What are Cal's plans to compete in this environment?

Story follows:

"The Texas Tech Lady Raiders made history this week, signing a record NIL deal with marketing agency Level 13.

The program agreed to a pact on Thursday that will allot $25,000 to each player on the women's basketball team. According to Front Office Sports, the NIL deal is the largest of its kind for any women's basketball program.

"We are proud to announce that Level 13 Agency has committed $25,000.00 per Lady Raider in the Women's Basketball Locker Room! We see you, we hear you, and we support you, ladies!" Level 13 said in a statement released Thursday afternoon.

A video shared on social media by KAMC's Mason Horodyski captured the moment the Lady Raiders players received word of the deals during practice at the Dustin R. Womble Basketball Center. Players can be seen smiling and embracing in the short clip as assistant coach and former WNBA player Plenette Pierson made the rounds to hug and congratulate the entire squad."

(Source: Texas Tech WBB Signs NIL Deal for $25K per Player)

On Instagram, it appears that both Jazlen Green and Jayda Curry have some type of clothing deal because both are doing photo shoots with references to their respective clothing brands.

I'm guessing Mia Mastrov also has some type of deal given all her followers.

SFCALBear72 said:

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On Instagram, it appears that both Jazlen Green and Jayda Curry have some type of clothing deal because both are doing photo shoots with references to their respective clothing brands.

I'm guessing Mia Mastrov also has some type of deal given all her followers.

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Good examples of how much we don't know about NIL. The involvement of 3rd parties, even those with boosters disguised as supporting companies, is still the X factor. And logical to assume that some (legit) companies would rather be involved with higher profile (ie. social media presence) than maybe a starting right guard from the football team.

Someone asked what the ROI on these Texas Tech players might be and the response was telling.

It was that there may not be an immediate ROI but that they hope to get dividends later with recruits and transfers.

So instead of a kid being offered a sum of money because of his prospects they are taking the reverse approach and saying "This money is available to all kids that sign."

That is a pretty serious corruption of NIL, because how can you offer to pay for NIL of a player you haven't even identified?

Laundry is not free.

So, if the $25,000 is a one time signing bonus, it must be taxable......Athletic Scholarships are not taxable, right. My point is: if the student athlete becomes a contract employee of the instituition, will they have to report the cost of tuition, etc. they are given as taxable income? Has the IRS been consulted by the NIL departments? Frankly, it seems NIL is open to loopholes and abuses. I being just a little sarcastic.....Rutgers WBB is advertising for walkons as they only have 8 players. Maybe they should offer a Texas Tech like NIL deal to perspective signees.

I am open to comments and responses.......

Ashfield63 said:

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So, if the $25,000 is a one time signing bonus, it must be taxable......Athletic Scholarships are not taxable, right. My point is: if the student athlete becomes a contract employee of the instituition, will they have to report the cost of tuition, etc. they are given as taxable income? Has the IRS been consulted by the NIL departments? Frankly, it seems NIL is open to loopholes and abuses. I being just a little sarcastic.....Rutgers WBB is advertising for walkons as they only have 8 players. Maybe they should offer a Texas Tech like NIL deal to perspective signees.

I am open to comments and responses.......

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The NIL money definitely is income and taxable.
With a couple of labor attorneys, I've raised the issue of taxes on student athletes if the courts count them as "employees" because then it would seem to be compensation for services. And, of course, the issue the becomes what is the "income" from the tuition waiver, as some schools charge the out-of-state tuition rate for all athletes (which I think is the case with Cal).

The students would be contractors and file a 1099. Presumably their total income is not going to be much more than $25,000 so the tax will not be that much. And even if it were 20%, and the net to the athlete was $20,000, that's a lot better than $0.

ClayK said:

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The students would be contractors and file a 1099. Presumably their total income is not going to be much more than $25,000 so the tax will not be that much. And even if it were 20%, and the net to the athlete was $20,000, that's a lot better than $0.

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So, the value of the scholarship doesn't count as income if they are contractors?

mbBear said:

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ClayK said:

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The students would be contractors and file a 1099. Presumably their total income is not going to be much more than $25,000 so the tax will not be that much. And even if it were 20%, and the net to the athlete was $20,000, that's a lot better than $0.

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So, the value of the scholarship doesn't count as income if they are contractors?

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Interesting point, but I wouldn't think so. It's not direct income. And of course the actual cost to the university of the scholarship is near zero.

ClayK said:

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mbBear said:

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ClayK said:

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The students would be contractors and file a 1099. Presumably their total income is not going to be much more than $25,000 so the tax will not be that much. And even if it were 20%, and the net to the athlete was $20,000, that's a lot better than $0.

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So, the value of the scholarship doesn't count as income if they are contractors?

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Interesting point, but I wouldn't think so. It's not direct income. And of course the actual cost to the university of the scholarship is near zero.

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Well, one could argue that every scholarship given takes away from a potential slot of revenue.. that said, not sure who benefits from that argument....
Obviously there specific language to all of this, and I am way out of my depth here, but if my moving expenses count as taxable income, not sure how the "other benefits" to the student-athletes are not taxable? Apples and oranges?

ClayK said:

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The students would be contractors and file a 1099. Presumably their total income is not going to be much more than $25,000 so the tax will not be that much. And even if it were 20%, and the net to the athlete was $20,000, that's a lot better than $0.

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In non- NIL cases there is a huge phantom income problem

Let's say Stanford gives you a stipend which you spend on school related items, room and board valued at $80K. Anything over $5,250 is taxable for federal purposes and you also have to pay state taxes. That is about 17K federal tax and around $4K for California. So the athlete is coming $21K out of pocket absent NIL or other financial help. THIS DOES NOT INCLUDE AND EMPLOYEE TAXES SUCH AS SOCIAL SECURITY, ETC The Furides are on record btw as saying the will fold their tent if they have to treat athletes as employees.

This is an area in need of major federal legislation.

This is not an area that needs major Federal legislation. Schools should get out of the professional football business.

I think there's a significant difference between being an employee and a contract employee. Technically one could argue that athletes are part-time employees, but only if they receive money from the university. Their status in regards to their NIL sponsor is clearly that of a contractor -- thus a 1099, and none of the other employee tax issues.

If the IRS cracks down on student stipends, etc., it would have to do the same for all students who get anything from the university (drama students, etc.), and the ROI would be minuscule.

Bottom line (so to speak): NIL recipients will file 1099s, pay minimal taxes and have a lot more money than they did before. The universities will not have to consider scholarship students as employees and thus there will be no Social Security taxes, etc. So NIL is here to stay, and it should be. Just like any other adult, young people deserve to be paid what the market believes they're worth.

bearchamp said:

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This is not an area that needs major Federal legislation. Schools should get out of the professional football business.

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Well, someone has to have the jurisdiction to make that happen....and define what it is in the first place.

The problem is that without regulation and limitations, the highest bidder will always win. At least in the NBA and the NFL, there are drafts and salary cap limits to give everyone a reasonable chance.

Since colleges are sponsors, not owners, and their main business is unrelated to athletics, no one -- except the broadcasters -- is totally committed to the survival of the industry. In the NFL and NBA, the owners know they need all franchises to be competitive and will make sacrifices to do so. Why should UCLA sacrifice for Cal?

(And it wouldn't surprise me if a significant minority of university administrations would be happy to see big-time college sports go away.)