The New Era of Profitability in College Sports | March 2024

March 2024 | Volume 15, Issue 8

Read the full article on CNN.

Caitlin Clark made history recently as women’s college basketball’s all-time leading scorer. The Iowa star is also an economic powerhouse, putting a spotlight on the multi-million dollar earning potential of some athletes in a new era of profitability in college sports.

The Fruits of Stardom

Clark, 22, has signed deals with Gatorade, Nike, and State Farm, among others. Sports data site On3 estimates the total value of those partnerships at $818,000 — the fifth-highest ranking in all of women’s college sports, and multiples higher than Clark can expect to make as a pro in the WNBA, where the top salary currently maxes out around $250,000. 

Her star power is also filling seats, boosting television ratings, and moving merchandise.

Growing Marketing Power

Clark’s stardom reflects women’s growing marketing power in college sports, three years after a U.S. Supreme Court ruling allowed student-athletes to make money off their personal brand and amid booming interest in women’s sports broadly. Brands are increasingly hungry to partner with college athletes who can help them reach younger consumers, especially young women who are most likely to cultivate loyal social media followings. And the growing profiles of top athletes like Clark are helping to bring more attention — and more revenue — to women’s college sports programs and professional leagues. 

“Corporate America obviously wants to target younger people, and part of that is the lifetime customer value,” said Patrick Rishe, director of the sports business program at Washington University in St. Louis. He added that Clark herself has a following of “Clarkies.”

“These preteen and teenage girls that are huge fans of Caitlin Clark’s, they’re watching the commercials, and they see her drinking Gatorade and they see her on a State Farm commercial,” Rishe said. “We don’t know if that brand recognition and reinforced messaging is going to lead to those young girls eventually becoming State Farm customers … but that’s the hope.”

Until recently, college athletes were not allowed to be paid. But a 2021 Supreme Court ruling allowed student-athletes to make money off their personal brand — their name, image, and likeness, known as NIL.

The total market for commercial NIL deals for college athletes is expected to reach an estimated $200 million in 2024, according to Opendorse, an online platform that helps connect athletes with NIL deals. And for top athletes like Clark, multi-year deals with major brands are likely “starting in the six figures,” said Sam Weber, head of marketing and communications at Opendorse.

NIL Empowering for Female Athletes

The NIL change is especially empowering for female athletes, whose post-college professional path — if it exists at all — is far less lucrative than men’s.

That is particularly visible in basketball. Currently, LSU stars Angel Reese and Flau’jae Johnson boast NIL valuations above $1 million, according to On3’s NIL ranking. Their prospects in the professional league — where the average salary in 2023 was around $113,000, according to Spotrac — are meager by comparison. (By contrast, even professional men’s basketball players ranked below the top 100 athletes in the NBA can make upwards of $10 million each year.)

Top brands may be eager to ink endorsement deals with pro-bound college athletes that can last the entirety of their careers, Weber said. He cited similar, long-term relationships Nike has had with athletes like golfer Tiger Woods, who began his 27-year relationship with the brand at age 20, and basketball star LeBron James, who signed with the shoe company, in what eventually became a lifetime deal, as a high school senior.

“Large brands and massive media agencies, what they see (in a player like Clark), that doesn’t go away when she puts on a WNBA jersey,” Weber said. 

Additional Funds for Schools and Athletics Programs

The growing public profiles of college athletes have also meant additional funds for their schools and athletics programs.

Season tickets for the Iowa Hawkeyes women’s basketball team sold out this year for the first time in the program’s history. Ahead of a recent pivotal game in Iowa City against the Michigan Wolverines, tickets prices were averaging $400 a seat, about 206 percent more expensive than the same game in November, according to TickPick. 

For Iowa’s March 3 home game against No. 2-ranked Ohio State, ticket prices were already topping $450 for the cheapest seat on StubHub on Friday, maxing out above $1,000. 

TickPick estimates the game will be the most expensive in women’s college basketball history. 

Recently, Nebraska’s victory over Iowa in Lincoln attracted 1.7 million viewers — the most-watched women’s college basketball game ever on Fox Sports. 

“There’s no question that name, image and likeness may be one of the largest reasons why we’ve seen such an acceleration in the growth of women’s sports and the business of women’s sports,” Rishe said. 

Building A Personal Brand

Women college athletes “now can build a brand for themselves, such that when they graduate, they can further monetize the image that they’ve crafted. And it also helps these women’s sports leagues because now you’ve got college stars joining professional leagues that now have a bigger aura, a greater recognition, than they ever had before.”

Discussion Questions

1. Explain the term “name, image, and likeness.”
   According to the law, the term “name, image, and likeness” (NIL) refers to the three pieces of one’s “right to publicity.” As applied to collegiate athletics, this means that the athlete’s name and image are their name and image, and that no one else should be permitted to use them for commercial purposes without the athlete’s consent. An athlete’s likeness is not as obvious—It refers to their “semblance”—For example, the outline of Michael Jordan on the Jordan brand.
   
   Under NIL law, all college athletes can accept compensation for commercial or promotional use of their name, image, and/or likeness. They can partner with businesses and endorse their products and/or services through their personal social media channels. They can welcome sponsorship opportunities and can be “the face” of a company’s marketing campaign. College athletes can now get paid to make appearances, sell their autographs, create and market their own merch lines, and advertise their own camps, clinics, and private lessons.
   
   NIL can be very profitable for the college athlete—for example, the college athlete with the highest current NIL valuation is USC basketball player Bronny James (son of NBA star LeBron James), who has an NIL valuation of $6.1 million.
2. According to Patrick Rishe, director of the sports business program at Washington University in St. Louis, “(c)orporate America obviously wants to target younger people, and part of that is the lifetime customer value.” In your reasoned opinion, is such “targeting” ethical? Explain your response.
   

   According to the American Marketing Association, marketing is “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large” (https://www.ama.org/the-definition-of-marketing-what-is-marketing/).

   
   
   When businesses sign NIL deals with college athletes, they are engaging in a form of marketing, and as Mr. Rishe acknowledges in his statement, through marketing efforts that reach young people, businesses begin building relationships with people that can last for their lifetimes. 
   
   Marketing builds brand recognition, which makes it more likely that the target market will try the product. When consumers try the product and like it, that builds brand loyalty, which in turn can lead to brand insistence (accepting no substitutes). This can have a multigenerational effect, since children of consumers can manifest brand loyalty and insistence based on the consumer proclivities of their parents.
   
   Although student opinion may vary in terms of whether such targeting is ethical, from a purely business perspective, this is an investment in building and expanding the target market.
3. In your reasoned opinion, is it ethical for college athletes to receive compensation for NIL? Why or why not?
   This is an opinion question, so student responses may vary. Opinions range from supporting NIL as a “shining example” of capitalism to claiming that NIL will mark the “death” of college sports (or at least college sports as we know it).
   
   In reaching a reasoned opinion regarding this matter, it is important to consider whether it is ethical for colleges themselves to “profit from the labors” of athletes without paying those athletes commensurate compensation.