The only way there's a problem is if the paying entity doesn't issue a 1099 or the receiving entity doesn't pick up the income. The IRS doesn't care about what the FMV is for the services...they just care that the deduction is picked up as income elsewhere.
When will the IRS focus on NIL payments?
- Thread starter cloneonledge
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Maybe scholarship could/should be tied to need. Establish cost to put athlete on field. Athletes still need school for a stage. Why do I want to pay a child millionaire's scholarship? School loyalty only goes so far. If I just want to be fan of sports team, it would be cheaper for us to be a pro sports ticket holder. We could afford limousine service to games.
- Mar 27, 2006
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A school certainly could tie athletic scholarships to need if they wanted to. Nothing stopping them from doing that. But unless every other school (or at least the vast majority) agreed to do the same, it would basically be shooting yourself in the foot.
Isn't a job worth what the market brings. If the big boys are paying 7 figures our guys shouldn't be effected.
Or, to bring it closer to home for some people, if a house is listed at $200k, but sells for $300k, whose to say the house isn't worth $300k? This is fundamentally the same argument as the OP is saying.
The buyer determines the worth.
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It’s hard to determine the value of their endorsements, with some exceptions like Zion or Caitlyn Clark, most college athletes would have little to no marketing value without school brands built by alumni and/or tax payers. Certainly nothing like 500k per year and greater.
Is JBo’s fair endorsement value that of a starter on a Big Ten team or that of a fringe G League guy? The G League players are better players on average compared to college yet their endorsement value is far lower.
Or as that of a dbag ice thrower who knows how to take a punch?
Absolutely and we know the NCAA or similar organization run by the schools (presidents owned by rich alums) won't. Too many egos involved.
They are worth what somebody is willing to pay them. Is there any other situation where we are questioning whether someone's income really measures their value and think some of it is a gift? No, it's a ridiculous thought. Just as it is in regards to NIL.
A small % of their NIL deal is actually for endorsement value and the majority of it is a one year free agent pro basketball contract paid by alumni directly and by alumni/tax payers who created the brand.
I’m sure with a few years data they could compare endorsement money after college to NIL payments to find the difference. Every year about 20-25 players will still get endorsement money after college, most will get far less or almost nothing.
I have no idea how “gift” plays in or at all, but these are not largely image/likeness/endorsement deals.
If Tyrese Hunter went g league he’s not getting a 600k endorsement deal, it’s a free agent contract to play a year for a specific team. I totally agree those free agent contracts are whatever the market brings...just there are other realities. Reality #1 is that they are contracts to play, not NIL deals. Reality #2 is that there's a much higher demand to pay them to play for large university athletic teams vs what they can make a few years later as pros. I'm not an accountant or lawyer but I assume there could be some messiness in that they are getting NIL deals that aren't really NIL deals.
My guess is if they had just said "it's legal to pay players to play" or "it's legal for boosters to play players to play" this would all be cleaner and more lock tight legally. Because it's supposed to be for NIL and it really isn't, it wouldn't shock me if there are some legal messes or further major regulation at some point.
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That’s because after college most aren’t continuing to play a sport to obtain endorsements. Just like how when most pro athletes retire their endorsements also go away except for the rare exception.
That's my point. Every year 10-20 players really do bring a ton of value to a school/community and would be able to get massive endorsement money if college sports didn't even exist, just a handful.
It's all pay to play for the vast majority, almost none of it is "NIL" or "endorsement". In terms of pay to play I'm sure the market is on its way to finding the true value of these college players to fans/boosters/alumni...to play. Not the true value they have to sell products/services, not even close.
Like I said, I'm not a lawyer or an accountant. It just wouldn't shock me that even an average accountant could compare some endorsement deals of college players to their future pro player endorsements and determine what % of their college NIL was a contract to play. It's not really what it is labeled as and that has to open up potential problems. If the term wasn't "NIL" it'd all be cleaner and more honest, they are not really NIL payments or endorsement payments.
Who are you to judge that? Is Lebron James endorsements mostly a gift? If he endorsed Cyclone Fanatic he wouldnt get millions? Isn't it just the brand of Nike being huge the reason they pay him so much, and not his inherent endorsement value?
I have no idea about "gift".
But it's very easy to see an NBA player's contract and their endorsement deals. Same for a G League player which is the best most college players can hope for and the salaries and endorsement deals are much lower than a lot of NIL deals even for average players.
The college players are only getting an endorsement deal and a scholarship per the law, but that's not what is really happening. For most of them the vast majority of the endorsement deal isn't really an "NIL" payment, it's their contract to play.
There has to be some legal opening because the actual court cases were about NIL, they weren't about player contracts. An average accountant could easily compare some years and determine what amount of NIL deals are actually for NIL, my guess is 5% at best.
When I was waiting tables I knew some waiters who got busted by IRS for lying about their tips because their cash tips were reported at just 5% and their credit card tips were 20% they could not fake. It would be very easy to prove how much players are actually getting for NIL and how much their pay to play contracts are. See what their endorsement value is the first few years they get a separate basketball contract and separate endorsement deals.
You think Tyrese Hunter got 600k from Texas because that's how much he's worth selling cars and tshirts? A small % was for his NIL, the vast majority is a contract to play basketball for Texas for a year.
That's just reality.
Damn you got a source for that number outside a message board? Like an actual one, not someone saying they heard he got that much?
People debate with him if it's 500k or 600k. It's not even that high compared to what a lot of players are getting.
Even if he only got 100k, the majority of it is a contract for him to play at Texas, not because they're dying for a short point guard from Wisconsin and Iowa State to sell people Chevrolets in Austin.
I'm just pointing out the payments are very obviously not for NIL yet the court cases were about NIL. I have no clue if the OP makes any sense regarding "gifts", but to my admittedly ignorant legal mind I would think there are some openings because the court cases were about endorsement deals and the payments very obviously aren't endorsement deals.
Please find me any court cases where the IRS went after a person trying to say their regular income was a gift? There is no federal law about pay for play and this even if it was all that happened, it would just be income, not a gift.
The IRS doesn't audit me to see if I actually brought value to my company commiserate with my salary. Maybe I slacked off all yeah. Why won't the IRS decide that some part of my salary is a gift.
This just seems like sour grapes because Iowa State might not be able to compete as well as others in the NIL world. Guess what, it's not like we were competing for championships before NIL. Plus, our coaches seem well positioned to moneyball this. Finding value where others do not. Chemistry, passion, team building.
So you can’t provide a source for how much he got. That means you also can’t say a “majority” of a mysterious number is for a contract to play at Texas.