MW Billionaire Larry Ellison helped give a high school student $10 million to play football for Michigan - and gave us a glimpse behind the NIL curtain

By Weston Blasi

Many universities give out NIL deals worth millions of dollars, but we rarely find out who the individuals are behind the money

It's now common for college athletes to make millions of dollars from NIL deals. And after billionaire Larry Ellison recently helped a high school quarterback get at least $10 million to play for the University of Michigan, we get a better look into how some of the biggest NIL deals are put together.

This week, Bryce Underwood, the consensus No. 1 high school football player in the class of 2025, changed his mind about playing football for LSU next year when he committed to play for the University of Michigan instead. Shortly after, reports circulated that Underwood would get at least $10 million over four years from Michigan's NIL collective, Champions Circle, according to reports from the Detroit News, CBS Sports and the New York Post.

Michigan's NIL collective said it wanted to personally thank "Jolin and Larry Ellison who were instrumental in making this happen by providing Champions Circle with invaluable guidance and financial resources."

According to NIL tracking website On3, many universities give out NIL deals worth millions of dollars to some of their athletes. For example, 1870 Society has helped connect student-athletes with Ohio State to the tune of $20 million, and Spyre Sports Group has procured $30 million in NIL deals for Tennessee athletes since July 2021. But we rarely find out who the individuals are behind the money.

Larry Ellison, the co-founder of Oracle $(ORCL)$, is the fifth-richest person in the world with a net worth of $141 billion, according to Forbes.

Ellison appears to have given at least some financial commitment to Michigan's NIL collective, a university that he did not attend. So why did he get involved? While Ellison attended the University of Illinois, his current wife, Jolin, attended Michigan.

In addition to the Ellisons, Barstool Sports founder Dave Portnoy aided their recruitment of Underwood, he said. Portnoy, who attended Michigan, said that he and at least one of the Ellisons pitched Underwood and his parents to come to Michigan via a video call, leveraging both the Ellisons' resources and Barstool's marketing reach.

How do such NIL deals actually work? Is Underwood getting paid via a donor like Ellison, or from the school?

See also: The number of millionaire college athletes has tripled. Here are the top 10 earners this year.

"Let's not forget that all of these deals are for the use of NIL of the athlete," Craig Brown told MarketWatch. He's a managing principal at Galway Family Office and a business manager for many professional athletes, including the NBA's De'Aaron Fox and NFL stars Jonathan Taylor and Amon-Ra St. Brown. "When a school appears to 'commit millions' to a player through an NIL deal, the money is not directly coming from the school itself; instead, it's typically paid by third-party businesses or collectives made up of boosters, alumni, and other supporters who can leverage the player's NIL for marketing purposes, essentially acting as a conduit for the payment to the athlete, while still adhering to NCAA rules prohibiting direct school-to-player compensation."

"The school cannot directly pay the athlete for playing sports; the money must come from outside sources that want to use the player's NIL for marketing," Brown added.

It's worth noting that the Michigan football team was recruiting Underwood, who is from Michigan, to attend its college prior to his commitment to LSU. It's also not known if there were other factors that led to Underwood's new college commitment that are separate from his recent NIL deal.

Representatives for Underwood and Ellison did not respond to requests for comment.

For several decades, athletes were not able to capitalize on their name, image and likeness to earn money, but in 2021 the NCAA relaxed those rules. Many student-athletes during those years lamented the rules that barred them from seeking any form of financial payment while the games they played in generated millions of dollars - especially in football and basketball.

"In this new day and age of NIL it seems only natural that these dollars are being repurposed to reach the individual student athlete. I think this is a trend that will continue," said Brown

Billionaires or other high-net-worth individuals putting their thumb on the scale in college athletics is not a new phenomenon. Before NIL was allowed, an individual who wanted to support a school's athletic program could do so in a few ways.

One was finding a way to pay a player directly, oftentimes in cash or via gifts to persuade them to come to a specific university. Many of those past payments were illegal under NCAA rules surrounding amateur status, but happened anyway. Reports surrounding many athletes including Cam Newton and Deandre Ayton emerged detailing that they were funneled money while still in college prior to the existence of NIL.

Another way for donors to influence a college program was more indirect. Many donors or boosters could donate money to the athletic department, which could be used to revamp a locker room, stadium or practice facility to entice new recruits. Such donations still occur frequently.

In the NIL era, it's now even more direct, and in Underwood's case a more public form of donation. And some say this could become a trend.

"In my opinion, more and more ultra high-net-worth individuals will continue to support their alma mater as they always have, just in a different way now," Brown said.

"This trend will persist moving forward...we're entering a new chapter in college sports," Brandon Copeland, an NFL veteran who co-founded Athletes.org, a nonprofit aimed at giving financial and other benefits to athletes, told MarketWatch. Copeland also teaches a financial literacy course at Penn's Wharton college.

See: Here's how much extra money Eagles running back Saquon Barkley earned with that historic game on Sunday

NIL deals can come in many forms, are negotiated by college athletes and their representation, and the deals typically involve leveraging an athlete's influence. A car dealership located near a college may give the school's starting quarterback a monetary payment (or even a car) if he appears in a TV commercial. An athlete can also ink sponsorship deals by leveraging their social-media following, depending on how extensive their digital reach is.

Some athletes and colleges also work with collectives that can raise money to bolster schools' recruiting efforts. These collectives can take in money from boosters and other fans, which are then used to compensate players and lure recruits to the school.

From the archives: How a millionaire outbid a billionaire Larry Ellison to buy the Golden State Warriors in 2010

-Weston Blasi

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November 27, 2024 16:27 ET (21:27 GMT)

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