NIL Deals With Commercial Entities Are a Long Time in Coming
I have previously blogged about the new deals between college athletes and commercial enterprises that allow the athletes to profit off athletes’ names, images, and likenesses (NIL) via commercial opportunities and social media. The athletes shed blood, sweat, and tears in their sports competition. Universities make millions from admissions fees to sporting events, sponsorships, deals with athletic companies like Nike, and television deals. Given the mega amounts that flow to colleges from their sports activities, especially football, it seems to be the right time to recognize the work of college athletes through NIL deals.
It is important to understand that performance on the field has a relatively small impact on NIL potential. Of course, athletes who play a more publicized sport and who perform in a way that brings them increased attention can raise their NIL ceiling and increase their market potential. Yet, at the same time, athletes who can carve out a niche—be that through social media or a dedicated local following that regards them as a hometown hero—have a sizable advantage and a large NIL potential.
Of all the reasons to pay college athletes for their services, the one that stands out most is the colleges’ ability to trade on the use of athletes’ NIL. It seems unjust to make so much money that way and not compensate the athletes. How would you like it if your company used your name, image, and likeness, and made deals with other companies to trade on your talents and you were not compensated for it at all? It is an ethical issue, one of fair treatment of others.
NCAA Position
The National Collegiate Athletic Association (NCAA) has developed rules about how and when college athletes can be compensated when others use their NIL for commercial purposes. As pointed out in a piece posted on iconsource.com, while universities have profited from the NIL of their student athletes for decades, it isn’t until recently that the athletes could enrich themselves.
Basically, the NIL is a term that describes the means through which college athletes are allowed to receive financial compensation. This can include autograph signings, product endorsements, social media posts, and more.
It is just as important to understand what NIL does not mean. As iconsource.com points out, “NCAA rules still prevent schools from paying players directly. This means that college coaches cannot offer money as an incentive for high school athletes to come play at their school, nor can athletes receive compensation directly from their university based upon their athletic achievements. Because the NCAA still intends to maintain its amateur sports status, paying athletes for their play on the field isn’t possible. However, NIL is the workaround for athletes to get paid without technically being considered professional athletes who make a living playing their sport.”
Caitlin Clark
If you haven’t heard about Caitlin Clark, the Iowa Hawkeye women’s superstar who recently broke the record for the most points scored by a women’s athlete, Lynette Woodard, which is 3,649 career points, where have you been? She also passed the top men’s point getter, Pete Maravich, who accumulated 3,667 points. This makes her the most prolific college athlete in the world of NCAA basketball.
One would think that NIL deals would fall in the lap of Clark now that she broke the record, and you would be right. Here is a summary of five of the largest deals, according to The Sporting News.
Nike
Clark inked a deal with Nike in late 2022, putting the Iowa star together with one of America's biggest brands.
Clark took advantage of her Nike partnership and gifted her entire team Kyler Murray's signature sneakers in January.
Gatorade
Gatorade is one of Clark's newest partnerships, as she signed an NIL deal with the energy drink brand in December.
Clark described the opportunity to work with Gatorade as a "dream come true," and the brand celebrated her arrival by releasing a video featuring the Hawkeyes star that aims to inspire the next generation of athletes.
Buick
Buick added Caitlin Clark to the brand's "See Her Greatness" campaign ahead of the 2023 NCAA Tournament, along with a handful of other women's college basketball stars.
State Farm
State Farm is among Clark's most recent NIL deals, as she partnered with the insurance company in October.
While insurance and basketball might not seem like the most natural fit, State Farm has a long history of collaborating with notable athletes including Patrick Mahomes, Chris Paul and Aaron Rodgers.
Bose
Clark agreed to an NIL deal with Bose before the 2023 NCAA Tournament and was featured in an ad for wireless headphones.
There are other deals including with: (1) Shoot-A-Way, which produces basketball shooting machines; (2) Hy-Vee, a midwestern grocery chain; (3) tax preparation company H&R Block; (4) Topps trading cards; (5) Panini America, which sells trading cards and autographed memorabilia; (6) Goldman Sachs, the mega-investment banking firm; and (7) The Vinyl Studio, her first NIL deal, that is a women’s-owned clothing company.
Clark's net worth is estimated to be near $3 million, though it's tough to gauge an exact figure considering her popularity continues to skyrocket.
On3 It has been estimated that Clark's NIL valuation at $910,000, though she continues to gain notoriety and will likely see that figure rise until her college career ends.
The Ethics Angle
The ethics of NIL arrangements are not always clear. Yes, there is a fairness issue and one could say these deals protect the athletes in case they suffer a season-ending or career-ending injury. College athletes risk injury to life and limb should be able to gain monetary compensation when their NIL is used by businesses for profit-making endeavors. I believe that the athletes have an ethical right to such payments.
However, there are ethical concerns. It is a fact that once the NCAA backed off from its long-standing rules against paying college athletes, it was just a matter of time before questionable payments would be made. The NIL rule opens pandora’s box to increasingly more complicated arrangements within which college athletes can monetize their NIL. I am concerned that it brings into play the proverbial “ethical slippery slope.” It’s just a matter of time before businesses find a workaround and pay high school athletes for their NIL, especially the uber-stars in their respective sports.
To be sure, there are many unanswered questions about paying college athletes. There’s no question there would be a disparity between what student-athletes could earn at the big sports schools versus smaller ones. Does that mean top athletes would be less likely to go to the smaller schools? If so, how might that affect their competitiveness?
Doubters say collegiate sports are corrupted by paying student athletes and such a practice turns amateurs into professionals while attending college. That may be true but collegiate athletics in sports like football and basketball is big business today with many colleges getting wealthy off endorsement and television deals. They “earn” that money because of the NIL of top athletes. It only seems fair the athletes share in the largesse.
Finally, these athletes might suffer injuries that put their potential careers with professional teams at risk, and harm their ability to have a successful career. Moreover, not paying them smacks of slave labor, especially because the NCAA generated record revenues of US$ 3 billion for the 2022 fiscal year ending 31st August, marking an increase from $519 million in 2020 and $1.1 billion in 2021.
College athletics is a big money maker for the colleges and the NCAA. Because the NCAA still intends to maintain its amateur sports status, paying athletes for their play on the field isn’t possible. However, NIL is the workaround for athletes to get paid without technically being considered professional athletes who make a living playing their sport.
Posted by Steven Mintz, Ph.D., aka Ethics Sage, on March 12, 2024. You can sign up for his newsletter and learn more about his activities at: https://www.stevenmintzethics.com/.
]]>What Do Respondents Say?
The 2024 Edelman Trust Barometer is a score that measures the average percentage of trust in institutions like NGOs, business, government, and media. It is essentially a global measurement of trust around the world. Trust is indicated by positive sentiment expressed over time regarding a brand's ability, dependability, integrity, purpose and personal relevance, which is based on personal experience with that brand.
The Edelman Trust Barometer identifies rapid innovation as a trend in society that has many implications for the welfare of citizens in many societies around the globe. Respondents to the survey indicate they are nearly twice as likely to say that innovation is poorly vs well managed. However, when they do believe that institutions are managing innovation well, they are 27 points less likely to feel that society is leaving them behind.
Edelman publishes data-driven insights that inform leadership, strategy, policy and sustained action across institutions. The 2024 survey included 32,000 respondents from 28 countries, so it is representative of global beliefs.
I have previously blogged about the Edelman Trust Barometer and what it means as a measure of trust in all institutions. Edelman believes that trust is the basis for productive relationships. According to the report, “it is the ultimate currency in the relationship that all institutions have with each other and society, including — business, governments, NGOs and media —.” Organizations should build trust in these relationships for society to believe what they say and say what they do.
Trust is the basis for stakeholder relationships whether in one’s personal life or in the workplace. Without trust, credibility is lost and one’s reputation can be threatened. As the saying goes, it takes a long time to build a reputation of trust but not very long to tear it down.
Trust is indicated by positive sentiment expressed over time regarding a brand's ability, dependability, integrity, purpose and personal relevance, which is based on personal experience with that brand.
A clear majority of those surveyed say that institutions “are purposefully trying to mislead people by saying things they know are false or gross exaggerations.” The results break down as follows: journalists (64%); government leaders (63%); and business leaders (61%). In other words, these establishment leaders are not trusted to tell the truth. I wonder whether the lack of trust could lead to divisiveness and, ultimately, a breakdown of societies’ institutions that threatens governance.
What are the 3 levels of trust?
Levels of trust in the workplace are indicated by three levels that define a specific relationship with a person in the workplace.
The involvement of business in socially-desirable activities has garnered support among the public worldwide in part because of the recent emergence of specialized reporting— Environmental, social, and governance (ESG) investing. ESG refers to a set of standards for a company’s behavior used by socially conscious investors to screen potential investments.
Environmental criteria consider how a company safeguards the environment, including corporate policies addressing climate change, for example. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
The 2024 Edelman Trust Barometer reveals a new paradox at the heart of society. Rapid innovation offers the promise of a new era of prosperity, but instead risks exacerbating trust issues, leading to further societal instability and political polarization.
In a year where half the global population can vote for new leaders, the acceptance of innovation is essential to the success of our society. While people agree that scientists are essential to the acceptance of innovation, many are concerned that politics has too much influence on science. This perception is contributing to the decline of trust in the institutions responsible for steering us through change and towards a more prosperous future.
These results raise a red flag about the future of economic growth in the sense that people fear for their economic futures. Add to that the level of distrust of government, and we can see that there is a lack of confidence that governments can make things better economically, at least in the short run.
Is it possible to elevate the level of trust in governments? Probably not, in the short run. Nevertheless, government leaders need to pay attention to the results of the Edelman Trust Barometer to ensure that they are on the right track to overcome uncertainties and a lack of confidence in their actions and behaviors.
Posted by Steven Mintz, Ph.D., aka Ethics Sage, on March 5, 2024. You can sign up for his newsletter and learn more about his activities at: https://www.stevenmintzethics.com/.
]]>The Tax Code Run Amok
I just finished filling out my tax forms for 2023. To say it's an ordeal is an understatement. It seems like the IRS Tax Code was written by lawyers who purposefully wrote it to confuse taxpayers, perhaps because it then becomes a full employment job opportunity. Having gone through the experience, I have become a devotee of a flat tax. It would make life easier for millions of taxpayers. It's also a fairer system than the one in place because it eliminates some of the techniques wealthy taxpayers use to reduce their taxable income.
Then there is the Schedule D Tax Worksheet, or the Qualified Dividends and Capital Gain Tax Worksheet, both of which seem obscure. I say we need to get rid of these worksheets because, like the one for social security discussed below, they are just too complicated for the average taxpayer to understand.
A flat tax should replace the current system of taxation. A Flat tax is a single tax rate applied to all taxpayers regardless of income. Employing a flat tax means that taxpayers cannot take deductions or exemptions. Most flat tax systems do not tax income from dividends, distributions, capital gains, or other investments. The opposite of a flat tax is a progressive tax, where taxation rises with a taxpayer's income.
A flat tax system is fairer, especially for low-income taxpayers who can't avail themselves of deductions the wealthy use to lower taxable income. Lower income taxpayers rarely own a house, so the real estate tax deduction is not available. More will be said about this next in the discussion of SALT. Lower income taxpayers do not have any discretionary income to donated funds to charitable organizations, and even if they do their standard deduction is greater than their itemized deductions so they can't use the charitable contributions deduction.
Well, the wealthy are treated unfairly as well. The SALT deduction (state and local tax) limits deductions in that category to $10,000. This means deductions for state income taxes paid, real estate taxes, property taxes and the like can only be deducted up to $10,000. If you live in California, as I do, you probably have $10,000 or more just in real estate taxes so you can't use the full amount or the other taxes mentioned.
Congressional Republicans instituted a $10,000 cap on the amount of state and local taxes can be deducted from taxpayers income for the purposes of calculating federal tax liabilities as part of the 2017 tax reform package that was the policy centerpiece of former President Donald Trump’s administration. The measure was a critical piece of the tax deal that raised hundreds of billions of dollars in taxes, enabling Republicans to lower the corporate tax rate from 35% to 21%.
A tax bill was voted on in the House of Representatives on February 14, 2024, and it failed by a vote of 225 to 195. The bill would have doubled the deduction to $20,000 for married couples who file jointly and only for those making less than $500,000.
One could say that for many high-income people, the cap raises the net cost of living in New York than Texas and Florida, states without income taxes that rely more on sales taxes.
What really made me question the fairness of the tax system is the Social Security benefits worksheet. It is used to determine the amount of taxes a person must pay on their social security benefits. I was outraged by this provision. I was affected because my benefits exceeded the limit beyond which they become taxable.
Social Security income is generally taxable at the federal level, though whether or not you have to pay taxes on your Social Security benefits depends on your income level. If you have other sources of retirement income, such as a 401(k) or a part-time job, then you should expect to pay some income taxes on your Social Security benefits. If you rely exclusively on your Social Security checks, though, you probably won’t pay taxes on your benefits. Many taxpayers fall into this class because their employer provides retirement income as well.
Here is the IRS description of whether you will be taxable assuming you receive social security benefits. "For married couples filing a joint return, you will pay taxes on up to 50% of your Social Security income if you have a combined income of $32,000 to $44,000. If you have a combined income of more than $44,000, you can expect to pay taxes on up to 85% of your Social Security payments." The combined income amounts are ridiculously low. In fact, many taxpayers wind up in the 85% category. I believe, this tax should die a natural death. Why? I also had taxes deducted from each social security check. This is a clear example of double taxation.
Just look at the tax benefits worksheet to understand why the tax on social security benefits. You need a doctorate in taxation to follow it.
The definition of income—what it is and how it’s taxed—is a core issue of a Supreme Court case that could have far-reaching effects for taxpayers. Moore v. United States, argued before the court in December, concerns the taxation of unrealized income. A finding on whether the plaintiffs, Charles and Kathleen Moore, must pay taxes on their profits as partial owners of a multinational corporation, could lead future courts to strike down other parts of the U.S. tax code. A ruling is expected this spring or summer.
So, what is unrealized income? When you invest — whether in stocks, real estate or cryptocurrencies — the fair market value of your investment could change hundreds or thousands of times before you sell it. Until you sell, your investment gains or losses are just on paper because you haven’t locked them in by cashing them out. At this point, any change in value since you purchased the investment is known as an unrealized gain or unrealized loss.
I could go on, but you get the point. Good luck in filing your taxes!
Posted by Steven Mintz, Ph.D., aka Ethics Sage, on February 20, 2024. You can sign up for his newsletter and learn more about his activities at: https://www.stevenmintzethics.com/.
]]>Internet and Digital Fraud on the Rise
Recently, the U.S. Federal Trade Commission disclosed that consumers reported losing more than $10 billion from fraud in 2023, This is an astonishing number and reflects the decline of ethics in society over an extended period of time.
Consumers alone reported losing more money to investment swindles—more than $4.6 billion—than any other category in 2023. That amount represents a 21% increase over 2022. The second highest reported loss came from imposter swindles, with losses of nearly $2.7 billion reported. In 2023, consumers reported losing more money to bank transfers and cryptocurrency than all other methods combined.
Results of FTC Study
The FTC received fraud reports from 2.6 million consumers last year, nearly the same amount as 2022. The most commonly reported scam category was imposter scams, which saw significant increases in reports of both business and government impersonators.
Online shopping issues were the second most commonly reported in the fraud category, followed by prizes, sweepstakes, and lotteries; investment-related reports; and business and job opportunity scams.
Another first is the method scammers reportedly used to reach consumers most commonly in 2023: email. Email displaced text messages, which held the top spot in 2022 after decades of phone calls being the most common. Phone calls are the second most commonly reported contact method for fraud in 2023, followed by text messages.
The FTC uses the reports it receives through the Sentinel network as the starting point for many of its law enforcement investigations, and the agency also shares these reports with approximately 2,800 federal, state, local, and international law enforcement professionals. While the FTC does not intervene in individual complaints, Sentinel reports are a vital part of the agency’s law enforcement mission and also help the FTC to warn consumers and identify fraud trends it is seeing in the data.
Digital Fraud
"Digital tools are making it easier than ever to target hard-working Americans, and we see the effects of that in the data we're releasing today,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC is working hard to take action against those scams."
Mobile phones have become a perceived safe place in our personal lives, especially among Gen Z. But in 2021, 68% of digital banking fraud originated on mobile platforms. As mobile technology improves, we see attackers targeting mobile channels more than traditional desktop applications. Fraudsters are increasingly exploiting mobile malware and uploading rogue apps designed to impersonate well-known brands to trusted app stores—exploiting the popularity of mobile banking to steal account information.
Digital fraud entails the use of phishing emails, phony websites, bogus mobile apps, fake social media profiles, and other mechanisms to illegally obtain information and defraud consumers and businesses.
Cryptocurrency fraud has exploded in recent years, fueled by greed and FOMO (the fear of missing out), making it one of the fastest growing digital crimes. According to the FTC, U.S. consumers lost $750 million to crypto scams in 2021. And Chainalysis reports that worldwide losses may topped $3.2 billion—a 516% increase from the previous year. No doubt, cryptocurrency fraud will continue to climb in the coming years.
Modern machine learning has proven to be instrumental in preventing digital fraud loss by understanding the behavior behind an attack. This technology works by studying normative customer behavior and looking for deviations that may signal fraud.
Ethics & Fraud
Fraud is an intentional act. Fraud doesn’t occur by accident. It is a crime and one increasingly infecting society. The reality is that regulatory agencies always seem to be one step behind scammers. Digital fraud is on the rise and is likely to be the most prominent type of fraud in 2024 and going forward.
Today’s most robust fraud management platforms enable organizations to set their risk tolerance and gain insight into the types of attacks they face. When a certain behavior is deemed high risk, that user must provide additional authentication before proceeding. This strategy allows companies to only filter out highly suspicious users, leaving the majority of regular customers uninterrupted.
We have become a cynical society for many reasons, not the least of which is the number of scammers who telephone us, send us email messages, or otherwise make unwanted contact. We just want to be left alone and enjoy the peace and quiet to which we are entitled. Unfortunately, there are too many people in society who look for the easy way out. In other words, why should they work for a living when they can earn ill-gotten gains?
The FTC’s Bureau of Consumer Protection stops unfair, deceptive and fraudulent business practices by collecting reports from consumers and conducting investigations, suing companies and people that break the law, developing rules to maintain a fair marketplace, and educating consumers and businesses about their rights and responsibilities.
There is a lot more to say about this scourge that is infecting society. It threatens our wellbeing. What, if anything, can be done about it? My best advice is to become educated about it and the steps you can take to verify the would-be scammer is on the up-and-up. The FTC website can help in that regard.
Posted by Steven Mintz, Ph.D., aka Ethics Sage, on February 15, 2024. You can sign up for his newsletter and learn more about his activities at: https://www.stevenmintzethics.com/.
]]>We Need a National Primary All on One Day
The presidential primary system is where candidates compete for delegates and seek the nomination for their parties’ next president. It’s a broken system. There are a variety of reasons why, not the least of which is the outrageous amounts of money spent in each state to court voters’ support. We’re talking in the mega-millions when the process is all said and done. Just think how that amount of money could be used for better purposes. I know it’s not a comparison of apples to apples, but the point is clear. It’s a waste of resources.
The main reason the process is broken can be seen in this year’s Republican primary cycle. After just one primary and one caucus, many Republicans with power and influence are calling for Nikki Haley to step aside so that Donald Trump can be anointed as their presidential candidate. Others say that Haley should drop out either just before or just after the South Carolina primary vote. The thinking is since she is not expected to win her own state vote, it’s time to pack it in.
The Ills of the Primary System
Primaries are statewide voting processes in which voters select a party's nominee who will later compete in the general elections. The rules of the primary, including who can vote, are determined by the states and the parties. Unlike in a caucus, voters in a primary cast a secret ballot for their candidates and can vote at any time when the polls are open on Election Day.
There are some who defend the way it works pointing out that the staggered nature of the primary calendar allows candidates to focus their resources on groups of states at various times instead of all at once. Often candidates focus on winning some or all the early states to gain momentum in the race, and force competitors out, as well as seeking to win large states that can earn them a high number of delegates.
That’s nice but this kind of system puts the needs of the candidate ahead of those of citizens. As Spock said in the 1982 segment, Star Trek II: The Wrath of Khan, “The needs of the many outweigh the needs of the few.” Spock shared this philosophy with the Captain of the Enterprise, James T. Kirk, earlier in the film, and later used it to explain why he sacrificed his own life to save the Enterprise. The line is possibly the most famous in Trek history.
The next primary is tomorrow on February 5th. However, the way that election is held is, to say the least, confusing. It’s a bewildering system that brings into question its relevancy. We can attribute it to 2020, when a delay in the results led to many Democratic political leaders in the state, including the late Harry Reid, pushing for the state to abandon the caucus system in favor of a primary. Only, they didn’t: Nevada now has both. No matter what the final vote is, it would be crazy for Haley to pull out of the race after Nevada.
The South Carolina primaries take place on two different dates. The Democratic primary was on Saturday, February 3, while the Republican primary is three weeks later on Saturday, February. 24. Why in the world is it necessary to have votes on two different days?
South Carolina has an open primary system, which means voters can cast ballots for whichever candidate they prefer, regardless of party affiliation. A registered Republican can vote in the Democratic primary, and vice versa. However, voters cannot vote in both primaries.
Let’s look at the primary voting system in New Hampshire, which was held on January 23. New Hampshire is a semi-closed primary, which limits registered voters to the ballot for their own party while unenrolled voters can choose either. Open primaries allow any voter to cast their ballot for whatever party they choose. Why can’t we have just one way to vote—i.e., party affiliation or totally open.
Delegates Pledged
There have only been 61 delegates pledged to the candidates prior to the Nevada vote. The total number of delegates needed to win the primary is 1215, for Republicans. This means only 5% of the vote has been counted. If Haley were to drop out after Nevada, the percentage counted would be about 7%. Think about how many states and citizens would have no say in who is the Republican candidate—over 90%. This flies in the face of the statement that is always made before voting for the next president, which is “Every vote counts.” The current system creates a fairness problem.
Years ago, the primaries went up at least or until “super Tuesday,” on March 14. Approximately 1/3 of the delegates are awarded on that day. To add confusion to a broken system is that after March 14, states are allowed to award all the delegates to the candidate who polls the most votes.
Recommendation
My recommendation is to have a national primary and on the same day. This enables candidates whose strength is in states that vote at a later date to have a say in the process, equal to that of those who have voted in the early primaries. The vote would be counted and if no one candidate receives more than 50% of the vote then the top two candidates would have a runoff.
Now there is talk of having the South Carolina primary to be the first in the nation. Why? Because its votes would mean something. Some have said that states with a sizable percentage of minority voters are denied their right to have their vote count if the primary in their state is on super Tuesday or later, and candidates like Haley are “forced” to drop out.
Changing the primary system as I suggest would also diminish the influence of large donors, because they would have to pick a “horse in the race” right away and couldn’t shift their resources after just a few states have voted. Although I am skeptical here because well-heeled donors would probably find a way to game the system.
It’s time to make sure that every vote means something in the primaries. It’s undemocratic to do otherwise.
Posted by Steven Mintz, aka Ethics Sage, on February 5, 2024. You can sign up for his newsletter and learn more about his activities at: https://www.stevenmintzethics.com/. Follow him on LinkedIn at: https://www.linkedin.com/in/steven-mintz-aka-ethics-sage-98268126/recent-activity/all/.
]]>