Group Licensing Could Help Solve College Sports’ Revenue Sharing Problem

Group Licensing Could Help Solve College Sports’ Revenue Sharing Problem

Tonight’s College Football Playoff Championship Game closes out the four-team playoff era. The sport will expand its playoff to 12-teams next season. 

Playoff expansion means more games of consequence–and ultimately more media revenue. 

It remains to be seen if the CFP’s next set of media rights deals includes a carve out for the players. A series of ongoing court cases could force that outcome. 

“But college athletes receiving value proportional to what they create doesn’t have to happen through employment,” Jim Cavale (founder and chairman, Athletes.org) said. “It could [also] happen through alternative structures, one of which is group licensing.”

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College athletes have been able to accept compensation in exchange for the use of their name, image, and likeness since July ‘21. 

But “80%, or more, of [NIL] deals [are] coming from collectives, and the majority of [that] money is going to football players,” Cavale said. 

He would know. INFLCR processed more than $100M worth of NIL transactions during his time as company CEO.

Group licensing deals, which may be more sustainable (since they’re not reliant on donor funding) and can benefit a broader array of college athletes, have been underwhelming to date. That reality is largely a byproduct of the lack of organization that exists amongst them. 

Athletes.org (AO) is working to change that, and Will Ventures and JDS Sports are betting, if organized, the group licensing opportunity for college athletes will be tremendous. The venture capital and private equity firms, respectively, funded the company’s pre-revenue seed round.

“Collegiate sports are already a multi-billion dollar market and we expect continued growth over the next decade. So, investing in a group marketing and licensing company presents a risk-adjusted way of capturing that upside,” Brian Reilly (co-founder and managing partner, Will Ventures) said. “Ultimately, group marketing and licensing will be required for opportunities across gaming, apparel, and collectibles to scale within college sports.”

AO has non-profit (think: NFLPA) and for-profit arms (think: NFL Players Inc.). Collectively, it serves as a player’s association of sorts for college athletes.

“We’re not a union because college athletes are not employees,” Cavale said. However, it maintains “the flexibility to change that should college athletes become classified as employees, which is possible in the near future."

AO promises to deliver three things for its member athletes, including efforts to maximize their income.

“We do that through group licensing deal flow,” Cavale said.

It also works to amplify athlete voices through advocacy initiatives at the university, conference, and NCAA levels, and provides ongoing support and guidance on key decisions.

“We’ve organized pro bono services for member athletes to get [legal or accounting] help in running what is now their own business,” Cavale said.

It’s not clear yet just how big the collegiate group licensing opportunity may be.

But, “if you compile [all of the] traditional group licensing opportunities, without even factoring in [some] non-traditional ideas, there is at least a $100 million market to initially pursue,” Cavale said. 

While that estimate may turn out to be accurate, the licensing business within college sports is different than the pros. The transient nature of players makes it more difficult to sell player-specific products. Fewer people are willing to spend $150 (or more) on a jersey when they know there is a possibility the athlete may not be at the school next season.

Licensees also maintain more power on the college level than they do in the pros with regards to royalty rates and minimum guarantees, since there is no exclusive provider of athlete rights. 

And yet, Cavale views nine figures as the floor.

“It could [actually] be a lot bigger than [$100 million],” he said. It depends “on what else [becomes] available [opportunity wise], and whether group licensing is the medium for sharing ticketing and media related revenues.”

Athletes.org sees continual threats to the NCAA’s existing model and is convinced it’s just a matter of time until college athletes participate in the gross revenues they help generate. 

“The same way that [the] O’Bannon [case] was writing on the wall for NIL, the House case, the Johnson case, the NLRB case, those are all writings on the wall for employment or some other revenue sharing model,” Cavale said. NCAA president “Charlie Baker has acknowledged this with his recent college athlete revenue sharing proposal.”

So, the Athletes.org team is working to organize college athletes and engage them in conversations about critical negotiating points (think: revenue sharing, scholarship protections, medical coverage, concussion protocol).

“It’s not [going to be] a one size fits all deal,” Cavale said. “And [the various stakeholders] must figure out the deal in a way that also protects Title IX, the Olympic sports, and also has a trickle down for the smaller schools to survive. If [the agreement doesn’t] address those three things the presidents are not going to go for it.”

Complicated as it sounds, one must assume there is a way to make it happen. It’s been estimated there could be as much $4 billion worth of additiotional media rights revenue to be captured if it does.

Perhaps that is where private equity enters the college sports conversation.

AO began rolling out ‘Chapters’ in November.

“Our initial focus is power conference men’s and women’s basketball athletes,” Cavale said.

More than 40% of ACC men’s and women’s hoops players have joined to date. 

It is now selecting Big East and Big Ten conference ‘founders’ who will be tasked with signing up their teammates. The process will continue with a new conference every three weeks through the end of college basketball’s regular season.

“The goal is to have more than 50% of the men’s and women’s players from the power six conferences signed up before March Madness because while we're signing them up we're also working on different [group licensing] revenue generation opportunities which we’ll be rolling out during the tournament.”

After the nets have been cut down AO will begin building football membership across the power four conferences before moving on to G5 conferences and other sports.

The company has a diverse board (think: Kirk Berger, Jason Ranne, Sandy Barbour, Jim Boeheim) that serves as the bridge between it and college sports’ power players, not all of which are understanding –or supportive– of its mission.

At least not publicly. 

Its goal is to make the remainder “realize non-employment revenue sharing, through group licensing, might be their [last] chance to figure out [a] new model before the courts decide these cases and make all college athletes employees,” Cavale said. 

The NCAA seems unlikely to get an anti-trust exemption in the current political climate.

“But if they have an asset in the form of a deal agreed upon in principle with athletes, they can leverage that,” Cavale said. “Charlie Baker can [use] that to settle these [open court] cases and get protection from future litigation. Without [an agreement with the players], they’re just spinning their wheels.”

In the meantime, AO will continue its efforts to maximize group licensing revenues for member athletes. 

“At the pro level, group licensing is supplementary income,” Cavale said. “We’re starting the other way around. We’re trying to get [college athletes] mailbox money for their name being part of a group license deal first, [and] working to organize these [individuals] for when we can bring them a salary or revenue share through broadcast NIL or whatever is next.”

OneTeam Partners is currently the market leader in the collegiate group licensing space. Its deal with Fanatics provides player NIL to the e-commerce company and allows for the production and sale of thousands of licensed player jerseys across eight sports. The company is doing the same for Electronic Arts, which will enable the return its college football game.

It’s worth noting that Will Ventures is OneTeam Partner’s exclusive venture capital partner.

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