💰 This Hidden NIL Rule Change is Going to Cost Athletes Millions

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I have a prediction about this TikTok ban that I will lay out at the end of this week’s newsletter, but before we get there, I want to say THANK YOU!

Whatever happens on January 19th (or before/after), this has been a great reminder that having a direct line of communication with your community is your greatest asset as a brand, creator, business, etc.

That’s what this newsletter has become for me, and it’s why I love doing it so much. So, thank you for reading, sharing, and replying with your thoughts and ideas… now onto the important stuff!

In today’s newsletter:

🗞 The Big Story: This Hidden NIL Rule Change is Going to Cost Athletes Millions

📉 Biggest Loser: The Rare Arena Design Costing the Timberwolves Millions

🏆 Winner’s Circle: The $20M NFL/MLB Stadium that (Almost) Floated in the Ocean

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🗞 The Big Story

A rule change is coming to college sports that almost no one is talking about, and it could be the reason athletes start getting paid way less from NIL collectives starting this year.

Background: It’s no secret that since paying college athletes for their name, image, and likeness was approved in 2021, schools have been using it to pay their players de facto salaries.

And the money isn’t slowing down, with reports that top schools like Ohio State spent upwards of $20 million in NIL money this year to construct its football roster.

Revenue Sharing: However, starting July 1, this is all about to change because instead of just NIL collectives being allowed to pay players, schools will likely be allowed to pay athletes directly up to a cap of around $20 million per year.

But how does this affect NIL?

Cracking Down: The proposed House settlement calls for creating a clearinghouse operated by Deloitte, which will be tasked with vetting deals worth more than $600 to ensure they are fair market value and not simply pay-for-play payments being passed off as “NIL deals.”

Experts believe this rule change will result in significantly less money being passed through NIL collectives going forward, instead of the $15-$20 million we’ve seen over the past few years at the highest levels.

But there is a silver lining to all of this for student-athletes.

Cashing Out: This rule change wouldn’t go into effect until July 1, and many industry experts are pointing out that collectives are trying to empty their coffers as much as possible over the next six months.

In fact, the NIL market has seen a roughly 40% spike in average compensation because of the threat of this new rule.

Welcome to a new age of college athletics.

📉 Biggest Loser

The Minnesota Timberwolves have a problem that no other NBA team has, and it’s costing them tens of millions of dollars every single year.

Missed Opportunity: Even though the Timberwolves put together one of the league’s most exciting post-season runs last year, making it to the Western Conference Finals, the team didn’t technically sell out a single one of its games.

But it’s not because fans didn’t want to see their team play.

Instead, since 2022, the Timberwolves have been forced to tarp off nearly 1,000 seats in the upper deck of their arena due to the 34-year-old venue’s poor design.

Dated Design: The Target Center, which is owned and operated by the city of Minneapolis, is the second-oldest venue in the NBA:

1. Madison Square Garden (New York Knicks): 1968

2. Target Center (Minnesota Timberwolves): 1990

3. Delta Center (Utah Jazz): 1991

4. Footprint Center (Phoenix Suns): 1992

5. United Center (Chicago Bulls): 1994

Even though Minneapolis helped fund half of a $140 million renovation project in 2017, the team still hasn’t been able to uncover those roughly 1,000 seats in the upper level because of poor design, which leads to long lines for bathrooms and concessions, resulting in what one employee plainly described as a “sh*tty” experience.”

But still, it’s not those tarped-off seats that have proven to be the team’s biggest issue.

Because while there are plenty of “old” arenas in the NBA, Target Center is the last one with an “upside down” design. This simply means that there are more seats in the upper bowl (10,000) than there are in the lower bowl (8,000).

Missing Out: This design makes it so that the arena has one of the lowest premium seating capacities in the NBA. This is significant because the average NBA team makes over 50% of their ticketing revenue through these premium sections.

For context, the Golden State Warriors, who lead the league in this area, made $250 million in revenue from premium seating in 2022 after moving from their old arena a few years prior.

Potential New Arena: Prospective team owners Alex Rodriguez and Marc Lore have already expressed interest in building the Timberwolves a new arena in Minneapolis if they were to buy the team, but unless they want to pay a $50 million penalty for breaking the team’s lease with the city, that can’t happen until at least 2035.

🏆 Winner’s Circle

The Chargers almost built a stadium in the middle of the ocean, but the craziest part is that this idea was actually genius.

Background: In 1964, the city of San Diego was looking to build a new stadium for its football team and future MLB team. So a local architectural firm proposed to then-Chargers owner Barron Hilton a design for a 53,000-person, multi-purpose stadium that not only could host football and baseball games but aquatic events like jet-ski and surfing competitions.

But how?

Rough Draft: The stadium was designed to float in San Diego’s Mission Bay. The idea was that the grandstand behind home plate would be the anchor, constructed on solid land and hold 13,000 fans.

Then, the two sections down the first and third base line, which would hold 20,000 fans each, would float on the water so that they could be moved to flank a football field that would also be built as an extension of the baseball field.

One engineer at the time even suggested having circus elephants push and pull the stands back and forth.

As crazy as this idea sounds, it actually almost happened.

Honeymoon Phase: For instance, a well-respected sports columnist in San Diego called it “the most daring, yet practical concept in stadium building since Houston discovered the dome.” And Chargers owner, Barron Hilton loved the idea, saying it would be “the finest home for a football team” he could imagine.

The city even liked the plan, too, since it was both unique and cost-effective, with the architectural firm estimating that the floating stadium would only cost $20 million to build, similar to other “normal” stadiums at the time.

But when they started to take a second look at the designs, things started falling apart.

Over Budget: Suddenly, the construction cost ballooned to $40 million, which led to the city building San Diego Stadium, now known as Qualcomm Stadium, in 1967 for $27 million.

This stadium was home to the Padres until 2003 and the Chargers until they left for LA in 2017.

Talk about a missed opportunity.

⏱️ In Other News

• How the Buffalo Bills are building an “air roof”

• Who’s your NFL MVP? A flow chart.

• RIP to the GOAT.

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👋🏻 Happy Friday!

After weeks of following the news in anticipation of a potential TikTok ban, I think I’m finally ready to give my prediction:

January 19: TikTok goes dark in the U.S. for 24 hours.

January 20: On Trump’s first day in office, he extends the TikTok ban by 90 days and vows to “save” the platform by facilitating a sale to U.S. buyers.

March 1: Trump announces that he has facilitated a deal that includes Elon Musk, Larry Ellison, and capital from Kevin O’Leary’s “The People’s Bid” to buy a majority stake in the platform.

This deal, however, will be largely performative as Bytedance and the Chinese Government will still retain partial ownership and influence over the platform. Still, it will be enough for Trump to call it a “successful and sufficient divestiture,” allowing the platform to remain operational in the U.S.

What did I get wrong?