Aug. 30—Appearing before Congress in March 2024, former Alabama coach Nick Saban warned that the introduction of name, image and likeness payments into college football could spell danger for one of America’s most popular sports.
“You’re going to create a caste system where the rich will get richer and the poor get poorer,” Saban said at the time. “Eventually the fans will look at it like, ‘I really don’t want to watch the game.'”
Not so fast, coach — at least according to a Carnegie Mellon business school professor.
Tim Derdenger’s research with co-author Ivan Li found that NIL has led to more parity in college football, with closer games, more upsets and greater talent distribution.
“[NIL has] led to fantastic outcomes for college football,” Derdenger told the Post-Gazette. “It’s brought more competition into the league and into the games. It’s great for fans. It’s great for the players.”
The fifth season of the NIL era gets underway in earnest Saturday, with most teams around the country — including Pitt, Penn State and West Virginia — playing their opening games.
Derdenger and Li, from the University of Texas at Dallas, analyzed recruitment decisions before and after college athletes were allowed to profit from their name, image and likeness starting in July 2021.
They also looked at NFL draft results, betting odds and game outcomes pre- and post-NIL.
Their findings counter the assumptions many may have had that permitting college athletes to essentially be paid for their services — something the NCAA had outlawed for decades — would allow the most popular and successful schools with the largest fanbases and deepest pockets to “buy” the best rosters.
Some, apparently including Saban, feared that would tamp down on upsets and further increase the stratification of a sport long dominated by a select few programs.
Instead, Derdenger and Li’s paper — “Does Personalized Pricing Increase Competition: Evidence from NIL in College Football” — discovered the opposite. In the age of NIL, prized five-star recruits are more often matriculating to less successful schools, as are three-star recruits.
“In general, lower-ranked programs match more with higher-quality players in a post-NIL world,” the study said.
The results from four-star recruits were more mixed, but the combined impact of the markedly different talent dispersion post-NIL has seemed to affect gameplay, as well.
The study found that point spreads have gotten tighter post-NIL, indicating that sportsbooks expected closer games. The scores of games also appeared to get closer, and underdogs won more often.
Derdenger said the analysis “shows that competition is getting tighter and more competitive across the board.”
Why players are making different decisions in the NIL era
Derdenger holds a doctorate in economics and has been at CMU since 2009. The former collegiate golfer at George Washington University studies technology and sports marketing.
He wasn’t shocked by the findings of the college football study.
In the NIL era, he’s seen Travis Hunter, the No. 1 overall recruit in 2022, spurn the traditional powers and attend Jackson State, an FCS program. Last year’s College Football Playoff included schools such as Indiana, SMU and Arizona State — all without notable recent success.
But the reasons why were more surprising for the Tepper School of Business professor.
About 65% of the approximately 30 to 40 players rated as five-star recruits each year (Derdenger and Li used the 247Sports Composite Score as a guide) have been drafted to the NFL, regardless of where they attend college.
With their NFL futures not overly dependent on the quality of the program they attend, these top talents seem to be choosing schools that will offer the most NIL money.
And sometimes, lesser programs will be more willing to pay up — particularly those the study classified as “temporarily embarrassed,” having large fanbases but not performing well recently.
“Fans, donors, and boosters of the program want to see these once great programs do well again, so they contribute large amounts of NIL money to attract five-star recruits,” the study said.
From 2018 to 2020, 18 of 94 five-star recruits chose schools ranked outside the top 25 the previous season, according to the study. From 2022 to 2024, 40 of 110 five-star players went to programs not in the top 25 the year prior.
In the NIL era, five-star recruits are “more than 15% less likely to attend top 10 or top 25 ranked schools,” the study said.
Three-star recruits are also increasingly choosing schools of lesser football and academic quality, seemingly motivated by the chance to make more NIL money — but for different reasons than their five-star peers.
These approximately 2,000 players each year have only about an 8% chance of being drafted anyway, so some seem to be more interested in maximizing their earnings at the college level while they can, even if that means playing for a school less successful on the football field or less prestigious academically.
Four-star recruits, a group made up of about 400 players each year, have gone both ways. Lower-rated four-star recruits are also opting to attend less successful programs.
But higher-ranked four-star players appear to be the beneficiaries of the shifting habits of the players slotted above and below them. They are not following the trend of attending lesser programs in the NIL era.
As more five-star recruits choose schools farther down the ladder, they’re opening opportunities at the top programs for these high four-star athletes, Derdenger said.
What it means for college football
After controlling for other factors, Derdenger and Li found that point spreads have shrunk by 1.2 points on average in the NIL era — thus sportsbooks are predicting the games to be about 1.2 points closer.
This trend seems to play out in final scores, as well. Although the overall margins of victory have been larger than the spreads, they also have fallen by an average of 1.4 points in the NIL era, Derdenger said.
And David seems to have a better chance of slaying Goliath these days. Betting underdogs have won a higher proportion of games in the NIL era, the study found.
Last year, underdogs won a record 26% of games, continuing an NIL-era trend that’s seen underdogs win a higher share of games than in any season from 2013 to 2019.
While the study found that NIL has increased the competitiveness of college football, Derdenger said it’s difficult to analyze the effect several years down the road because of the House settlement, which allows schools to pay athletes directly, and the many legal challenges springing from that landmark deal.
Derdenger’s advice to college football power brokers? “Don’t touch NIL. It’s working.”
But he would make changes to other aspects of the sport.
The transfer portal now plays a massive role in college football roster-building. Since the NCAA dropped a rule in 2021 requiring players who transfer to sit out a year at their new program, there has been an explosion in athletes swapping schools.
An analysis by The Athletic of 600 top recruits in the Class of 2021 found that 60% of them transferred at least once in their college careers. The number of FBS players who entered the transfer portal jumped from about 1,700 in 2018-19 to about 3,800 in 2023-24, according to Fox College Football.
Derdenger suggested reimplementing the rule requiring transfers to sit out a year.
“The fact that there is free movement of these athletes without any penalty is what’s causing the chaos,” he said. “It’s not NIL. There needs to be friction put back into the system.”
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