Over the course of the past few years, Kendrick Perkins has established himself as a cornerstone of ESPN’s NBA coverage.
But on Thursday, Big Perk found himself in the spotlight at the Worldwide Leader for a different reason, with ESPN’s Dan Murphy publishing a report that raised red flags about the former NBA center’s new NIL company.
The company — Nilly — offers high school and college athletes upfront cash in exchange for the right to sell their name, image and likeness while taking a percentage of the profits. The upfront payments range from $25,000 to hundreds of thousands of dollars, with the company receiving between 10-50 percent of the player’s NIL earnings for up to seven years.
Although there are other companies that sell investors a stake in athletes’ future professional salaries, Nilly is believed to be the first to offer cash advances on NIL earnings. ESPN obtained one contract that Nilly signed with a high school athlete, which pays the player $50,000 in exchange for the exclusive rights to sell his NIL for the next seven years, with the company taking 25 percent of the player’s future NIL earnings up to $125,000. The player is also required to make monthly social media posts, sign 10 autographs and be available for at least one public appearance per year.
In an interview with ESPN, Perkins, who co-founded the company with Wall Street veteran Chris Ricciardi, focused on the portion of the contract that pays players upfront.
“You have so many athletes and their parents who are struggling day-to-day,” Perkins said. “Because we’re actually taking a bit of a gamble on what the student-athlete is going to make in the NIL space, the benefit is the kid — the student-athlete — is able to get financial security so they don’t have to rush.”
Multiple finance experts, however, raised concerns about such deals, likening them to high-interest loans.
“To me it feels like you are preying on people who need the capital now and using that to cloud their focus on the future,” said Michael Haddix Jr., the CEO at Scout, which provides financial education seminars to college athletic departments. “It feels predatory, and it’s capitalizing on young people who need money and haven’t thought through the long-term implications.”
Added Utah law professor Chris Peterson, who was previously an adviser for the federal government’s Consumer Financial Protection Bureau: “These are trashy products designed to take advantage of young kids.”
Like Perkins, Ricciardi defended his company, stating that there’s no interest rate or requirement for the athlete to pay the deal back. ESPN’s report, however, noted that in the instance of the contract it obtained, the player could wind up giving Nilly “the equivalent of a $75,000 fee in exchange for the guarantee of and immediate access to $50,000 up front.”
With the NIL marketplace remaining unregulated, the reality is that such arrangements may have always been inevitable. While there’s certainly something to the idea of athletes having access to cash upfront, it’s telling that the financial experts ESPN reached unanimously agreed that it’s a bad long-term deal.
From a sports media perspective, it’s certainly interesting to see an ESPN report painting one of its own stars in such a seemingly negative light. But while the report has already resulted in Perkins receiving plenty backlash on social media, one would imagine that his reaction to the response could best be summed up in three words.
[ESPN]
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