different based on conference and even division and then sport.

Brian Elliott: But I think that the only way to do it is to treat athletes like employees and let them advocate for themselves. And so, let's see, and uh pay them that way well because otherwise it would just gets kind of crazy let's talk about that let's talk about the the blurring the line between the athlete and the employee um what are some of the concerns there um well i guess with any well if you have tax implications more tax potential liability drop but i think i think it does give you at least an idea of what the liability is right and you can kind of plan for that as opposed to right now everything's sort of up in the air and schools are being sued for all kinds of things left and right and so is lancy as employees and all the things that come along with that you can at least manage the risk i think yeah i think there was i think you mentioned before there was some sort of department of education the fact chief that that took you know took a position on this as it relates to the financial assistance and that that maybe was raising more questions than answers yes yeah yeah and i think too with the new administration is right this department of education letter and the the doj filing in the house element those were both under the previous administration last week or the week before so now we have questions of okay wait well now what's gonna um so i think yeah i think um i wish i had more answers and i mean i think most people probably wish we have more answers at this point um but um at the moment it seems like it's kind of a waiting game and then i mean you also do have a few states their governors are taking it upon themselves to just write executive orders so that our universities can basically do whatever they want in caa you can't interfere sorry um so you have that happening too so it's kind of there are so many layers right now so let me just take a a minute there on so many layers the the rules we're talking about are these uniform are these like federal rules uniform across all states or do they vary from state to state um what's the landscape look like yeah the nil rules themselves vary from state to state the ncaa has released guidelines um but that's all they ever did they never formalized any rules regarding nil um payment or compensation and so each they took it upon themselves once california and florida got the ball rolling back in 2021 to create their own legislation so that is also part of the problem there is no uniformity every school is treating it differently um And I know initially there were, like, California and Florida both had restrictions, and then they quickly realized within, I want to say, six or seven months that the restrictions made them less competitive, made their schools less competitive. So they pulled back and basically said no restrictions. I want to say Texas, I don't know if they repealed a lot of their restrictions yet or not, but initially, the last time I checked, they had not.

Chuck Kraus: So, again, every state has their own set of rules, and then each university within their state either can operate within that, or they might get a disadvantage, a competitive disadvantage, and it just kind of depends on how each state is looking at it. And I guess based on your comment earlier about an example of a school where it has one person in charge of this, I imagine some of the legislation is just, or rules of the school, it's coming out of the identification, the fact they don't have the infrastructure to deal with it properly. So until we have the infrastructure to deal with it properly, we're just going to put a blanket prohibition across it, of course, that sounds like that puts them at odds with what they need to do from a recruiting perspective, what perhaps alumni associations and other collectives want. So the schools, in a lot of schools, in a lot of ways, are kind of stuck in the middle in an uncertain environment where the landscape's shifting, where regardless of what they do, someone on the other side of that decision is going to be upset and challenge it.

Brian Elliott: It makes it a perilous situation to try and offer it again. Mm-hmm, yep. And then, you know, with the transfer portal and the way athletes are moving around these days, there's a sense of urgency to get it figured out so that you don't lose out on, you know, the five-star recruit. Because then you could have three years of bad seasons, and your alumni sure don't want that.

Chuck Kraus: So it's the, I think the urgency of being able to produce on the field, on the court, you know, whatever, causes a lot of, like, hasty decision-making. Yeah, yeah. And then I feel some tension in the, you know, the focus on a particular star athlete versus sort of the branding around the team generally. Mm-hmm.

Brian Elliott: You know, if you focus on the team generally, you're not beholden to, you know, having to land that star athlete, but at the same time, there's pressure, there's pressure that way to be competitive with the other schools. Mm-hmm, mm-hmm. And the, the, the students athletes, you know, you know, of the brand around the school right like they they add to the to the value of the school brand uh is that an element that's that's considered in in the compensation models so the the house settlement specifically has a mechanism in which you have to give the athlete a fair market value for i mean obviously not quote unquote their performance but essentially the performance and so yes i think that it doesn't specify how you come up with that fair market value but i do think that an athlete having a strong personal brand and bringing that to an institution absolutely increases their power and their worth at that certain institution and so i think it does it is taken into consideration when thinking about you know how much to compensate them yeah that's interesting so we've talked about um talked about the house settlement a little bit we've talked about um the title nine implications maybe we shift a little bit and bring it bring it back to sort of a the branding and sponsorships back to you know back to your background as a as an ip attorney attorney a brand attorney how do we think about this in terms of personal branding and sponsorships you know beyond collectives direct payments it sounds like athletes individually now have the opportunity to build their own brand how do we how do we start to think about that i think um you know the young the athletes they're younger so they grew up with social media it's not something it's something they've had from the very beginning and they all know how to utilize each platform really well and sports are inherently viral when you have a really cool play or um just anything in the sports world catches on quickly right and so as an athlete your ability to go viral and set yourself up on social media is pretty it's pretty much you know it's right there for you um and then being able to parlay that into an actual business or you know an entrepreneurial journey a lot of the athletes are getting really good at that um a lot of the women athletes tend to be better at this um because they're really adept at the marketing and they're a little more personable um online so they get a little bit they get more of the um kind of content creator uh how to basically like they kind of already know what they're doing um with the men athletes of some of the brands i've heard You know, they take a little more education and a little more work to get the content out there and to do things that the brand wants them to do. But I do.

Chuck Kraus: I also think athletes are thinking about similar to my content creators that started off as, like, for example, posting lifting videos and then they start coaching. And then that coaching turns into, oh, I want to create a supplement line. And so now, you know, a multi-million dollar supplement company and athletes are kind of starting to think along those lines as well. And there are a lot of there's a lot of really cool tech out there and companies out there that are helping them learn those marketing pieces and learn some of those entrepreneurial foundations as far as what are you building?

Brian Elliott: What do you want to do? What are you interested in? Make sure you're working with brands that align with that and kind of thinking two steps ahead. As opposed to just right now while you're in school.

Chuck Kraus: Yeah, it's fascinating. I'm picturing an athlete, you know, great at their sport, whatever it is. But maybe as you're describing some of the male athletes, stereotypically not interested in viewing videos, not interested in making clips. I just want to play.

Brian Elliott: I just want to play football. I'm not interested in this. Are you seeing the potential that that they could have a harder time securing a spot with a team because they they're not coming in with that momentum already built? I think I personally think that if you're really good at your sport, there's always going to be a place for you.

Chuck Kraus: And I don't necessarily think that. Having not having a great personal brand and not taking advantage of some of these things will harm you if you are really good at your sport. I think you sort of get a pass there. But if you are maybe not the top player, but you really do just love the sport and you're decent enough to to, you know, get a spot, I think.

Brian Elliott: Yes, I think knowing the ins and outs of the social media world and sort of the branding and all of those things, I think that helps you. So I think as we're talking, right, it strikes me that we're putting a lot on these young people, right, with the idea that they're students, right, they're athletes, they're employees now in some sense. Right. But now they're also creators, you know, content creators and they're business people.

Chuck Kraus: And that's that's a lot for a 17 and 18 year old. Yes. Yeah, I agree. And I think I think that's part of I think people have kind of lost sight of that a little bit, that these are just kids and they went to school to play a game.

Brian Elliott: And now they're like you said, they're business people and their employees and they have also need to go to class right so that they can graduate um so yeah i think the support system that needs to be around some of these athletes is much more robust than i think anyone is realizing they need to really have a team of people around them helping them making sure that um if they are going to jump kind of into that entrepreneurial space that it doesn't detract from their ability to play their sport or to pass their classes so thinking about who you need around you what resources you can use and again that's kind of where i think the university should be doing a better job of um like helping these kids you know um they have the tutors and things like that but now because they are entrepreneurs and because they want to do business people they need maybe people around them that's all they know yeah that's where my mind was going is maybe the next race is is you know for schools to develop the program that facilitates a bunch of this for for athletes so that it doesn't feel like you're it's you against the system sort of thing but come to this school or come to this conference because we've built some momentum around our program and we've established some of these existing relationships we've made longer term partnerships with this brand or that brand you know so we've talked a little bit about we focused on i think the sort of individual branding of the athlete but are we are we ignoring sort of the partnerships with the with the school or with the team is there is there similar focus there around not just not just the athlete who's there for four years but maybe less than four years if they if they go pro um but but with the program generally something that that endures right back to your comment uh earlier aggie football is popular uh every year regardless whether the season turns out the way we want right yeah i mean i think but some of that too there are still questions about what the athletes are allowed to to use from the university right because we have universities with their own separate ip that they have to license and what what is a university willing to allow the athlete to sort of capitalize on in order to help build their own brand right so there are questions about exactly what the relationship from a marketing perspective and branding perspective looks like from the legal side of it to protect the university ip and to protect the athlete ip um so i think it it does feel a little bit siloed at least to me as far as far as the athlete as far as the athlete as far as the athlete as the athlete as the athlete as the athlete as the athlete being as the athlete being So brand marketing, doing their thing and then playing a sport for the university and the university not necessarily marketing the athlete and the athlete not necessarily marketing the university. They just sort of coexist. We just know. Right.

Chuck Kraus: We know this guy plays for Florida. So great. But there's not a lot of the cross branding, I guess we'll call it, because I think a lot of the IP questions are kind of up in the air. So, yeah, that's fascinating.

Brian Elliott: I had assumed wrongly, you're clarifying it for me, that it was much more integrated and that there would be clear ability and expectations that individual athletes would be carrying the flag of the school and potentially the flag of whatever brand was decided to get behind them. Well, I think they they are the plan, but there's approvals and at least and I don't know the differences. Again, each state is different. I know with the the way the Florida legislation was drafted, an athlete would have to get approval to utilize any school specific IP and the school might not like that deal.

Chuck Kraus: The school might not like that brand. And so they may say, we don't want you can't wear your, you know, don't wear any Gator gear. You can do the brand deal as an individual, but not wearing our stuff. And then there are a lot of schools like, you know, Nike sponsors off the schools.

Brian Elliott: So a student athlete can't do a deal with Adidas or can they, you know, it just kind of depends on the legislation, depends on what the specific university kind of says about those things. So there is still a lot of contention and it's not as definitely not as cohesive. I don't, I don't, I don't think it is. Are there, that brings up a good question.

Chuck Kraus: I mean, are, do schools, is this going to cause schools to be cautious or put in restrictions about student transfers because they're taking IP with them when they go? Yeah. Yeah. Uh, the transfer portal is a whole, the transfer world, that is a whole other issue right now, but, and I, that I do is suspect that's probably part of it, um, is obviously losing the player in general, but then losing control of some of that IP.

Brian Elliott: So, so, so yes, I think everyone's trying to, all the universities are trying to figure out the best way to, you know, just keep the players on school. What does that look like? How can we do that? Um, you know, since there's no, the transfer portal again, it's a little bit crazy.

Chuck Kraus: And what is, what is the transfer portal? Well, I don't know. They've changed the rules all the time, but basically it used to, if you transferred, you would have to sit out, you would lose a year of eligibility. Um, and then, you know, you could go.

Brian Elliott: your new school now and this is football i don't know if it's different for basketball i'm not sure about that um now there are no you basically can just transfer whatever you want and you don't have to sit out you can play immediately for the routine and so lately um that what we've seen the last few years is athletes leaving for what is perceived of higher nil fields um like the georgia quarterback who just transferred to my miami because he supposedly received you know he's getting paid will be getting paid supposedly more than any of the rookie nfl quarterbacks so that's you know something and he played last year at georgia and now he can play money with no restrictions i think there's there's been some instances where where these transfers have occurred and then when the athlete feels um hard done by if they were yep yeah let's talk about the law talk about some of those examples i think yeah um unfortunately there are more than i think there should be um but for example at my high university one of the football players sued the university he sued our football coach um and basically said you know there were unkept nil promises he went to florida under the impression that he would be you're getting paid x amount never received that money so he transferred he's transferred twice now to different schools um that case is still ongoing and you know there was no nothing's in writing a lot of these deals all right so that's another issue that needs to be handled none of these deals have been in writing for the most part um not all of them some of them aren't it's very crazy these representatives are not requiring the school to put anything in writing they're just set letting the school say okay yes we will pay you however much or the collective will pay you however much to come here um and the same thing happened at unlv there was their quarterback he was promised you know a certain amount uh in compensation they didn't get it in writing he never saw any of the money so he said i'm out of here i'm gonna transfer he sat out middle of the season and then decided to transfer um so it's just it's a little bit crazy that nothing's in writing that um there were all these questions of whether or not you know schools did promise or coaches did promise something that they're not um you know that the student athlete isn't receiving so that's all part of the transfer portal and kind of what why there's so much movement um that hopefully that's again everyone's hoping at the start of the health settlement you on some of those things yeah it sounds like yeah it sounds like maybe there's a focus on the recruitment but not necessarily on the retention right side of things can you talk about that a little bit yeah um it appears that the recruitment and using nil to kind of build your dream team um seems to be the focus and then whatever happens at the end of the season happens um which i i find odd because i don't know how you build a program um without that buy-in but i think they're getting minimal buy-in from athletes for a very short amount of time and then the athlete has the ability to leave if they don't like it um personally i don't think that's the best long-term strategy in the near term i think it works i think everyone's saying that ohio state sort of took that um took that route and they want a championship so maybe the bet is now we want a championship so people are going to want to stay i'm not sure um but yeah it seems the focus is strictly on recruiting getting them in there and then whether or not we build an actual cohesive program isn't really our concern right now it sounds like these deals are not they're not multi-year commitments to the extent of commitments they're just right right come to the school for this amount of money not not stay with us for your entire career exactly right which we i mean there isn't a reason why it couldn't be um and i think again that's part of what's going to have to happen i think there is going to have to be contracts with the athlete that say you stay for two seasons three seasons whatever um you cannot you know to go pro but you can't transfer oh i don't know so i think we're going to have to get to that place in order to uh solve some of these issues that's fascinating maybe just um in in closing if you could give you know advice to each of those constituents whether it's the the athlete or the school or then the brand that that wants to be involved in this what would you say or sort of top three pieces of advice let's start with the athlete what are the what are the top three things they need to think about uh addressing with their you know they think they have the ability to to secure some of this funding uh they're great at their sport what what are the things they need to think about get it in writing definitely get the offer in writing signed by the university and you um and have a team of people around you you know um and i i know not to do our alarms here but having a lawyer on your side When it comes to some of these things, it's imperative. A representative that you trust, you know, and then learn about what being a business is, because if you're getting paid that kind of money, you are essentially running a business and you need to know what that entails and how best to protect yourself and protect your assets and what you're building. So that would be my number one. Have good representatives that you trust around you.

Chuck Kraus: What about the school? The school is thinking about this and they, as we said earlier, they have peril on both sides. So how do they, how do they rightly wade into this? Schools are on their own.

Brian Elliott: No, I'm just kidding. I think they really need to start building out. It makes me think of what you sent me the other day. Maybe they should have lawyers that are working in their athletic department.

Chuck Kraus: Maybe they should be focusing on building out teams within, you know, a back office team. Having, treating some of these things like a professional sport and having a group of dedicated people for each sport that are going to help manage some of this. Because right now, it just seems like you have anybody and everybody working towards what they don't know. There's no, there's no general consensus.

Brian Elliott: And I think the universities need to go maybe a little more organized and have people who can interpret law and help advocate for certain things within their organization. And then what can the brands do? What can the sponsors do to maybe help the situation? I think transparency is really great.

Chuck Kraus: I think if a brand wants to help the whole, help the whole ecosystem by sharing, you know, who they target, how and why, obviously they're not going to share all of your marketing secrets and things like that. But I think transparency and deals is important. Athletes should be able to say how much they're getting or what. And I think brands, also to smaller brands, I think smaller brands need to be less afraid of kind of jumping in.

Brian Elliott: I think because there are a lot of questions, some of the smaller brands think they don't either, they don't have the money or they don't really want to have to figure out what they can and can't do, and they'll let the big, you know, the 90s of the world take all of the, take the limelight here. But I think there's so much opportunity for smaller brands with, you know, smaller schools, smaller programs. Yeah. Yeah.

Chuck Kraus: Thank you. to get involved. And especially if you're an alumni from a smaller school and you own a company, why would you not get involved? You don't have to be a traditional clothing company or shoe company to work with athletes, right?

Brian Elliott: You can be anybody. I've seen some really, really funny deals that you wouldn't necessarily assume would make sense, but athletes are great marketers. They just have a natural ability. People love sports.

Chuck Kraus: People love athletes. People aren't interested in their story and what they're doing. And from a brand, you have to capitalize on that. You really can't ignore it anymore.

Brian Elliott: I think that's exactly right. I think in a lot of industries where there's a boom, you see ridiculous amounts of capital come in. And then there's this feeling that you're going to get left behind. Sort of the FOMO kicks in and you see then even more money piling in.

Chuck Kraus: It feels to me that the brands that don't have the unlimited budget that want to get into this will be well served to take a longer term view and develop some of those relationships, perhaps with schools, to build something with a longer duration and almost bring a personality to the particular school or the relationship between the brand and the school. A little bit like you see the NFL teams doing where some of the social media accounts of the NFL teams, they have a particular feel. My kids are always showing me the Buffalo Bills Instagram account as one that's just different. And I wonder if one of the approaches for the brands of schools is to develop those sorts of relationships with local businesses, local sponsors, where you can really do something that's unique.

Brian Elliott: I'm thinking that we need to reevaluate the Y'all Street Law Podcast marketing budget and see how we can get ourselves involved. I think that's right. I think that's right. Let's do it.

Chuck Kraus: I think we should. I mean, I'll connect you with any athletes I know. So amazing. Wonderful.

Brian Elliott: Shannon, this has been a real treat for us. This is not an area that I'm close to at all in my practice and has been really eye opening. The complexity and the layers that are involved is really fascinating. So thanks so much for sharing.

Chuck Kraus: Yeah, of course. I'm happy to chat about it anytime and after this settlement. If it's approved or not, we'll probably have more to talk about. Well, I tell you what, we're going to do an update in a future episode.

Brian Elliott: We'll have you back on for a segment to talk about what has changed as a result of this settlement. And then we'll get an update from Brian on his progress to increase his max squat and bench press. I love it. Stay tuned.

Chuck Kraus: All right. Awesome. Thanks, Shanna. All right.

Brian Elliott: Thank you, guys. Okay. Talk to you soon. Bye-bye.

Chuck Kraus: Bye. For more insights and updates, visit www.scalefirm.com or follow us on LinkedIn. We'll see you soon.