As the NFL nears the halfway point of its season, there are, as always, plenty of business-related topics in the news. Here’s my take on three of them.
Caleb Williams nonsense
There have been some recent reports or, in some cases, rehashes of old reports, that USC quarterback Caleb Williams, the defending Heisman Trophy winner and presumed top pick in the 2024 NFL draft will be making some business of football decisions regarding the NFL draft next year.
Two reports that have caught my attention are (1) he may stay at USC next year and earn name, image and likeness money instead of NFL money, and (2) he may ask the team that drafts him for a percentage of ownership in the franchise. Well, .
Whether this is truly coming from Williams, or his father, or others, or no one at all, none of this is going to happen.
Regarding the first rumor about NIL money, consider the following: This year’s top draft pick, Bryce Young, signed a four-year contract worth approximately $38 million, with $24 million of it in signing bonus. We can estimate that the top pick in 2024 will earn roughly $40 million on a four-year contract, with roughly $25 million of it in signing bonus. That is before any endorsement money (the professional equivalent of NIL).
USC donors and sponsors may be wealthy, but they are not paying Williams more than $25 million to play for them next year. And even if they could and would, as a former agent I could never advise Williams to bypass the NFL as a top pick. First, he would be putting a $40 million contract on hold for another year when he could suffer injuries or a downturn in performance. More important, he would be delaying his second NFL contract as well, one that he can’t even negotiate until he has played three years in the NFL. And the second contract is where the “real money” for players resides.
Granted, the NIL vs. NFL is a legitimate conversation for low-round draft picks, where bonus amounts are in the $100K to $200K range. But it is not a serious discussion for the top of the draft.
As for equity in a franchise, well, no. The NFL draft system is a slotted system. Williams will know his compensation the moment he is drafted; the collective bargaining agreement has prefabricated all rookie contracts, and the numbers above will represent his contract if he is at the top of the draft.
Just for conversation’s sake, though, let’s say the NFL magically allowed the team that drafts him to give Williams equity in the franchise, and the team surprisingly and stupidly caves in to Williams. The equity, of course, would have to be valued for cap purposes. He could not take his entire salary in equity; he would have to be paid at least minimum salary. Thus, if we project roughly $1 million a year in actual salary, there would be $36 million of the $40 million contract that he could take (if somehow it were allowed) as equity. Thus he would have $9 million a year in equity of a franchise worth, say, $7 billion. In doing the math, that would be a 0.012% stake in the team for four years, or less if the valuation rises each year. And after four years, depending on whether Williams re-signs or has a team option, etc., that equity could be returned. Again, this is purely an academic exercise; it is not going to happen.
After all the noise and rumors over the next six months, Williams will sign a four-year contract with a fifth-year option next summer, and the nonsense will cease.
