Jean's baseball NIL revelation
- Thread starter G-Dawg
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An exclusive line of braided belts that are permanent affixed to jorts with just the right amount of length to fold down right past the buckle. All players get 5 pair in the denim pattern they choose.
Baseball shorts like our guys wore this season only in denim and a big G and P on each *** cheek.
Too bad Rowdey and Tanner have moved on...they'd be perfect with the success from their latest fashion trend.
A video board commercial. Their favorite pizza toppings skit will be done each game sponsored by Genes page. Free 247 access the day your skit appears.
I don't know what is going on, but, in reading between the lines, it seems like we're about to get an NIL deal to make all 35 players on the baseball roster, full scholarship players.
Vandy baseball is about to end
Vandy baseball is about to end
That's $600k a year for college baseball NIL. Only the bat companies will put up that kind of cheese right? You would have to sell an extra $6-8 million a year in bats to justify it.
Not saying it won't happen, but I will be shocked personally to see that big of an NIL deal for college baseball. Hope I am wrong.
Not saying it won't happen, but I will be shocked personally to see that big of an NIL deal for college baseball. Hope I am wrong.
Maybe the Sanderson Farms folks can take some of their 4.5 billion and create some sort of fund that grows, and start a company that sponsors them all.
But yeah, this sort of deal won't be prevalent.
I'll say one thing. The timing of that natty was perfect. Can only help. Everybody likes supporting a winner.
I don't think Warstic does much more than $6-8 million in total revenue. I think Jenkins is in, not so sure Kinsler and Jack White want to donate all the profits to the Dawgs, but I have been wrong before.***
Care to break down that math? For that to be right, it would mean tuition / room and board / books was now an average of almost $26,000 per year for MSU between in-state and out of state students that are on the baseball team (meaning way higher than that for out of state). Surely MSU doesn’t cost that much these days, does it?
My math:
35 - 11.7 (existing scholly allotment) = 23.3
$600,000 / 23.3 = $25,751
ETA: Looks like it does actually cost that much now. Actually, it’s even more ($25k in-state, $40k out-of state). Holy **** at the escalation of college costs of attendance. It was less than half of that for in-state just 15 years ago. It’s only $10k away per year for being what Vanderbilt’s annual cost was when I was applying for colleges out of high school, which is just crazy to think about.
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It's ridiculous... I was being generous and assuming all players are in state.
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Official Cost of Attendance recognized for Financial Aid purposes is $26,640 a year for an instate student. Out of state adds $15,680 to that number.
To justify it it's have to bring in minimum of $600.001k plus any branding/name recognition gains by the sponsor. Not sure why $6-8 million is the justification point. Event without generating brand recognition, which is not possible, any company would take a 100% annual return on their investment, which is $1.2 million revenue. I have no idea what an investor could expect in this rumored scenario but $6-8 million return is FAR HIGHER than the minimum required return
Do you know anything about business? Or are you confused by what I wrote?
If I spend $600k on marketing, I need to sell a lot more than that to break even. I still have all the other costs to cover, I'm not getting magic bats from thin air that just show up at customer's homes with no shipping costs. I have material, labor, distribution, tax, and a million other expenses to cover. Marketing budget is going to be 7-10% of revenue on a B2C product... Or so they taught us in B-School.
$600,000/.07 = $8,571,428.57
$600,000/.10 = $6,000,000.00
So for it to break even, I need to sell an additional $6-8.5 million. "Branding gains" are only realized by increased sales. I will assume you are thinking I was talking about $6-8.5 million in net income, but I clearly was talking about revenue (sales.)
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Good luck trying to educate folks about really running a business. Most that have never owned a business or been a CFO have no clue.
Wrong. The 2 B schools i went to didn't teach that businesses are bound to return 1200% on advertising budget. In fact, that may be the dumbest thing I've ever read. The example in your B school book was just an example; not a rule. And if you think brand recognition is only defined by those that have purchased the product, woo buddy. That's adorable.
Most smaller manufacturing businesses are lucky to turn a 10% margin. So to make 600k extra to pay that NIL deal, you have to gross out around 6,000,000.00 more in sales. As someone who owned and managed a business, the NIL would have to do better than break even to justify it.
These NIL deals are basically paid endorsements. So does a kid have a following? Are his followers the correct demographic for my widgets? How many people can he influence in the correct demographic?
These are what you have to evaluate. It is just like picking a spot for a retail business. How much traffic on the road, how many people live within 25 miles. How much does it cost to buy or rent there.
It is all about ROI.
These NIL deals are basically paid endorsements. So does a kid have a following? Are his followers the correct demographic for my widgets? How many people can he influence in the correct demographic?
These are what you have to evaluate. It is just like picking a spot for a retail business. How much traffic on the road, how many people live within 25 miles. How much does it cost to buy or rent there.
It is all about ROI.
Dude. Just stop. Marketing budgets live in a very narrow range of revenue.You don't even seem to understand the difference in revenue and profit or the meaning of return.
Here is an easy example. I am a realtor. I make 3% gross commission on a house I sell. If I spend $600 k on marketing and sell $6 million (revenue) in homes I get a gross return of $180K.... I lose $420k gross. The reality is I have to pay brokers and taxes etc. I would probably have to sell $40 million in homes just to break even on that marketing spend.
I have no idea what's wrong with you. But for the love of God, please tell me you did not attend Mississippi State. Tell me that the "B schools" you attended was a boys ranch or something. Quit talking about this. You are unbelievably lost.
Take a lap Bird.
Here is an easy example. I am a realtor. I make 3% gross commission on a house I sell. If I spend $600 k on marketing and sell $6 million (revenue) in homes I get a gross return of $180K.... I lose $420k gross. The reality is I have to pay brokers and taxes etc. I would probably have to sell $40 million in homes just to break even on that marketing spend.
I have no idea what's wrong with you. But for the love of God, please tell me you did not attend Mississippi State. Tell me that the "B schools" you attended was a boys ranch or something. Quit talking about this. You are unbelievably lost.
Take a lap Bird.
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Agree with this.
My earlier point was that profit margins vary greatly depending on the business and industry. It's highly unlikely that any small company that has 10% profit margin will fork out $600k for an NIL deal. Some companies have 50% margin, I work with a few that do. The other poster said $6-8 million in revenue would be required and that's simply not true bc not every business operates off 10% margin
You are confusing gross and net margins What business operates on a 50% net margin? Bitcoin and cocaine? If you show me a legitimate business that works on a 50% net margin, I am 17ing in. 50% gross is boring. 50% net of marketing, I am in again.
Let's say it's an attorney. He works out of his house and has an unpaid spouse for a paralegal. The highest margin business I know of... If he spends $600k on marketing to generate what??? $1.2 million of LTV revenue? Horse ****. If he did, it would force him to hire 2 new attorneys.
I live in this world bro. I don't argue about basketball, because I am an idiot about it. Marketing I know extremely well. Business I know even better. Bought and sold a franchise this year in fact. I have signed NDA's on a dozen other businesses this past year. Nobody is going to spend more than 20% in marketing. Not even a sole proprietor consultant.
Startups in tech may touch 15% of revenue... And by the way, we are talking most of that budget is heading for straight up lead gen. NIL is promotion, much more expensive for a return. Marketing budgets live in the 7-10% range. I'm 100% right on this. If you show me a business that can spend 50% of it's revenue on marketing and make a profit, I am calling crimestoppers.
And just to keep this from going any further here is your original quote:
You clearly are confused. A business that spends $600k on advertising and generates $1.2 million in REVENUE has a 100% return or "roi" according to you. What are the product/service costs? What about salary? Expenses? Taxes?
Let's face it. You are confusing revenue with profit. Take 2 laps.
Let's say it's an attorney. He works out of his house and has an unpaid spouse for a paralegal. The highest margin business I know of... If he spends $600k on marketing to generate what??? $1.2 million of LTV revenue? Horse ****. If he did, it would force him to hire 2 new attorneys.
I live in this world bro. I don't argue about basketball, because I am an idiot about it. Marketing I know extremely well. Business I know even better. Bought and sold a franchise this year in fact. I have signed NDA's on a dozen other businesses this past year. Nobody is going to spend more than 20% in marketing. Not even a sole proprietor consultant.
Startups in tech may touch 15% of revenue... And by the way, we are talking most of that budget is heading for straight up lead gen. NIL is promotion, much more expensive for a return. Marketing budgets live in the 7-10% range. I'm 100% right on this. If you show me a business that can spend 50% of it's revenue on marketing and make a profit, I am calling crimestoppers.
And just to keep this from going any further here is your original quote:
You clearly are confused. A business that spends $600k on advertising and generates $1.2 million in REVENUE has a 100% return or "roi" according to you. What are the product/service costs? What about salary? Expenses? Taxes?
Let's face it. You are confusing revenue with profit. Take 2 laps.
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Boy are you right. I never thought anyone could have such a difficult time understanding. Marketing is a cost of doing business. Just like labor and utilities... Do you think we would have someone argue you could spend 50% of revenue on the gas bill and still make a profit?
Not that I think sponsoring our baseball players really makes business sense for most businesses (I don't), but for advertising to be worthwhile, it only needs to generate revenue less variable costs in excess of the cost of the advertising. Which is roughly equivalent to gross profit (not exactly since some COS can be fixed while some G&A can be variable). The tax effect will actually make the advertising break even point lower since while the net revenue generated is taxable, the cost of the advertising is also deductible. However, a lot of these businesses like the ones sponsoring the BYU walkon football players aren't doing it because it makes business sense. They're doing it as a deductible contribution to the athletic program.
This is correct. ROI is a net income after tax calculation. Maybe Birdawg is thinking about RoAS (return on ad spend) which is a marketing centric calculation that is simply revenue divided by ad spend. Marketers use this figure so they can have instant feedback on campaign effectiveness. They take zero operating costs into account.
Most often I have seen it in PPC campaigns. Much more fruitful than a sponsorship by the way. The general consensus is depending on margins, RoAS for a company needs to be anywhere from 4-1 to 10-1 or greater to be a break even on a campaign.
This all got started because I was saying a baseball bat company would be the only ones I think could justify dropping $600k for NIL. That's a capital intensive business that will likely involve wholesale distribution and retail. I would guess that the break even on $600k in advertising spend for that industry is north of $6 million in bats sold (retail dollars.) If a good portion is direct to consumer online, that number could be lower.
Birdawg seems to think if you spend $600k on marketing, you break even at $600k in revenue. That is not the case, you break even at $600k in net profits after tax. Otherwise, every company in the world would spend 30-50% of revenue on marketing instead of the 7-10%. After variable cogs after 10% marketing spend the ROI tends to deteriorate and that money is better put to work elsewhere.
Most often I have seen it in PPC campaigns. Much more fruitful than a sponsorship by the way. The general consensus is depending on margins, RoAS for a company needs to be anywhere from 4-1 to 10-1 or greater to be a break even on a campaign.
This all got started because I was saying a baseball bat company would be the only ones I think could justify dropping $600k for NIL. That's a capital intensive business that will likely involve wholesale distribution and retail. I would guess that the break even on $600k in advertising spend for that industry is north of $6 million in bats sold (retail dollars.) If a good portion is direct to consumer online, that number could be lower.
Birdawg seems to think if you spend $600k on marketing, you break even at $600k in revenue. That is not the case, you break even at $600k in net profits after tax. Otherwise, every company in the world would spend 30-50% of revenue on marketing instead of the 7-10%. After variable cogs after 10% marketing spend the ROI tends to deteriorate and that money is better put to work elsewhere.
This is really all there is to it. It’s legalized, glorified money laundering. And you have big boosters with creative accountants (both of whom may or may not even work for XYZ company) that are essentially going to be using these companies as nothing more than a conduit for the payments.
I would be shocked if all baseball players got their school paid for- it won’t be that big. But it will help I’m sure.
We already do some things from a scholarship standpoint that allow us to essentially operate above the 11.7, but this will probably help us close the gap more with what Arkansas and Vandy can do. At least until Arkansas starts doing something similar, and then we end up back in the same place…
All expenses come off the gross line, so its a deduction.
Revenue - expenses = net, which you then have to pay taxes on.
Just taking the cost of attendance as a total is also incorrect. Because the athletes will be issued 1099's on it. To cover that the total would be closer to 35000.00 per player.
Revenue - expenses = net, which you then have to pay taxes on.
Just taking the cost of attendance as a total is also incorrect. Because the athletes will be issued 1099's on it. To cover that the total would be closer to 35000.00 per player.
I cannot imagine that many of these NIL deals are founded on sound business principles.....player payments have been happening everywhere for years - why would people all of a sudden demand an official ROI?
For all the guys that were "brown bagging" it, they now have a proper channel to execute what they were doing in the dark. Plus, they get to lower their tax liability by expensing this activity as "marketing". For them, it's already an infinite increase in ROI by comparison because there wasn't any business return/benefit in the past - not to mention the removal of violation risk.
Edit: Wasn't a reply to anyone in particular - still figuring out which "Reply" button to hit. Apologies.
For all the guys that were "brown bagging" it, they now have a proper channel to execute what they were doing in the dark. Plus, they get to lower their tax liability by expensing this activity as "marketing". For them, it's already an infinite increase in ROI by comparison because there wasn't any business return/benefit in the past - not to mention the removal of violation risk.
Edit: Wasn't a reply to anyone in particular - still figuring out which "Reply" button to hit. Apologies.
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