OT: Kendrick Perkins co-founded 'predatory-ish' NIL cash upfront company

[SweaterBae]

The best definition of capitalism I've heard is that it is a system in which every party involved attempts to screw over every other party as hard and often as they can, until it stops being profitable.

Their model more closely resembles socialism.

It does not in any way, and you seem to completely miss the point, regardless.

[kenwood3333]

not much different than agents gifting valuable items to prospective young players in the hope they will sign with them when and if they turn pro

[Speedlot]

I hate Perkins as much as anybody out there... but from this brief reading...
Meh. There's worse stuff out there.

If they can get scammed by this then they can get scammed by other things.

[Optimus_Steel]

So he is a loan shark, lovely….

[Curmudgeon]

Connie Hawkins was banned for life when he took a $200 loan from an agent against future earnings.

[meekrab]

Yes, except Angel investors can make 100x-1000x their investment if they hit on a unicorn (ie AirBnB), whereas here, their return is capped at 2.5x investment. It's a terrible business model for Perk tbh.

Presumably it's not actually capped but their %age drops after the 2.5x mark.

Why would you assume it's not capped when all the info out there literally says it is and nowhere does it indicate otherwise?

Combining the volatility of the college athlete NIL regulatory landscape with the already volatile nature of the marketability of an individual college athlete makes for an extraordinarily risky investment for Nilly. The founders claim their goal is to provide a modest, mid-teens return for its investors. A daunting task when the company is dishing out $50,000 payments to unproven high school athletes, particularly when you consider that they cap their earnings at 2.5 times the initial payment.

Because it would be immensely stupid to voluntarily cap your own earnings when you have exclusive rights to NIL contracts for what could be a young superstar?

But then again Kendrick Perkins is involved so we can't rule out immense stupidity I guess.

[hippesthippo]

Yes, except Angel investors can make 100x-1000x their investment if they hit on a unicorn (ie AirBnB), whereas here, their return is capped at 2.5x investment. It's a terrible business model for Perk tbh.

Presumably it's not actually capped but their %age drops after the 2.5x mark.

Why would you assume it's not capped when all the info out there literally says it is and nowhere does it indicate otherwise?

Combining the volatility of the college athlete NIL regulatory landscape with the already volatile nature of the marketability of an individual college athlete makes for an extraordinarily risky investment for Nilly. The founders claim their goal is to provide a modest, mid-teens return for its investors. A daunting task when the company is dishing out $50,000 payments to unproven high school athletes, particularly when you consider that they cap their earnings at 2.5 times the initial payment.

A mid-teens return is much much more than modest.

[hippesthippo]

not much different than agents gifting valuable items to prospective young players in the hope they will sign with them when and if they turn pro

True, but Nilly currently operates in an unregulated environment unlike the areas Agents operate in. There is very little in the way of settled law regarding NIL as it's all still brand new. Bringing attention to matters like this is how new law will get established and bad-actors weeded out.

[PushDaRock]

Presumably it's not actually capped but their %age drops after the 2.5x mark.

Why would you assume it's not capped when all the info out there literally says it is and nowhere does it indicate otherwise?

Combining the volatility of the college athlete NIL regulatory landscape with the already volatile nature of the marketability of an individual college athlete makes for an extraordinarily risky investment for Nilly. The founders claim their goal is to provide a modest, mid-teens return for its investors. A daunting task when the company is dishing out $50,000 payments to unproven high school athletes, particularly when you consider that they cap their earnings at 2.5 times the initial payment.

Because it would be immensely stupid to voluntarily cap your own earnings when you have exclusive rights to NIL contracts for what could be a young superstar?

But then again Kendrick Perkins is involved so we can't rule out immense stupidity I guess.

Some of us have literally been calling it a bad business model from the very beginning.

[PushDaRock]

Presumably it's not actually capped but their %age drops after the 2.5x mark.

Why would you assume it's not capped when all the info out there literally says it is and nowhere does it indicate otherwise?

Combining the volatility of the college athlete NIL regulatory landscape with the already volatile nature of the marketability of an individual college athlete makes for an extraordinarily risky investment for Nilly. The founders claim their goal is to provide a modest, mid-teens return for its investors. A daunting task when the company is dishing out $50,000 payments to unproven high school athletes, particularly when you consider that they cap their earnings at 2.5 times the initial payment.

A mid-teens return is much much more than modest.

S&P returns over 10% as an average annually. A mid-teens return target for this is a pretty terrible investment imo especially when risk adjusted.

[hippesthippo]

Why would you assume it's not capped when all the info out there literally says it is and nowhere does it indicate otherwise?

Combining the volatility of the college athlete NIL regulatory landscape with the already volatile nature of the marketability of an individual college athlete makes for an extraordinarily risky investment for Nilly. The founders claim their goal is to provide a modest, mid-teens return for its investors. A daunting task when the company is dishing out $50,000 payments to unproven high school athletes, particularly when you consider that they cap their earnings at 2.5 times the initial payment.

A mid-teens return is much much more than modest.

S&P returns over 10% as an average annually. A mid-teens return target for this is a pretty terrible investment imo especially when risk adjusted.

Mid-teens is a significant increase over the 10% return of a solid index fund. It seems obvious, but 50% is 50%.

[dhsilv2]

Presumably it's not actually capped but their %age drops after the 2.5x mark.

Why would you assume it's not capped when all the info out there literally says it is and nowhere does it indicate otherwise?

Combining the volatility of the college athlete NIL regulatory landscape with the already volatile nature of the marketability of an individual college athlete makes for an extraordinarily risky investment for Nilly. The founders claim their goal is to provide a modest, mid-teens return for its investors. A daunting task when the company is dishing out $50,000 payments to unproven high school athletes, particularly when you consider that they cap their earnings at 2.5 times the initial payment.

A mid-teens return is much much more than modest.

No it isn't. Nobody is investing their money in something like this, with a real chance of it going to zero without a fairly high return. Mid teens is actually very small.

[dhsilv2]

A mid-teens return is much much more than modest.

S&P returns over 10% as an average annually. A mid-teens return target for this is a pretty terrible investment imo especially when risk adjusted.

Mid-teens is a significant increase over the 10% return of a solid index fund. It seems obvious, but 50% is 50%.

I'd expect investors to want 100-200% returns on something like this. Mid teens is insanely low.

But to your example. This is far more volatile and risk than a 1.5 beta vs the S&P would indicate.

Or let me quote you someone who I think best explained why mid teens is a modest return

True, but Nilly currently operates in an unregulated environment unlike the areas Agents operate in. There is very little in the way of settled law regarding NIL as it's all still brand new. Bringing attention to matters like this is how new law will get established and bad-actors weeded out.

[hippesthippo]

S&P returns over 10% as an average annually. A mid-teens return target for this is a pretty terrible investment imo especially when risk adjusted.

Mid-teens is a significant increase over the 10% return of a solid index fund. It seems obvious, but 50% is 50%.

I'd expect investors to want 100-200% returns on something like this. Mid teens is insanely low.

But to your example. This is far more volatile and risk than a 1.5 beta vs the S&P would indicate.

Or let me quote you someone who I think best explained why mid teens is a modest return

True, but Nilly currently operates in an unregulated environment unlike the areas Agents operate in. There is very little in the way of settled law regarding NIL as it's all still brand new. Bringing attention to matters like this is how new law will get established and bad-actors weeded out.

This is conflating two separate issues in my opinion. 15% can be a great return and also not worth the risk if you don't believe you're going to actually get a 15% return lol.

[dhsilv2]

Mid-teens is a significant increase over the 10% return of a solid index fund. It seems obvious, but 50% is 50%.

I'd expect investors to want 100-200% returns on something like this. Mid teens is insanely low.

But to your example. This is far more volatile and risk than a 1.5 beta vs the S&P would indicate.

Or let me quote you someone who I think best explained why mid teens is a modest return

True, but Nilly currently operates in an unregulated environment unlike the areas Agents operate in. There is very little in the way of settled law regarding NIL as it's all still brand new. Bringing attention to matters like this is how new law will get established and bad-actors weeded out.

This is conflating two separate issues in my opinion. 15% can be a great return and also not worth the risk if you don't believe you're going to actually get a 15% return lol.

No. When people speak about modest returns it's based on the risk and type of investment.

[Ryoga Hibiki]

I don't understand the outrage and I don't see how this is predatory.
What was actually predatory was the NCAA system before NIL.

[Ryoga Hibiki]

250% back on a loan is usury. For those that don't know that's charging exorbitant interes rates on what should be a standard loan. 25% is generally considered usurious. Giving a kid a 50k loan that isn't squashed until you get 125K back is just wrong.

it's not exactly like a bank loan, if the player doesn't end up generating enough NIL he won't have to give the money back.
There's a risk from the company perspective.

[Ryoga Hibiki]

I think the NBA marriage with betting and all those ads everywhere are way more "predatory" than this.

[PushDaRock]

Mid-teens is a significant increase over the 10% return of a solid index fund. It seems obvious, but 50% is 50%.

I'd expect investors to want 100-200% returns on something like this. Mid teens is insanely low.

But to your example. This is far more volatile and risk than a 1.5 beta vs the S&P would indicate.

Or let me quote you someone who I think best explained why mid teens is a modest return

True, but Nilly currently operates in an unregulated environment unlike the areas Agents operate in. There is very little in the way of settled law regarding NIL as it's all still brand new. Bringing attention to matters like this is how new law will get established and bad-actors weeded out.

This is conflating two separate issues in my opinion. 15% can be a great return and also not worth the risk if you don't believe you're going to actually get a 15% return lol.

Without factoring in risk, you're basically just saying 15% is higher than 10% which is the most pointless thing ever to bring up.