OpenDorse Two Year NIL Report Takeaways

On June 28th OpenDorse published its year 2 NIL Report, which was filled with interesting data points, quotes, and expectations for the future of NIL.

We dove deep into the 20 page report - below are the key takeaways, quotes, and metrics that stood out from year 2 and some of the key predictions for year 3 of NIL.

Categorizing The Years

OpenDorse categorized the years of NIL as:

"YEAR 1 (July 2021-June 2022): HYPE OVER HELP
YEAR 2 (July 2022-June 2023): SUCCESS SEPARATES THE PACK
YEAR 3 (July 2023-June 2024): ROI IS REALITY

It’s time to answer a very important question: What is the ROI of an NIL partner?"

The first 1.5-2 years saw outlandish numbers reportedly thrown around for NIL deals.  Now that NIL money has been invested by donors via these Collectives, a full school year has gone by, and donors can see if their investment had any sort of ROI.  We also believe that Year 3 will bring about donors likely scaling back their investment if the team isn't performing as well as expected relative to expectations, or conversely investing more if it's clear the NIL efforts are resulting in higher caliber players ==> more wins for that respective sports team.

$1.17B

The year 1 report projected $1.14B in year 2. The year 2 report projects $1.17B in year 3, with half of that total compensation coming from Power 5 football.  In the report OpenDorse cited "with anticipated stability, there is still notable growth expected in the Power 5 and Group of 5 segment."  The visual below does a great job of breaking out what makes up that $1.17B and the top left number in the grid stands out.  

Collectives Expected to Grow

The report focused on year 3 being the year of ROI and conveyed expectations on a positive ROI on a few dimensions, and also projected an 11.2% growth in Collective Budgets from year 2 to year 3.  Many, like On3's Shannon Terry, took to Twitter to express their concern with just how high some of these Collective projections are.

Deaveraging the above data even further, the report suggests that many Power 5 Collectives have >$10M each to invest in NIL activities.

There are over 60 Division I Power 5 Schools that make up that first row, and while many seem to have the resources and support to raise these types of funds, others appears as though they may face challenges to get to this level of fundraising.

Correlation vs. Causation - NIL Investment vs. On-Field Success Collectives

Continuing with the ROI theme, the report dives deeper into the correlation between NIL investment and on-field success.  The report claims, "A classic chicken or egg dilemma. Is there a connection between NIL success and on-field success? The numbers indicate so. With correlation ranging from moderate to strong, the relationship between athletic performance and NIL earnings appear to be linked. Speculation continues about whether NIL earnings are a driver of or byproduct of winning."

So are the teams having on-field success because there is NIL investment leading to better recruitment and more of an incentive for players to perform well, or is the on-field success because the larger NIL investment is already going to players or teams with strong players and programs?  The report includes a few examples of on-field success by conference/sport that show a generally positive correlation.

Collectives vs. Commercial NIL

The table that caught our eye at CleanKonnect was the distribution of Activities. vs. Total Compensation for Commercial ("traditional" NIL) vs. Collectives (Donors). 

The data illustrates a much smaller percent of all activities from Collectives but a large percent of overall total compensation, meaning the average compensation for a Collective activity is significantly higher than that of a typical Commercial activity. 

To understand the math, let's say there were 100 total NIL activities - 80 Commercial and 20 Collectives.

If each Commercial activity generated $100, that would be $8000 in total Commercial compensation. 

But that $8000 represents just 20% of the total compensation, meaning the Collective compensation would be $32,000 ($8000/20%) = $40,000 in total NIL compensation. 

The $32,000 in Collective compensation is spread out over 20 Collective activities, meaning each Collective activity generated $1600 in compensation.

So each Collective NIL activity is generating 16x more in average compensation compared to a traditional Commercial NIL activity.  

Breaking down the distribution into categories, Collective activities typically skew much more toward appearances (36%) compared to Commercial activities (7%).  The pessimistic interpretation of this data is the current infrastructure allows Collectives to pay athletes 16x more on average for less work (appearances) compared to Commercial opportunities (largely social media content creation). 

While there has been some punishment for Collectives or donors not following the NCAA's interim NIL policy, most notably the Miami saga from February 2023, new Collectives are continuing to form.  The report identifies that there are 200+ Collectives across all levels of college athletics, breaking down into the following distribution:

NIL Network reported back in June 2022 that the NIL Collective count had grown to 116 from 32 in just four months, and it appears that the up and to the right trend continued over the last 12 months.  Some Collectives did shut down, like TCU's Think NIL and others merged, like Penn State's two primary NIL collectives, Success With Honor and Lions Legacy Club for efficiency purposes.

Other Interesting Data Points

There were four other interesting data points to us.

Unique athletes receiving deals - Average of 43.6% of athletes per institution have received a deal

This number on first glance seemed high to us at CleanKonnect.  There are reportedly over 500,000 college athletes, so the data would suggest that more than 200,000 athletes have gotten at least one NIL deal.  OpenDorse's data between its one year and two year reports suggests there's been about $2B in NIL spend, meaning that each athlete on average will have earned about $10,000.  While the distribution is definitely right skewed* toward the positive outliers (the high earning athletes), an average of $10,000 for all athletes seems aggressive.

*A distribution is positively skewed when its tail is more pronounced on the right side than it is on the left. Since the distribution is positive, the assumption is that its value is positive. As such, most of the values end up being left of the mean. This means that the most extreme values are on the right side

Variety of businesses engaging - Average Brand Activity: 41% National | 13% Regional | 46% Local

A report from OpenDorse and Front Office Sports in December 2021 documented that:

When looking at the current distribution of NIL brand deals, 65.7% of deal spending has come from national brands with an anticipated first twelve-month spend of $380.6 million. Local brands accounted for 35.3% of the total spend with an anticipated twelve month expenditure of $198.8 million

So the 46% local in the most recent report suggests that local NIL deals became a much larger chunk of overall NIL activity from January 2022-June 2023 compared to July 2021-December 2021, which seems to hold because of the increase in Collective activities.

Full-time staff member dedicated to NIL - Schools with ≥1 FTE dedicated to NIL: 59% P5 | 15% G5 | 7% DI

Almost 3/5 of the ~60 Division I P5 schools have a staff member dedicated to NIL.  NIL Network had provided data back in January 2023 that showed just how quickly the NIL Administrator role was growing.

Third-party partnerships - 57% of NCAA Division I schools have ≥1 third-party partner in the space

Third-party partners would include companies like OpenDorse, Inflcr, CleanKonnect, etc. that offer some product or service to make navigating NIL safer, easier, and as a more potent tool for schools.

Full Report

Surprisingly this year's report was devoid of some simpler metrics that the one-year report included like what percentage of total NIL activities and NIL compensation came from each respective sport.  Skeptics of the report point out that OpenDorse has a bit of a monopoly on this data at scale, so it can be massaged to convey stories accordingly.  This report was tremendously helpful in deaveraging some of the NIL data that those who follow NIL see throughout the year. You can download the two year report in its entirety for your own viewing.