College Football & NIL: What’s NIL’s Impact On Smaller Schools?

Prior to today’s college sports world with NIL and revenue sharing, who would have been the highest paid college football player of the 21st century? 

Reggie Bush? Tim Tebow? I’m sure Baker Mayfield and Cam Newton would like a word. Ndamukong Suh probably would have been up there as well. 

Even just six years ago during Joe Burrow’s record-breaking 2020 campaign when he led LSU to a national title, college athletics – and especially college football – were much simpler.

Now more than ever, dollar signs rule all in college sports. And there’s no doubt the schools and programs with the most money have an edge on the smaller programs who are struggling to keep up. 

Less Money Sometimes Means Less Talent

The simple truth. Institutions that have more money in their revenue sharing pool will be able to attract and retain better players. Recruiting still matters but not as much as it once did. Recruiters and coaches belonging to smaller programs still had a shot to win over some top recruits. Those chances have dwindled since they likely don’t have the budget and can’t offer what Power Four programs can.

Two of this year’s college hoops All-Americans – JT Toppin and Yaxel Lendeborg – recently played for mid-major programs and are just a couple of examples of talent making the leap to larger schools. Would they have stayed at their respective mid-major programs pre-NIL?

Not always, but most of the time, less talent means there’s a cap on how far a team can advance in the postseason. That seems to be the case in the NCAA Tournament for example, where there are fewer Cinderellas in the past few years than there used to be.

When smaller programs fail to make postseason runs or don’t have successful seasons, they earn less money and therefore have less to distribute to athletes. It may be a never-ending cycle.

The same can be said when it comes to NIL and third-parties, such as collectives. If there isn’t a lot of success, fans and businesses may be reluctant to provide financial support or NIL deals. 

Missing Out On The “Flutie Effect”

The “Flutie Effect” – when an institution’s application rates rise significantly because of athletic success.

It was coined following Doug Flutie’s famous 1984 game-winning Hail Mary pass that saw enrollment at Boston College rise over the next two years.

We’ve seen this happen a handful of times with much smaller schools. Recent examples are Florida Gulf Coast, which had a run in the NCAA Tournament as a 15 seed, and UMBC, which knocked off No. 1 Virginia as a 16-seed in 2018. Both schools saw application and enrollment increases the following years.

There’s also James Madison, which has historically had success on the gridiron but reached new heights with a trip to the College Football Playoff last season and an expanding brand since transitioning to the FBS in 2022. 

Over the past five years, JMU’s undergraduate applications have increased by more than 80%, and success in athletics is likely a reason why. 

In fact, when a school’s football team goes from bad to great, applications rise by 18.7%. JMU’s football program has rarely been bad, but when a bad team turns things around, it has much broader positive impacts. 

While the CFP expanding to 12 teams benefitted the Group of Six because it added at least one automatic bid for the G6, the talent gap between smaller schools and larger programs is still widening. Because of this, I believe more small schools will have less of an opportunity to benefit from the Flutie Effect.

Division Relegation & Olympic Sports Being Cut

The financial strains smaller schools face that come from trying to compete in the NIL and revenue sharing world have significant impacts across the athletic department, not just on the scoreboard or in the league standings. 

Most recently we’ve seen Saint Francis University being forced to move from Division I to Division III because of financial reasons. The announcement even came right after their men’s basketball team made the NCAA Tournament. The University of Hartford also fell victim to this same situation, a move that also came right after they made their first NCAA tourney appearance. There will likely be more schools forced to do this in the future.

There have been dozens of programs cut over the past few years and many stem from the House settlement and the lack of funding to support certain Olympic sports programs. Over 1,000 college athletes have been impacted across the country.

Cal Poly had to cut its men’s and women’s swimming programs last year while Saint Louis University recently announced the discontinuation of its men’s and women’s tennis programs.

I imagine some of the funding from SLU’s tennis programs could instead be used toward retaining and attracting talent for the men’s basketball team, which is becoming more prominent nationally.

Staff Layoffs & Changing Job Titles

The discontinuation of programs and scrunching of money doesn’t only impact the athletes and coaches but other staff within the athletic department as well. 

While some staff members are laid off, athletic directors, coaches, and other personnel within the athletic department, especially at smaller programs, have become full-time fundraisers, along with their other responsibilities. They also need to maintain focus on all of the legal aspects that come with the revenue sharing and NIL landscape while juggling other, new responsibilities such as maintaining a roster budget. Not all G6 or mid-major programs have the luxury of hiring a general manager.

Like everyone else, coaches and ADs are trying to adapt in a new and evolving college sports world.

And until there is some sort of legislation and guardrails in place, P4 schools will likely have too many resources and too much money for smaller schools to compete with.