NFTs and Financing the Future of Potential Stars

NFTs are getting a lot of press.  For sure, NFTs have made a big splash in the art world.  I had an interesting conversation with a friend today about financing young athletes through the monetization of their right of publicity since the NCAA (and states) have begun allowing collegiate athletes to profit from their image etc.  One interesting issue concerns aspiring professional tennis players.  Often those players must make a decision between attempting to finance a shot at a professional career—a very expensive prospect, or go to college and see what develops.  Notably, as a friend mentioned to me, there are numerous excellent young tennis players who cannot finance the expenses to start a pro-career—expenses such as travel, coaching and trainer fees, hotel etc.  Many have to give up on a promising career because of a lack of funding.  Interestingly, this is a sport where economic class plays a big role—kids with less resources are unable to be developed and never get a legitimate shot at the pro-tour.  Allowing young players to monetize their right of publicity without damaging college prospects may be an interesting way for them to gather resources to support a professional career in the future and develop (maybe crowd-funding works).  Local businesses, family, friends and others could invest in young players early.  But, what if we could sweeten the deal?  What if we could use NFTs to create a market for, as an example, electronic playing cards for young athletes?  Can you imagine what the NFT “playing card” for an athlete such as a young Andre Agassi, Messi, Ronaldo, or Michael Jordan may be worth after they develop in the future?  There are a lot of details to sort out, but you can see how a market can develop creating an enormous amount of value and good (and yes, a potential for bad).  See here for Topps entry into the NFT market for trading cards: Topps Digital Launching Baseball Card NFTs (beckett.com).  What if we could expand the concept further?  There's no doubt that we are at a place where maximizing the potential of human resources is our greatest challenge.  This could be a way to help.  Extend it to brilliant children to finance their education?  IP and NFTs at their best?  It's an interesting thought experiment. 

US Collegiate Athletes may Profit from Name, Image and Likeness

The National Collegiate Athletics Association, an organization which essentially regulates collegiate athletics in the United States, has voted to begin the process of allowing student athletes to profit from the use of their name, image and likeness.  This vote was made in light of California’s recent decision to allow collegiate student athletes to be paid for playing.  Historically, collegiate student athletes were prohibited from receiving payment.  The NCAA press release states: 

Board of Governors starts process to enhance name, image and likeness opportunities

Each NCAA division directed to immediately consider modernization of bylaws and policies

October 29, 2019 1:08pm

In the Association’s continuing efforts to support college athletes, the NCAA’s top governing board voted unanimously to permit students participating in athletics the opportunity to benefit from the use of their name, image and likeness in a manner consistent with the collegiate model.

The Board of Governors’ action directs each of the NCAA’s three divisions to immediately consider updates to relevant bylaws and policies for the 21st century, said Michael V. Drake, chair of the board and president of The Ohio State University.

“We must embrace change to provide the best possible experience for college athletes,” Drake said. “Additional flexibility in this area can and must continue to support college sports as a part of higher education. This modernization for the future is a natural extension of the numerous steps NCAA members have taken in recent years to improve support for student-athletes, including full cost of attendance and guaranteed scholarships.”

Specifically, the board said modernization should occur within the following principles and guidelines:  

• Assure student-athletes are treated similarly to non-athlete students unless a compelling reason exists to differentiate. 
• Maintain the priorities of education and the collegiate experience to provide opportunities for student-athlete success. 
• Ensure rules are transparent, focused and enforceable and facilitate fair and balanced competition. 
• Make clear the distinction between collegiate and professional opportunities. 
• Make clear that compensation for athletics performance or participation is impermissible. 
• Reaffirm that student-athletes are students first and not employees of the university. 
• Enhance principles of diversity, inclusion and gender equity. 
• Protect the recruiting environment and prohibit inducements to select, remain at, or transfer to a specific institution.

The board’s action was based on comprehensive recommendations from the NCAA Board of Governors Federal and State Legislation Working Group, which includes presidents, commissioners, athletics directors, administrators and student-athletes. The group gathered input over the past several months from numerous stakeholders, including current and former student-athletes, coaches, presidents, faculty and commissioners across all three divisions. The board also directed continued and productive engagement with legislators. 

The working group will continue to gather feedback through April on how best to respond to the state and federal legislative environment and to refine its recommendations on the principles and regulatory framework. The board asked each division to create any new rules beginning immediately, but no later than January 2021.

“As a national governing body, the NCAA is uniquely positioned to modify its rules to ensure fairness and a level playing field for student-athletes,” NCAA President Mark Emmert said. “The board’s action today creates a path to enhance opportunities for student-athletes while ensuring they compete against students and not professionals.”