There are a million and one problems with the name, image and likeness landscape in college sports.
There’s little — if any — oversight or regulation of the space despite the NCAA officially permitting athletes to profit off of their NIL rights more than three years ago. Somehow, the space is still the wild, wild west.
That lack of oversight has made room for predatory financial institutions and their flag-bearers to slither their way into the space and take advantage of college athletes who might not know any better.
That’s where Kendrick Perkins comes in.
ESPN’s NBA analyst has reportedly partnered with Chris Ricciardi, a Wall Street veteran, to create a company called Nilly, according to reporting from ESPN’s Dan Murphy.
Wait, so how does Nilly work?
The way this works is fairly simple — that’s the most sinister thing about it.
Nilly offers college athletes upfront payments ranging from $25,000 to hundreds of thousands of dollars.
In exchange for those upfront cash payments, Nilly gets the exclusive right to use or sell an athlete’s NIL rights for up to seven years, depending on the contract. The company and its investors also grab between 10 percent and 50 percent of an athlete’s earnings during that time period.
Isn’t this kind of predatory?
Yup. It sure is. When you dive into the details, it gets much worse.
https://twitter.com/madsal15/status/1844393070155927992
Murphy obtained a Nilly contract in the course of his reporting, revealing more on how these deals work.
Murphy writes:
“ESPN obtained a copy of one Nilly contract that lays out a $50,000 payment to a high school senior in exchange for the exclusive rights to sell his name, image and likeness for seven years. In that contract, Nilly and its investors will receive a 25% cut of the player’s NIL earnings for the length of the contract, or until Nilly earns a total of $125,000 (2½ times its initial investment), whichever comes first. Ricciardi said the percentage of NIL money that Nilly takes from an athlete can be as high as 50%, and a spokesperson said Nilly’s share can be as low as 10%.”
This is a deal Nilly is offering to a high school senior. As far as how the company goes about choosing the athletes it makes these offers to, Ricciardi says the company has a “proprietary” formula that helps it select which athletes to target.
How is Kendrick Perkins involved in this?
Like I said at the top, Perkins is a partner to Ricciardi. The two of them founded the company together.
He also promotes the company on his Instagram, which has nearly 560,000 followers to date. In his bio, Perkins describes himself as an “ambassador” of Nilly.
Why is Perkins doing this? What does this company exist for?
Perkins is selling altruistic motives for this one. He’s saying he’s putting immediate cash into the pockets of student-athletes who might not have any available. Apparently, signing away your rights for seven years is all in the name of financial security.
“You have so many athletes and their parents who are struggling day-to-day,” Perkins said. “Because we’re actually taking a bit of a gamble on what the student-athlete is going to make in the NIL space, the benefit is the kid — the student-athlete — is able to get financial security so they don’t have to rush.”
That’s Perkins’ explanation. But Ricciardi’s explanation might offer a clearer perspective on things.
He told Murphy that most athletes are “statistically unlikely” to earn enough for Nilly to maximize its return through those seven years contracts, so the hope is an average percentage return in the mid-teens.
That means, for a deal like the one above, investors would hope to make between $5,000 and $10,000, according to Murphy. He likened the Nilly deals to advances in the music industry, which should do nothing at all to comfort you about the predatory nature of these deals.
Perkins says Nilly is taking on risk by doing this, but this is more about filling investors’ pockets than helping athletes.
But is Nilly actually taking on risk here?
No, not really. They’re dishing out deals to athletes likely from low-income households and taking hold of their rights for years.
Ricciardi says these deals have no payback terms, and that may be true. But, in essence, they’re taking an advanced lump sum of money from Nilly and kicking back a percentage of that cash — with interest — every time they make a single cent off their own NIL rights.
If that sounds like a loan to you, you’re not losing it. That’s what it is. Here’s Murphy with more:
“Consumer finance experts who reviewed the contract obtained by ESPN said the one-sided relationship between the player and Nilly could lead a judge to determine that the arrangement more closely resembles a loan than a licensing agreement if challenged in court.
Mike Pierce, who formerly helped lead the student financial services team of the CFPB and now runs a student borrower advocacy nonprofit, said Nilly could be violating laws if the contracts are determined to be loans.”
Stack that on top of a morals clause in each contract that opens the door to Nilly potentially suing athletes who violate the terms of their agreement, and you’ve got a pretty terrible contract that brings a lot of risk to the table for student-athletes out there who are just trying to make a living playing the sport they love.
Perkins and Nilly are taking advantage of young athletes with these deals. That much is very clear.
When someone finally looks into this, expect it to all come crashing down.