Cashing In On NIL and NFTs

August 3, 2021 | blog | By Mike Sullivan

Athletes and marketers are cashing in on NIL and NFTs and if you’re not, it’s time to change that.

If you’re a leader for a challenger brand already leveraging the power of NILs and NFTs, then NVM. If you’re not, let me introduce you to the N Crowd that’s about to turn marketing on its ear and give challenger brands lucrative opportunities to level a playing field that up to now has been prohibitively expensive.

Without belaboring the point too much, for years marketers have wished they could utilize college athletes for endorsements, voiceovers, and commercials. But because of NCAA regulations, you couldn’t buy an athlete lunch or give them a summer internship, much less pay them for marketing and advertising.

In the future, when college athletes look for the dividing line for when everything changed for them, the date will be July 1, 2021. Thanks to a series of new State Laws, a blessing from the United States Supreme Court and new relaxed regulations from the NCAA, college athletes now enjoy varying degrees of protection and more importantly, the ability to sell the rights to their Name, Image and Likeness (NIL) and benefit from those deals monetarily. As of yet, there are no Federal Congressional guidelines and there are certainly gray areas with boundaries that will no doubt be pushed. College athletes are cashing in on NIL and NFTs with the new ruling, and for challenger brands looking to utilize athletic endorsement as a marketing tool, the new NIL opportunities may prove to be a walk-off grand slam in the bottom of the ninth.

First, a little background.

Celebrity and athletic endorsements are nothing new. Baseball player Honus Wagner inked the first endorsement deal with Louisville Slugger back in 1905 to put his signature on bats sold in stores and, later, added other deals to hawk tobacco, gum, gunpowder, soft drinks, Gillette razor blades, and cigars. Why did Wagner’s deal catch on? To this day, more than sixty percent of the bats used by Major League baseball players are Louisville Sluggers and, in May, one of Wagner’s American Tobacco baseball card sold for $3.7 million at auction.

In 1922, golfer Gene Sarazen signed on to the advisory staff at Wilson Sporting Goods and maintained that relationship for 75 years – the longest running endorsement deal in history. As time passed, the number of athletic endorsements exploded along with the exorbitant value of the deals themselves. In 1964, professional bowler Don Carter signed the first million-dollar endorsement deal in history with bowling ball maker Ebonite. Not even a half century later, in 2003 and 2006, Nike signed lifetime endorsement deals with soccer star Cristiano Ronaldo and NBA icon Lebron James for more than $1 Billion dollars each.

For big brands and category leaders, partnering with professional athletes has always been popular and usually expensive. As painful as signing million-dollar checks may have been, it was still a big competitive advantage because, unlike their smaller competitors, big brands had the deep pockets to pay their players. Challenger brands? Not so much. That’s what makes cashing in on NIL and NFTs so exciting both for the athletes and challenger brands.

Time for amateurs to cash in.

For decades, when the topic of paying Olympic athletes, or allowing professionals to compete in the Olympic Games came up, countless critics would rage about the importance of protecting the “purity” of amateur sport. That changed in 1986 when the International Olympic Committee paved for the way for professional athletes to compete. Once the Olympics were open to the pros, that left NCAA sports as the last major frontier for amateur athletes. For 30 years, as lucrative TV deals have lined the pockets of colleges and universities and athletic conferences, the drumbeat has gotten increasing louder to compensate college athletes by giving them the right to use and benefit from their name, image and likeness. Now they have them. The extent to which they’ll use them remains to be seen.

For challenger brands, it means extraordinary opportunity. Where before, big, national sports celebrities were expensive and not often available for regional or even local endorsement opportunities, college athletes saddled (like most college students) with the increasing cost of their education, may be more than willing to play ball.

Just look at some of the NIL endorsement deals that were signed in just the first few weeks:

Beyond the simple endorsement here or there, in addition to his online swag store, Miami QB D’Eriq King and Florida State QB McKenzie Milton have co-founded Dreamfield, “an NIL-based platform focused primarily on booking live events for student-athletes, including autograph sessions, meet-and-greets, and speaking engagements,” according to ESPN. Currently, the two founders are requesting $2,000 an hour for appearances. Not only that, the company is also leveraging the popularity of NFTs which brings us to the second new opportunity for challenger brands to embrace.

Now, the NIL ruling is even reaching into the high school ranks. Just this week, quarterback Quinn Ewers, the top national recruit out of Southlake Carroll High School in Texas, decided to skip his senior year of High School and enroll early at Ohio State. Not to start his education. Not because he’s ready to compete on the field. Ewers said it was so he could take advantage of his NIL and start earning.

NFTs go small to go big.

When the NBA launched its “Top Shots” platform last October selling Non-Fungible Tokens (NFTs) featuring digital NBA highlights, there was a lot of conjecture as to whether it was something fans would buy. They did, to the tune of more than $400 million. In May, when an NFT of a digital painting by the artist Beeple sold for more than $69 million, the wave of chatter about NFTs and their popularity got even louder. But that’s the thing about waves – they come in AND they go out.

In June, the NFT market for digital art cooled nearly 95 percent from the high in May. But here’s why that’s not a bad thing.

According to a June 30 article from crypto monitor Coinbase, “while the fever for blockbuster digital art may have cooled, the number of individuals interacting with NFTs in smaller ways may actually be growing.” More importantly, the article notes, major media empires like Marvel and Fox have decided to ramp up their investment in NFTs in the hope that big fans will jump on the bandwagon. Consider just these five examples from the Coinbase article:

  • Fox Entertainment announced a $100 million investment in its new NFT-focused business. Blockchain Creative Labs — a joint venture between Fox and Bob’s Burgers animation studio Bento Box Entertainment — will seek to directly link fans, advertisers, and creators via NFTs.
  • Rick and Morty creator Dan Harmon will helm the studio’s first foray into NFTs with his 2022 show Krapopolis, which will have a dedicated marketplace for digital goods like unique character art, GIFs, and “tokens that provide exclusive social experiences.”
  • Marvel is expanding into a “mixed reality” metaverse with digital collectibles. Later this year, fans will be able to buy digital Marvel art like NFT comic books and display it virtually with the VeVe app, which “adds a digital layer to the world around us.”
  • Square CEO Jack Dorsey and Jay-Z discussed making NFTs part of music streaming service Tidal. During a live-streamed conversation, Jay-Z, who sold a majority stake of Tidal to Dorsey in March, lauded NFTs for their ability to automatically pay artists every time a work is resold via smart contracts: “Anything that benefits the people who love art and the people making it — that’s what I’m interested in.”
  • Hollywood creators are carving out NFT rights in new contracts, says manager and producer Michael Sugar, whose firm Sugar23 manages top filmmakers like Steven Soderbergh and actors like Keanu Reeves. “The NFT boom has led to a sizable shift in the creator economy by effectively cutting out the middleman known as distribution,” he tells Coinbase Bytes. “Clients and producers can reach their audiences where they are.

If the entertainment industry is correct that the future of NFTs lies not just in million-dollar auction wins, but in smaller transactions baked into the fan experience (and I believe they are), that kicks the NFT door wide open to every brand and especially challenger brands. Underdog brands that leverage NFT technology to build and cultivate a larger percentage of brand evangelists have a real chance to not just simply play the game better, but to change it completely.

With both the new collegiate NIL opportunities and with NFTs, challenger brands have an extraordinary opportunity to think differently, to move quickly, and to use their smaller size and nimbleness to their advantage. NIL endorsements and NFTs allow challenger brands to ride the front wave of innovation and cultural relevance without having to break the bank. And, if they do it quickly, they can even beat their larger, slower competitors to the punch.

College athletes are cashing in on NIL and NFTs. All it’s going to take for challenger brands to benefit is courage and creativity.

MIKE SULLIVAN is president and CEO at  LOOMIS, the country’s leading challenger brand advertising agency and a top Dallas advertising agency for digital, social, mobile and user experience. For more about challenger branding, advertising and marketing, leadership, culture and other inspirations that will drive your success, visit our blog BARK! The Voice of the Underdog and catch up on all of our posts.

For more about LOOMIS, or to discuss how we can help your company succeed, CLICK HERE

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Mike Sullivan

President at LOOMIS, the country’s leading challenger brand advertising agency


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