Kendrick Perkins has co-founded a new company, Nilly, with Wall Street investor Chris Ricciardi, as reported by ESPN's Dan Murphy . The company looks to offer college athletes upfront money starting from $25,000 to several hundred thousand dollars in exchange for the exclusive rights to use or sell their name, likenesses, and image rights for seven years.
The company will earn and offer company investors anywhere between 10 to 15% of the athletes' NIL earnings during the seven-year period. While there are many other companies that provide the same service but with athletes' future professional salaries, Nilly will be the first company to do so while offering college athletes direct cash advances on their NIL earnings.
Kendrick Perkins spoke to ESPN about his new company, noting that his goal with Nilly is to try and alleviate some of the financial worries and stresses that college athletes feel while playing, referencing his own time as a student-athlete.
"You have so many athletes and their parents who are struggling day-to-day. 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."
ESPN reported that the company has already signed contracts with 20 athletes, all who are either men's basketball or football players. When they reached out to these athletes for a comment, they confirmed the signing of a contract but refused to address the company and the details that were provided.
The report also mentioned what the structure of these contracts looks like, after looking at a contract a high school athlete signed. The deal provides the athlete $50,000, in exchange for the athlete's name, likeness, and image rights, for the next seven years.
The contract stipulates that Nilly will receive 25% of the athlete's NIL earnings for the length of the contract, or until the company earns $125,000 from the agreement, which is 2.5 times the initial investment they made by providing the athlete $50,000 in upfront money. Co-owner Chris Ricciardi said the company can collect anywhere between 10 to 15% of the athlete's NIL earnings, depending on the deal.
These Deals Could Be Very Dangerous For College Athletes
Murphy wrote in the article that he spoke to several financial consultants, who noted that Nilly's contracts are similar to high-interest loans, that provide the consumer with a lot of money upfront, but take a lot of money away from them in the long run.
"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. It feels predatory, and it's capitalizing on young people who need money and haven't thought through the long-term implications."
Ricciardi has clarified that the terms of their contracts with athletes are not loan-based, and if the athletes are not able to earn a lot of money from NIL deals during the length of the contract, then they are not obligated to pay back Nilly for the initial amount they gave them as an advance.
"There's no interest rate. There's no requirement to pay back, it's purely a licensing deal. I would be surprised if those people thought that music advances were high-interest loans."
When asked about the concerns of athletes being exploited, Perkins told Murphy that this deal would be looking to help college athletes, rather than harm them or exploit them.
Any player who signs a deal with Nilly must fulfill several commitments as stipulated in the contract, which could include at least one social media post every month, autographing at least 10 items, and making at least one public appearance in a year during the contract's lifespan.
What makes this even worse is that Nilly, under the terms of the agreement, is not obligated to provide help to these athletes in finding NIL or endorsement deals.
Both Perkins and Ricciardi claimed that using their statistical models, they have determined how much to give an athlete as an advance, and even added that it is unlikely that they recoup their full initial investment during the lifespan of the deal, presenting it as a win to younger athletes.
Athletes Are Trusting Nilly With Their Earnings
The report noted that Kendrick Perkins claims the company has gained a lot of momentum through his marketing, as he promotes Nilly and their athletes on his Instagram account, which has over 500,000 followers.
In order to pay the players, Nilly allows investors the opportunity to buy a set of contracts they sign with athletes. This is also to ensure that the poor financial performance of one athlete does not hurt the investment made, as other athletes could carry the load with their endorsement deals.
The duo of Perkins and Ricciardi clarified that these deals do not have any ramifications or entitlement to the athletes' potential professional earnings, and are strictly for their time as student-athletes signing NIL deals.
"You can't find another company that's going to take this type of risk like we're doing. It's solely based on what you're going to accomplish in the NIL space... We're all aligned to maximize their NIL earnings. We're not an agent exactly, but we are a financial partner with them."
Some experts told Murphy that the nature of these contracts could lead a judge or prosecutor to determine that these contracts resemble loan agreements rather than licensing agreements. This is something the company is aware of, as they have listed it in their investor memorandum as a risk owing to the recent ruling about income-sharing agreements.
If a judge does deem Nilly's contracts as a loan or an income-sharing agreement, then it could lead to the company dealing with several lawsuits, from both athletes and investors.
In perhaps the most alarming sign, the contract has a morality clause, that allows Nilly to terminate the agreement, but also retain the athletes' future earnings entirely, or even sue them for the initial advance amount.
These contracts are a big financial gamble for athletes, as they are trading in their major future earnings for what could be just a fraction of what they can stand to make in the future. On top of that, the fact that Nilly doesn't help the athletes find endorsement deals, despite vowing to come up with a plan to do so in the future, is a major red flag.
Any athlete considering signing a deal with Nilly, much like any other contract at such a young, should be very careful, understanding their financial upside and ceiling as student-athletes and what they can stand to make, but more importantly, owe the company during the length of their contracts.
Related: Charles Barkley Destroys Kendrick Perkins: "He Averaged 5 Points Per Game..."
Thank you for being a valued reader of Fadeaway World. If you liked this article, please consider following us on Google News . We really appreciate your support.
Local News
