CEO Stories with Drew Russell, Intersport

POC: I’m here today speaking with Drew Russell, executive vice-president of Sports Properties and Media Assets at Intersport, a Chicago-based sports and entertainment marketing company. Drew has more than 20 years of experience in the industry and the business of college athletics.

And as I recall, Drew, we have some interest in this from the fan level, as well? So, Drew, thanks for joining us today on the “This is Capitalism” podcast.

DR: I appreciate it, Patricia, it’s good to get to know you and spend some time with you. I am professionally interested in this topic but personally interested as well as a big-time college sports fan myself.

POC: So, Drew, if we can let’s start off talking a little bit about how the name, image, likeness opportunity for college athletes came to be. For many, many years, the NCAA prohibited them from monetizing themselves. So how did it come to be that they can now monetize themselves and what has it meant for collegiate athletes?

DR: There have been a number of court cases that have taken place, one very famous case that was brought by a former basketball player at UCLA, Ed O’Bannon, and it had specifically to do with an EA sports videogame and how that videogame was using the intellectual property of the players to be able to promote itself.

Every state had a different law, different regulations. And some of those states went into play last summer. There was a lot of question as to whether or not the federal government would step in.

The NCAA was being pressured to make rules and regulations across its entire membership but what ultimately happened was they left it up to the institutions and states themselves to be able to govern this. And really, we are in a situation right now where there are very few clearly defined rules. A lot of states and institutions are doing things a little bit differently. But in the end, right now, for the first time ever, college athletes are able to monetize their name, image, and likeness in various ways.

POC: If there aren’t a lot of clearly defined rules, on the other hand there aren’t the clearly defined prohibitions that there were before.

DR: The one standardized rule that seems to be in place, and it can be interpreted a number of different ways, is pay for performance or pay for play. That it’s not necessarily legal to be able to say “hey, if you do X, Y, Z on the field, you are going to get compensated in this manner,” or “we’re going to compensate you to come play at this particular university without your name, image, and likeness.”

So that’s the one that has stayed standard, that’s more of a protection for the conferences and for the NCAA itself so that there probably aren’t rival leagues or other sanctioning bodies that are being started. But outside of that, there are very few regulations and rules and a lot of athletes have been able to take advantage of that, a lot of brands have been able to take advantage of that.

And by the way, we are still following these athletes, we are still loving our universities. And it’s, again, I think overarching sentiment to this has been good for these athletes. Good for these athletes to be able to finally take opportunity for this. And everything is moving seamlessly thus far.

POC: Okay, it seems like there are really three entities, if you will, or three groups with the potential to benefit from this. One is the athletes themselves. Two is sponsors and three are the schools for which the athletes play. Let’s first talk about the athletes. What does a typical deal look like for a college athlete who maybe isn’t on the radar of every professional sports agent or every professional team but is still a pretty darn good athlete?

DR: I think when this conversation first started, the big fear of the public was that the star quarterback or the star point guard or center, they were going to be the ones that dominated this category. And what has been really unique is each one of these athletes is their own brands. I mean, there is a gymnast at LSU that has four million followers.

POC: A male or female gymnast?

DR: A female gymnast, four million followers. There are so many that have built their own brands and have been able to do this. So, this has been very helpful for the Olympic sport athletes, this has been very helpful for female athletes that may not have the perceived exposure that the male athletes have.

There was a lot of talk this summer about the starting quarterback for Alabama and how he was receiving a million dollars in NIL deals right off the bat. I’d say the majority and the average that has been discussed out there is in the couple thousand-dollar range for athletes because in a lot of cases they are being paid as social media influencers. I think that is the most frequent type of deal that’s being done between brands and athletes themselves is utilizing their social media platforms to be able to amplify a brand’s message.

You had the starting quarterback at Clemson appear in a Dr. Pepper commercial this fall. So those elements are happening, and those social media posts are on behalf of local restaurants, on behalf of clothing brands. So yeah, they are posting on behalf of those saying” hey, I’m a believer in this product, I’m a buyer in this product, you should be too.” 

POC: Is it too soon to say the impact that is visible for sponsors of having these deals?

DR: I think it’s too early to say that. I think there are a lot of brands that jumped in, and it was exciting to see the brands jump in right away. I mean there were a number of deals struck at midnight the night the name, image and likeness became legal. But a lot of those brands have jumped in to get the PR value for it, to take advantage of the opportunity of people talking about their brand, engaging in name, image, and likeness activities beyond what they have actually paid for relative to the athletes.

I do think you’re going to see that market settle down a little bit next year and the following year because you are going to have certain brands that are going to say “all right, we went in, we did it, we may not necessarily have seen the return on it that we have seen when we do this professional athletes.”

But I think there are other brands that you’re going to be able to see that say “hey, this works really well for us. This is efficient, this is a great opportunity for us to be able to connect with this university, with this university community, and with the athletes themselves.”

But I think it is too early to tell. And by the way, every brand has a different way of measuring the impact on their business but there isn’t anything right yet that says hey, this has been a success for this particular brand or not.

POC: Are we seeing different kinds of sponsors jump in than what you saw before?

DR: I think you’re seeing a variety of brands get involved in the space. There are footwear and apparel companies, sports beverage companies, that have inextricably linked to collegiate sports over time and it has taken them a little bit longer to jump in and put their toe in the water relative to name, image, and likeness because I think they wanted to see how it was going to play out a little bit. Now they are getting a little bit more involved but again, their deals are not necessarily with the star quarterback or the center, they are taking very much different approaches to the space and creating stories around these athletes more than anything else.

POC: So would it be fair to say, Drew, that the big companies that we usually associate with being very active in sponsorship, with professional athletes, have maybe had to scale down their thinking when they are looking at athletes with obviously lower profiles who don’t have the proven track records of being stars or big names that the professional athletes do?

DR: Yeah, I think those brands have had to be strategic about their approach. Again, you’re dealing with 18- and 19-year-old kids, some of whom have a very strong grasp of who they are and what their personal brand is, but others are still developing that. I think it has been important for those bigger brands to determine who they want to align themselves with.

And I think what you’ve seen a lot is they are running campaigns and they are running collegiate marketing campaigns through the universities, conferences, NCAA networks and they are trying to find ways to integrate these athletes as a part of what they are doing. So, I’m not sure I would necessarily characterize it as scaling down, but I think they do have to take a different approach versus “hey, here is what we do on the professional side of the business.”

POC: It seems that there is a lot of opportunity for local business to capitalize on this though.

DR: I think there has been and that has been good for the athletes. I think it’s good for those local businesses. People don’t understand how much collegiate athletics and collegiate sports mean to the ecosystems of these college towns. I mean, there are longstanding businesses, restaurants, you name it, that are reliant on the crowds and the fan bases and everybody that becomes a part of it.

Those businesses may not have always necessarily had the opportunity or been able to achieve the investment level required to officially align with a university, so now this gives them the opportunity to be able to do that with athletes that may be more impactful for them.

POC: If somebody is a local star, has been a local star at the high school level and then they go on to play and play well at the collegiate level, there is probably a lot of pride that hometowns can take in supporting these athletes.

DR: Again, these businesses and brands have to look at it like they look at the rest of their marketing spends, whether they are marketing on social media, whether they are in a small town and maybe newspaper advertising or radio advertising is still impactful in that area. They have to look at these opportunities too and say “hey, how can my business be impacted by this particular individual?”

And as we know, some of these individuals coming from small towns are the biggest things that have ever happened to that town and ever will happen to that town. So, the ability for brands to rally support behind that individual is excellent.

POC: Well, it’s also a lot easier to get excited about an individual, especially somebody who people have had some contact with or some personal awareness of than it is an entity in a lot of ways.

DR: I think that can be the case, yeah. I definitely think that’s something that again they have to evaluate. But more so, fiscally they are able to do it where it can be a big spend when you want to go do a deal with a network, a conference or a university themselves.

POC: You raised a really interesting point a little bit ago, Drew, about these are 18- and 19-year-old kids. They may be savvy in social media; they probably have grown up with social media for the most part but they haven’t necessarily been schooled in or taught about monetizing it.  

So, is that the responsibility of the schools then to help teach them, help make sure that they are making good decisions? And you could put good decisions in the category of appropriate sponsors, good decisions in terms of what to do with the money you make? Even if it’s a couple thousand dollars that’s still a couple thousand dollars that the athlete didn’t have otherwise.

DR: I think that is one of the really great things that has come from this initiative. Because for many, many years I think athletes were being schooled on what not to say, on what not to do with their social media. What I didn’t think was happening enough was people educating and creating brand building opportunities for those athletes and talking to them about how they develop their personal brand and who they want to align with and what are their social causes and what are they advocates for and about.

And now, every university has to be able to do that because name, image, and likeness has become a part of the recruiting pitch. Every single university has to have some type of response and some type of program that talks about how they are going to assist the athletes in this specific area so that they can benefit from this as much as they possibly can.

And those universities are getting help from other third-party entities that have come on the scene to be able to establish this and do this. So, there are a number of different consulting groups, there are a number of different collectives that have been started that are all built with this in mind in order to continue to maintain a presence for these athletes in name, image, and likeness campaigns.

POC: Drew, the number of college athletes who go on to play professionally is obviously very small. It is presumably most players’ dream, but it is still small. And it is obviously too soon to tell but I’m imagining that this might also be an avenue for professional opportunity for these athletes who don’t go on to play professionally but all the sudden they have learned more about the sports business or the marketing side.

DR: Again, another benefit about this. Because for some people this is as high as their career will go. And for some sports this is the pinnacle of their sport, even beyond the professional side of things. So, their ability to be able to again build a social media presence, build content offerings, understand what it’s like to work for a brand and have to show up on time and have to tweet on time or post on Instagram and different things like that can all be beneficial to the growth process of the individual.

POC: There had been some concerns, I believe, that if athletes were allowed to monetize name, image, and likeness that they might be distracted by the amount of time they are spending on social media. But is there any sense of how this has turned out, that this, instead of being a burden for the students, has actually simplified this for them?

DR: Yeah, I think it has simplified things. I actually think there was the thought that these athletes would just be checking the box and accepting every possible deal.

Based on my dealings and what I found, these athletes have become very selective in terms of who they want to align with and whether or not their time – that they are either dedicating to their craft or their academics or their family or social life or whatever it may be – they are balancing whether or not “hey, is this really worth my time to be able to execute on this particular deal or vice versa”” So I think they have been very selective in that process.

But again, these are… I think that’s the thing that people don’t realize when you are not intimately involved and engaged in collegiate athletics is the nature of how regimented these athletes’ lives are. So, I think they are well suited to be able to understand what time management means and how they can balance what is happening in the brand and the name, image, and likeness space with their other pursuits and duties.

POC: What are the downsides or the potential downsides? We talked a little bit about there was the fear that okay, it could be a distraction for students. On the other hand, you’re making the point that it helps keep… it really plays into the amount of discipline that an athlete has to have.

And I would also imagine then it really, if they have professional sponsorships, it also helps keep them accountable. They’re in danger of losing these sponsorships if their behavior off the field is unbecoming or whatever the standard might be. But what are some of the other downfalls again from either the sponsor perspective, the school perspective, or the students’ perspective?

DR: From a brand perspective you’ve got to make sure that you’re generating a return on investment. And that’s going to be measured differently by each particular brand but if you jump in and attach yourself to the wrong athlete, an athlete that may not be as committed, an athlete that may be just checking the box and hoping for the check, may not result in significant ROI.

I think for the athlete, again, you want to be able to align yourself with the right brand that’s going to share the same values and morals that the athlete has.

Surprisingly, there haven’t been a lot of stories, none that I can think of right now, of a situation going south with name, image, and likeness relative to either the brand or the athlete in terms of a particular athlete getting in trouble or a particular brand doing something unscrupulous and the athlete being a part of that. So, for the fact that we are almost a year into this thing, and we haven’t had a ton of stories like that, I think shows that this isn’t as earth shattering a movement as people thought it once was.

POC: What is the danger for schools? Or is there any downside for schools?

DR: Listen, the disparity in resources for universities is the biggest downside. And again, there are only a certain number, a finite number, of Division I institutions that are actually making money off of college athletics, probably less than 30.

So certain institutions are going to be able to put resources, educational resources, support resources together that others aren’t going to have access to. So, on the one hand you could say that’s a bad thing and on the other hand you look at it and say, “you know what, that has always been the case with collegiate sports, whether it has been above board or below board, in previous years.” And so, I think those economic disparities between the institutions can be challenging.

I think some institutions are afraid long-term their piece of the pie, the sponsorships that they have generated over time, is that in jeopardy at all because now brands have the ability to be able to go out and spend and market in other ways? I think that was a little premature though. I think universities are becoming more savvy now and understanding that hey, if we work together with these athletes, we can create an even more impactful program for a brand.

POC: Drew, you also said that you are a big fan of college athletics. So, from the fan perspective, does this change anything for you?

DR: I woke up on Saturday morning each week this fall and turned on college game day and watched football games all day and I can’t recall once where I thought in the middle of the game, “man, I can’t believe this guy is making more money than me.” [Laughs.] Or, “man, he threw an interception, he probably wouldn’t have thrown that interception if he wasn’t spending his time endorsing this brand.”

I think fans look at this as an opportunity for their athletes and their beloved institutions to continue to perform on the biggest stages. And I honestly… my personal opinion is that the athletes may be putting more pressure on themselves because now they are not only playing for their university, for their teammates, for their families, but they’ve got a business that’s behind them too.

So, if you’ve got some high-profile athletes that may not have performed in the way that they were supposed to perform, they may be putting more undue pressure on themselves. But it has not changed my love affair for college football, college basketball, college baseball, and the other sports. And I don’t think I have seen any studies or any research that has indicated that differently for others either.

POC: So, there is no sense of that now that they’re monetizing it, it’s not as pure, if you will?

DR: Yeah, I think you’re always going to get your old-school thinkers that “this is not the college football that I was brought up on, this is not the college basketball.” But guess what, the world… We are living in a different world. So, you’re always going to have that perspective, but I think that perspective is quickly changing.

 POC: Well to your point, there is always going to be something that changes the perception.

DR: Well, I mean listen, it used to be… You used to have to sit out as a freshman in all of college sports before you participated. That changed and freshmen are part of this.

What I want to reiterate is everybody thought that this would be the downfall of college athletics. And everybody thought “wow, the rules are so disparate and different by state.” And it just hasn’t had the negative impact that everybody thought was going to become a part of this.

And in the end, it’s a good thing for everybody involved. As long as it continues to use the boundaries of our sports and as long as these athletes, who really again pour their blood, sweat, and tears into these institutions and universities, as long as they have an opportunity to be able to get something out of this too, just like any other regular student would be able to go out and get a job or monetize their name, image, and likeness if they were a dancer or a model or an actor or an actress, why should they have the opportunity to be able to go out and do that but the athlete should not?

POC: Fair point, fair question. And I think that question has now been fairly answered. Drew, Thanks so much for joining us on “This is Capitalism, the Podcast,” and I look forward to chatting with you another time.

DR: Thank you so much, Patricia, it’s been a pleasure.