Why some small businesses are getting out of college sports’ NIL game

Two years after the NCAA opened the door for college athletes to receive compensation, smaller businesses are still trying to figure out the value of a deal.

(Trent Nelson | The Salt Lake Tribune) Utah Utes guard Kennady McQueen (24) as Utah hosts Princeton, NCAA basketball in Salt Lake City on Sunday, March 19, 2023.

Doug Dickson slid into former Utah State forward Justin Bean’s direct messages not long after the NCAA adopted an interim name, image and likeness policy in July 2021. The franchisee of a Taco Time restaurant in Logan had wanted to work with the now-NBA G League player for years because his last name first almost too perfectly with his business.

Dickson and Bean worked out a deal where he’d film a commercial for Taco Time, mention the restaurant in 10 social media posts and hold a two-hour meet-and-greet event. The restaurant also introduced the Justin Bean Combo, which included a bean burrito, a large drink and large stuffed Mexi-fries.

Then came the subject of Bean’s compensation. That’s when Dickson started to sour on NIL.

“Honestly, the cost to do what we did was probably more than what I was expecting going into it,” Dickson said. “I kind of feel like if I would have been able to just work with through Justin and not his agency, it probably would have been a lot better for me personally.”

Bean did not go into specifics when asked how much the deal with Taco Time paid him. But he described the contract as “handsome” and said it would pay him “several thousand dollars over the course of a year.” It helped pay for his wedding plans, he said.

Dickson and Taco Time are one example of how many athletes in Utah and elsewhere have partnered with smaller businesses to take advantage of the NIL space. When the NCAA relaxed its rules nearly two years ago, it was akin to a Walmart opening its sliding glass stores in the wee hours of Black Friday morning — everyone wanted a piece of the action.

Athletes posted on social media saying they were open for business inquiries. Soon NIL collectives popped up like the ones at BYU and the University of Utah.

Certain athletes became millionaires or quasi-millionaires seemingly overnight. In just the first year of the relaxed rules, nearly $920 million was paid out to athletes, per Yahoo Finance. LSU gymnast Olivia Dunne has landed deals with American Eagle and Grubhub. At the same time, former Alabama quarterback and Heisman Trophy winner Bryce Young signed with BMW and Subway — and those are just some of the big-name companies.

But small businesses have entered the NIL space as well, working with lesser-known athletes who often play for smaller schools. In Utah, unless your name is Cam Rising, that’s where much of the NIL dealmaking has taken place.

Take Utah’s Kennady McQueen and Utah Valley University’s Halle Nelson. They are women’s basketball players for their respective schools, and signed deals last year with a startup company called Edge Spray, a product made to help athletic shoes grip a court better.

Edge Spray is based out of New York. CEO Zach Keck only learned of McQueen and Nelson through one of the company’s interns. Since McQueen and Nelson have the same manager, they ended up being the company’s first-ever NIL signees almost simultaneously.

McQueen said her NIL deal with Edge Spray was one of the first “big” ones. She said she received a $300 startup fee and 15% of any sales made through a custom discount code. Nelson received the same, she said. They both recorded a video of using the spray and posted it on social media.

Edge Spray puts links to the social media accounts of its partners on its website as part of the deals. Keck said he learned about NIL as he was still developing the company, giving him the opportunity to use it as an experimental way to promote his business.

Aside from the spray, Nelson, while playing for Utah State, signed an NIL deal with the Center Street Grill in Logan. Similarly to Bean, the restaurant named a menu item after her — HALLE-luja fries, beer-battered curly fries covered in cheese, bacon and garlic.

Nelson received a startup fee of $599 from the restaurant, she said. The deal lasted six months. She promoted her signature fries once or twice a month on social media as part of the contract, and participated in a photoshoot.

Even bigger names in college sports have opted to work with smaller businesses. Before transferring to Texas, former BYU guard Shaylee Gonzales started a partnership with Thrifthood, a thrift store in Provo that sells a lot of sports memorabilia. While she was at BYU, the store provided her with pregame outfits she would then post on social media.

Albee Bostrom, co-founder of Thrifthood, said he has seen increased traffic to the store and on its website since he started working with Gonzales. And while Bolstrom thought the initial financial ask for Gonzales was too steep, the two sides eventually reached an agreement close to the middle, he said.

Bostrom said he would eventually and ideally like to have a single-digit cadre of athletes working with Thrifthood through NIL. And the types of athletes he’d prefer aren’t just looking for big paydays.

“I know a lot of these athletes are looking to make money. But for us, it’s more than the money,” Bostrom said. “We want to build more than just your bank account. We want to build a community here. … We want to pay them in different ways.”

But like Dickson, NIL hasn’t worked out for everyone.

Patrick Walmsley, owner of Utah-based Luma Juice, explored NIL with local athletes to promote his product. He gave partners a case of juice and a discount code and asked them to promote the juice on social media.

Some of the players Luma partnered with were BYU football’s Aisea Moa, UVU soccer’s Madeline Vergura and Katie O’Kane, and BYU softball’s Alina Agbayani, Walmsley said. He also got former BYU football player Bronson Kaufusi to help out by using his large Instagram following.

But over time, Walmsley learned that Luma’s sweet spot business-wise was wholesale, and the audiences of athletes might not be the best avenue for marketing the juice. Plus, with lesser-known athletes, it’s more difficult to generate revenue, he said.

With few sales resulting from NIL, a mutual benefit doesn’t exist.

“We’re just not going to see an e-commerce angle until we get away from those micro-influencers,” Walmsley said. “You have to really get into a much larger person with a much larger following to actually see business get generated. We’ve basically been unwilling to take that step because typically, that means they’re gonna want some sort of compensation that probably includes equity in the company, and that’s something we’re not prepared to do.”

As a result, Walmsley and Luma are no longer aggressively pursuing monetary NIL deals with athletes. Although, he did say he’d be willing to help them gain exposure to business and build a portfolio.

As of now, Keck has also paused the deals that included a startup fee and requirements for athletes to post on social media.

Keck said the social posts McQueen and Nelson made for Edge Spray — they each posted once — netted only two sales total. NIL deals he’s made with other athletes have also brought back no return.

But Keck is not blaming the athletes for a lack of sales.

“It’s an experiment for a reason,” Keck said. “We learned from it. I think there are so many factors to this that it’s on us to figure out our s---. The athlete is a medium. They’re a partner of ours and they’re going by what we’re asking them to do.”

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