NIL technology company delving into the collective space

An individual from a donor-led collective recently told Blake Lawrence, the CEO and co-founder of Opendorse, that his collective has hundreds of compensation checks inside an office safe awaiting staff to manually hand them out to athletes after each NIL activity — a labor-intensive approach from a pre-direct deposit world. 

That collective — which Lawrence declined to name — currently is in talks regarding a potential partnership with Opendorse, the technology company now moving fast to rapidly expand its reach in the collective marketplace. Lawrence expects his company to grow its deals with collectives from nearly 10 now to more than 30 this summer. Many of the nearly 30 school-specific collectives that are publicly known often are long on ambition to help upwards of 100-plus athletes monetize their NIL but short on the technological infrastructure to achieve it. 

The partnership between a well-established industry leader like Opendorse, whose technology is being used by 55,000 college athletes, and NIL-focused collectives is important because it helps legitimize the collective. Many are founded by prominent donors and alumni who confront operational challenges when trying to scale, especially when it comes to managing NIL deals with scores of 17- to 23-year-old athletes who are used to direct deposit and may not even know how to deposit a check. 

Working with Opendorse brings the collective credibility, marking another step in the maturation process for the young collectives. 

Opendorse is working with seven collectives, including Spyre Sports Group, which is associated with Tennessee; Division Street (Oregon); and 6th Man Strategies (Kansas). They also have unannounced partnerships with top collectives at Texas and Nebraska, as well as with some collectives that are opting, for now, to keep a low profile. By year’s end, Lawrence expects every Power 5 school to be associated with at least one collective and to see large penetration in the Group of 5 market as well. 

“There is no end in sight,” Lawrence told On3 on Thursday.

With the space quickly evolving, collectives increasingly are pooling funds from donors, often yielding consequential sums of money. As Lawrence described, a school-specific collective reasonably can aim for 100 athletes to receive $50,000 annually for NIL deals, what Lawrence termed a “decent start.” That would require a $5 million annual war chest, which Lawrence believes is now the minimum amount — essentially table stakes for the market — for a Power 5 collective.

Big bucks required

That said, he added that there is a clear path to athletes receiving $100,000 annually (a $10 million collective) from collective-driven NIL deals. But that’s not where it will end. Landing the most prized prospects will require substantial funds tied to NIL activity, all of which points to upward of $25 million budgets annually for the most ambitious collectives.

“You’ve got the transfer portal and you’ve got a proven All-American student-athlete that’s looking for a new home, and maybe that’s a half-million dollars in NIL opportunities that may be very attractive to that individual,” Lawrence said. “So then you’ve got to start to see these collectives get to a point where there’s $15, $20, $25 million (annually) that are allocated toward NIL opportunities for student-athletes in that market.”

Some early-to-market collectives initially earmarked, say, $6 million for three years of NIL deals, Lawrence said. But because of how competitive the collective market already has become — with the newest fund more deep-pocketed than the last — that collective has shifted strategy, focusing now on using that $6 million for just this year. All of this will accelerate an arms race well underway among collectives associated with blue blood programs hell-bent on securing the most star-studded recruiting classes. 

“We are in this time in-between realities,” Lawrence said, adding that when current recruiting classes arrive on campus in the fall, a high percentage will not be receiving NIL compensation from a collective the day they arrive. But a year from now, he said, the entire 2023 recruiting class that steps onto campus will be receiving NIL compensation. “And then the flywheel has begun,” he said. “Every individual will be getting some amount of compensation. Then the competitive nature of college athletics is going to drive the amounts in which these athletes are getting up on an annual basis.”

As a result, collectives will continue to mature. To date, Lawrence has been impressed with how organized and informed collectives are regarding state laws and school policies. Informed collectives, he said, often look to have athletes participate in NIL activities once every two weeks — engaging in anything from autograph signings to podcast appearances to meet-and-greets with fans.

Collective world remains nebulous

A typical collective, which may be supporting 100 athletes, must engage in a comprehensive process. The collective’s staff has to manage NIL offers, communicating with athletes about the location of the activation and other logistical details, securing an agreement for them to appear, reminding them to show up, submit proof of their appearance to ensure quid pro quo and disclose details of the transaction to their school to ensure compliance.

“That is a sophisticated operation,” he said. “Technology is required. … A collective without Opendorse is likely tracking things in a spreadsheet, likely having text-message conversations with 50-plus, 100-plus athletes on a daily basis. And some athletes will have agents and reps that also need to be involved.”

Among the benefits of Opendorse, Lawrence said, are that NIL deal offers directed to a full roster of athletes can be shared to them in just a few clicks. With payment processing, once deal activities are complete, an athlete is immediately compensated through their Opendorse account. And there are automated compliance disclosures, so once a deal is complete, the athlete is prompted to disclose proof — a photo of an appearance or link to a social post — and simply click “disclose.”

The collective world remains nebulous, challenging to quantify as they come in all shapes and sizes. Among those that maintain a low profile, Lawrence said, some should be viewed more as “directives” because some involve just one prominent individual. For instance, Miami businessman John Ruiz, a Hurricanes booster, has set aside $10 million to support Miami athletes through NIL deals.

Overall, as collectives continue to expand nationwide, Opendorse is eager to work with them to maximize efficiency and ensure compliance, providing credibility to a nascent category of the NIL era.

“No matter how they exist, no matter how they came together, if they want to support athletes, they have to follow the rules,” Lawrence said. “And if athletes want to participate in this marketplace, they’ve got to have a technology partner that is actually set up to protect them and support them. And so it’s very natural for us.”