MW Oracle founder Larry Ellison's billions helped shape the NIL deal that flipped a top football recruit to Michigan from LSU

By Weston Blasi

Many universities are now handing out name, image and likeness deals worth millions of dollars to top athletes, but we rarely find out much about the source of those funds

It's now common for top-flight 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 are getting a better view into how some of the biggest NIL deals are put together.

This week, Bryce Underwood, the consensus No. 1 football player in the class of 2025, changed his mind about playing football for LSU next year and committed to play at Michigan instead. Shortly afterward, 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.

The Michigan collective was quick to thank Larry Ellison and wife Jolin, describing them as "instrumental in making this happen by providing Champions Circle with invaluable guidance and financial resources."

According to NIL tracking website On3, many universities facilitate NIL deals worth millions of dollars for the top stratum of their student-athletes. For example, the 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 University of Tennessee athletes since July 2021. But we rarely find out who the individuals are behind the money.

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

Ellison appears to have provided at least some financial commitment to the NIL collective at Michigan, a highly regarded university that he did not himself attend. So why did he get involved? While Ellison, born in New York in 1944 and raised in Chicago, attended the University of Chicago and the University of Illinois, his current and fifth wife, Jolin, is reportedly a Michigan alumna.

In addition to the Ellisons, Barstool Sports founder Dave Portnoy aided the recruitment of Underwood, according to Portnoy. Portnoy, a Michigan graduate, said that he and at least one of the Ellisons pitched Underwood and his parents on the Michigan program during a video call, leveraging both the Ellisons' resources and Barstool's marketing reach.

'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.'Craig Brown, Galway Family Office

Despite this nearly unprecedented vista into the role of NIL funds in the Underwood saga, much of college sports recruiting and the evolving NIL landscape remain opaque at best. So how do NIL deals work? Are star players like Underwood actually getting paid to play by universities - ending decade upon decade of painstaking efforts by the NCAA and member institutions to draw a clear line between collegiate, amateur athletics and the professional ranks? Or are NIL funds paid to student-athletes by donors like the Ellisons, separate from the educational institutions in which the athletes enroll?

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."

A college or university "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 Belleville, Mich., about 20 miles southeast of the Michigan campus in Ann Arbor, prior to his commitment to LSU. It's not known if there were other factors, separate from NIL terms, that led to Underwood's flipped collegiate commitment.

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

Collegiate athletes historically were not allowed to capitalize on their elevated campus profiles - to say nothing of their frequent appearances on national TV - but in 2021 the NCAA relaxed its posture on amateurism, saying student-athletes could capitalize on their names, images and likenesses.

Many student-athletes had for decades lamented 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. Those payments were illegal under NCAA rules but happened anyway.

Reports surrounding athletes including Cam Newton and Deandre Ayton detailed alleged arrangements under which funds, prior to the institution of the NCAA's NIL policy, were funneled to the players while still in college.

Another way for donors to influence a college program is indirect. Donors or boosters could donate money to the athletic department, which could use the funds to revamp a locker room, stadium or practice facility to entice new recruits. Such donations still occur.

In the NIL era, direct funding is legal and out in the open, and in Underwood's case subject to semipublic negotiation and renegotiation. And some say this could become a trend.

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

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

Copeland teaches a financial-literacy course at the University of Pennsylvania's Wharton business school.

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, and the deals typically involve leveraging an athlete's influence. They are negotiated by college athletes - or even precollegiates, like Underwood - and their representatives. A car dealership located near a campus may offer a 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 leveraging a social-media following, depending on how extensive that digital reach is.

Some athletes and colleges 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.

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

Michigan's Wolverines, less than a year removed from victory in a national-title game vs. Washington, occupy eighth place in the 18-team Big Ten with 6-5 and 4-4 overall and conference records as they travel Saturday to Columbus, Ohio, to take on bitter rival Ohio State. OSU is 10-1 and ranked No. 2 nationally, behind only new intraconference foe Oregon, which shifted this year to the Big Ten from the Pac 10.

Read on (January 2024): State schools like Michigan and Washington dominate more than the football field

-Weston Blasi

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November 29, 2024 08:35 ET (13:35 GMT)

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