Players Era Festival benefits from nifty NIL loophole

The GIST: The Players Era Festival — a new men’s college basketball tournament — may not include women’s teams (yet), but its payout structure highlights a unique workaround that allows student-athletes to earn financial rewards without technically violating NCAA rules. Fascinating.

The tournament: The three-day event tipped off yesterday as eight teams, including Oregon and Notre Dame, compete for up to $9M in NIL rewards. Each squad will see at least $1M awarded to its school’s NIL collective — an astronomically high number that has created some skeptics, since such tourneys typically only generate $1M to $3M in revenue.

How it works: Per Yahoo Sports, to comply with the NCAA’s rules against paying athletes directly for their performance, presenting sponsors such as Starbucks, Eli Lilly, and MGM Resorts pay the tournament organizers, who then allocate money to each school’s NIL collective. Coaches then decide how to distribute the money to athletes.

• NIL collectives have presented a fascinating loophole that allows companies and donors to financially reward athletes while technically abiding by the NCAA’s rules.

The goal: Organizers for the Players Era Festival have big plans, including expanding its bracket, adding a women’s basketball tourney, and awarding more than $50M in NIL incentives by 2027. It remains to be seen how the first edition goes, but if organizers really have the money (and sponsors) to back up these claims, it could be an interesting space for brands to activate.

Zooming out: Women’s college basketball is still fighting to see its tourneys treated equally: It only landed the March Madness moniker in 2022 and teams still don’t earn financial rewards for their March performances like the men do. But things are scaling up quickly as viewership rises — and for any brand footing the bill for a comparable women’s tourney, the wins would be big.

• Companies like State Farm — which just signed USC star JuJu Watkins as its second-ever college NIL athlete — are already recognizing women’s basketball players’ potential brand power. In March, SponsorUnited reported women’s college basketball enjoyed a 60% increase in the number of NIL deals YoY, far greater than its men’s counterpart. Check.