Question/idea on NIL for Rutgers...

[DHajekRC1984]

A college player being paid $1 million in NIL will pay nearly $475k (47.5 %) in taxes if paid all in year 1. Fed/State/ and... Med/SS as it is treated as self employment income.
IF a player and a school were to decide to create a contract for say paid over 4 years....the taxes would reduce to $85 or $37.5% each year (lower brackets) resulting in said player keeping $135k MORE in pocket over those 4 years. The law does not require income paid all in the year earned if a mutual contract is created. (I assume buyouts are a good example..we're still paying coachses who haven't coached in years?).

Why would a college kid say Lino Mark in year 2 need to get all that cash up front? He and Rutgers could enter into annual contracts that could create a significant income stream for the next 8-10 years.
Rutgers could do the same with several players stretching their annual NIL budgets wider and create the ability to go deeper in deals.

Above is just an example. There are plenty of ways to do something like this and perhaps just for the few really big deals. But again, this would require thinking outside the box and exercising their creative gene...which in the past has been impossible, New Team?

 

[NickRU714]

I'm confused and don't know what you are proposing.

Instead of signing Mark to a 1yr $1m deal - sign him to 3yr deal but stretching out the $1m?

Or do you mean sign Mark to a 3yr / $3m deal?

 

[NickRU714]

Personally I'd rather not have to pay Fall or Grant for 3 to 4 more years.
"We cant afford a center because Pike gave Grant a 3 year NIL deal that we're still paying."

If we're doing multi year contracts (presumably for increasing amounts) then all college staffs need to get A LOT better at player identification.

And fans need to get used to recruiting and transfer failures being stuck on the roster for years and taking up money.

 

[mugrat86]

A college player being paid $1 million in NIL will pay nearly $475k (47.5 %) in taxes if paid all in year 1. Fed/State/ and... Med/SS as it is treated as self employment income.
IF a player and a school were to decide to create a contract for say paid over 4 years....the taxes would reduce to $85 or $37.5% each year (lower brackets) resulting in said player keeping $135k MORE in pocket over those 4 years. The law does not require income paid all in the year earned if a mutual contract is created. (I assume buyouts are a good example..we're still paying coachses who haven't coached in years?).

Why would a college kid say Lino Mark in year 2 need to get all that cash up front? He and Rutgers could enter into annual contracts that could create a significant income stream for the next 8-10 years.
Rutgers could do the same with several players stretching their annual NIL budgets wider and create the ability to go deeper in deals.

Above is just an example. There are plenty of ways to do something like this and perhaps just for the few really big deals. But again, this would require thinking outside the box and exercising their creative gene...which in the past has been impossible, New Team?

How are you calculating the 47%? 37% federal and 10% state?

 

[DHajekRC1984]

How are you calculating the 47%? 37% federal and 10% state?

no, here's the kicker ..
"NIL (Name, Image, and Likeness) money is treated as taxable, self-employment income by the IRS, generally requiring a 15.3% tax for Social Security and Medicare if net earnings exceed $400." per the IRS.

Breakdown of Taxes on $1 Million NIL Income

• Federal Income Tax: At $1 million, a single filer falls into the 37% federal tax bracket, creating a significant tax liability.
• Self-Employment Tax (FICA): As independent contractors, athletes pay roughly 15.3% for Social Security and Medicare.
• State Income Tax: This varies heavily by location, ranging from 0% in states like Florida or Texas to as high as 13.3% in California.

I forgot which state passed a law making NIL STATE tax free income to help recruit players...

Less NET income if paying an agent/handler fee. I would imagine those guys would steer a player away from my concept as they want there $$ now and already up there in income tax.

 

[DHajekRC1984]

I'm confused and don't know what you are proposing.

Instead of signing Mark to a 1yr $1m deal - sign him to 3yr deal but stretching out the $1m?

Or do you mean sign Mark to a 3yr / $3m deal?

A 1 year deal for the million that pays out over three. He can sign another the next year with similar terms that would overlap (or have the deal renegotiate to incorporate the new terms).

Some program/concept that stretches out how Rutgers pays the money, whatever number they come to. Deferred compensation.

'Why would a player agree to this?".... Like I posted. Because it saves them money(taxes). Heck, RU could even agree to pay a little more Total NIL to stretch out/defer some of the payout.

 

[DHajekRC1984]

Personally I'd rather not have to pay Fall or Grant for 3 to 4 more years.
"We cant afford a center because Pike gave Grant a 3 year NIL deal that we're still paying."

If we're doing multi year contracts (presumably for increasing amounts) then all college staffs need to get A LOT better at player identification.

And fans need to get used to recruiting and transfer failures being stuck on the roster for years and taking up money.

yeah, I agree and not what I am suggesting.

 

[PhillyRU]

Not that I’m opposed to the idea, but Rutgers would absolutely manage to get into some absurd Bobby Bonilla situation

 

[DHajekRC1984]

Here's a great read on all this.... and why I think this could have mutual player/school benefit.

The NIL Tax Game Just Got Real—What College Athletes (And Their Parents) Need to Know Right Now – Cordasco & Company

cspcpa.com

Folks often see these coaches salaries and NIL deals and not think of the NET income vs. gross, much less the cost of living geographically.

Player rep teams needs to be agent/lawyers/accountant.

 

[seansherm]

The athlete wants the $ up front so they can leave and increase their income each year. Schools won't want to pay athletes for years after they are gone, plus, NIL isn't the school paying, its companies.

 

[NickRU714]

Also, NIL isn't with the school.
Mark would need a 3 year contract with an outside company and deal with their accounting and them having to carry the payments to Mark even if he left.

This could be something for university Revenue Sharing.
Honestly, ADs barely understand how to assemble a roster with just 1 year contracts.

I wouldn't want to start dumping multi year commitments and potentially "dead cap" money.
Players being paid by the AD while on other teams.

The job gets complicated fast.

 

[RUBigFrank]

You don't understand the mindset of completive athletes - they need to be paid more than their peers, even by one dollar.

 

[RRRRUUUU]

A buy now, pay later model. What could go wrong?

 

[DHajekRC1984]

A buy now, pay later model. What could go wrong?

Yes, please enlighten me with what you think could go wrong. Why I asked for discussion and floated the concept.
The comments about NIL coming from outside are appreciated. That is certainly true and mucks it up quite a bit.

 

[DHajekRC1984]

The athlete wants the $ up front so they can leave and increase their income each year. Schools won't want to pay athletes for years after they are gone, plus, NIL isn't the school paying, its companies.

1st half I don't know if 100% true. They can certainly overlap contracts which increases that year's income and the value of the contract is the value of the contract. Nothing ventured nothing gained. Too many "stay the course" thinkers but you're correct on the NIL outside..missed that important point. That's likely the deal breaker there.

 

[mugrat86]

The op's argument makes a lot of sense.

 

[DHajekRC1984]

Also, NIL isn't with the school.
Mark would need a 3 year contract with an outside company and deal with their accounting and them having to carry the payments to Mark even if he left.

This could be something for university Revenue Sharing.
Honestly, ADs barely understand how to assemble a roster with just 1 year contracts.

I wouldn't want to start dumping multi year commitments and potentially "dead cap" money.
Players being paid by the AD while on other teams.

The job gets complicated fast.

Nick since you're at least willing to give this thought and discuss without immediate dismissal let me pivot and ask you a different question. Since the NIL payments are supposed to be "fair, normal, and equal for services" my words of the rules.... how do you think an athlete gets paid $2 million NIL deal? Some player gets a cameo in a commercial and earns a couple million? Just as an example we get Mike's to put Lino in a commercial and they pay him a million? Who else would get paid that much for a spot? How would his value to Mike's be determined to be worth that much? How did Dylan and Ace get such big Nike deals? Future perceived worth? For doing what?

There's got to be a ton of crap going on out there in this WW West and folks just saying...ok, let the NCAA come after us if they can or want, etc after the horse is out of the barn. Would be really interesting to see the deals and the reviews of said, etc.