Ok. Looking for some insight on NIL investment for the school and for large donors
School standpoint. If they have a 5M NIL, how are they generating 10% profit off of that? How much more revenue can be generated?
Individual like Mike R or others. Giving 1M, how they getting$$$ back
For part 1, which is most relevant with rev sharing - if the school is spending $5M on NIL, the quick answer is they generate a 10% profit off that if they sell $5.5M more in ticket and sponsorship sales than they would have if they spent $0. I'll forget sponsorship for a moment and look at only ticket sales for simplicity. If we assume the average SHU ticket price is $50, they'd need to sell an additional 110k tickets (~6,900/game w/ 16 home games) as a result of that $5M NIL spend to generate a 10% profit. Again, that's obviously simplified - some of that return will come from sponsorship and general donations, plus the NIL spend isn't limited to $5M or $0. It's a matter of finding that point of diminishing returns where additional spend will no longer keep pace in its ability to drive revenue. That said, it would be very difficult for SHU to realize a profit on NIL spend in year 1. The more realistic approach is likely to accept financial losses in the first few years of rev sharing, viewing it as an investment in a winning and profitable future.
For part 2 - this answer actually also has multiple parts. Mike R isn't getting any return and doesn't care about getting any return on his NIL spend. He's just there to be SJU's George Steinbrenner and spend what it takes to see his team win. Even if he has athletes do a little something for Vitamin Water, it's not even remotely proportional in value to what he's paying them. Individual NIL contributors in general don't get any sort of return other than hopefully the joy of seeing their team win.
For outside NIL spend that can generate a return, there are 2 main types - direct returns and media value.
The only businesses that are going to see any significant direct returns are ones that can profit directly from a team winning. That's pretty much just the schools, who previously couldn't pay players directly - but in theory could include businesses like Learfield or perhaps Ticketmaster or a ticket broker a school may choose to partner with. These businesses make money when the schools sell tickets and the schools sell more tickets when they win, so theoretically they would have the most to gain by spending on NIL. Other examples of this would include selling player licensed merchandise, paid autograph sessions, athletes hosting camps, etc which can add up over time but is a fairly small piece of the pie.
The other side, which is where most NIL spend goes (or is at least claimed) is media value. These businesses aren't pocking direct returns on their NIL spend, they're calculating the media value they get from it. So if company X pays player Y NIL money to promote their product with Instagram posts, they'll look at the total views and engagements they get from those posts and compare it to what they'd have to pay Instagram directly to promote their own posts to generate that same viewership and engagement. To look at an example, a quick Google search says the average Instagram and X CPM (cost per thousand impressions) rates for promoted posts is ~$6.50. So assuming that number, if they paid a college athlete NIL money to promote their brand on Instagram and the athlete's posts generated 1 million impressions, the media value is $6,500. So if the company paid the athlete less than $6,500 they got positive value from the deal. If they paid the athlete more than $6,500 they'd have been better off just paying Instagram directly. So for an athlete to legitimately earn $100k in NIL value with a social media deal, they'd need to generate well over 15M impressions for the business paying them. Again, that's a bit simplified because things can vary based on a company's goals, there are other cost models that can be used (such as cost per click or cost per engagement), and those costs can vary based on factors such as how targeted the promotions are, but it should get the general idea across.
Apologies for the long-winded post.
