ESPN host and retired NBA star slammed for offering ‘predatory loans’ to college and high school athletes

ESPN anchor and former NBA star Kendrick Perkins is facing backlash over a new startup company being compared to a “predatory” lender.

Perkins, the 39-year-old basketball analyst, has partnered with Wall Street investor Chris Ricciardi in Nilly, which offers college athletes upfront pay in exchange for future name, image and likeness (NIL) profits.

The problem, according to the expert who spoke to ESPN about the company, is that Nilly could entice a vulnerable group of young people into predatory loans. So far, Nilly has only dealt with 20 men’s football and basketball players, all of whom are at the college or high school level.

“These are worthless products designed to take advantage of young children,” Utah law professor and former Consumer Financial Protection Bureau adviser Chris Peterson told ESPN.

ESPN’s Dan Murphy has obtained one copy of a Nilly contract that offers a $50,000 payment to a high school student in exchange for exclusive NIL rights over seven years. In addition, Nilly will receive a quarter of that athlete’s NIL for the life of the deal or until Nilly gets $125,000 – 2.5 times the original investment.

And according to Ricciardi, Nilly can earn as much as 50 percent of an athlete’s NIL money, although a company spokesperson told ESPN that share could be as low as 10 percent.

NIL agreements have been allowed by the NCAA since 2021 and allow amateurs to earn third-party endorsement money without jeopardizing their eligibility. But it wasn’t until recently that such agreements could be bundled into other deals, such as those promoted by Nilly.

AJ Dybantsa, the country’s top basketball recruit, is set to make millions from NIL deals

Ricciardi emphasizes that the contracts are not loans, but licensing agreements, which protect athletes from default. Instead, he explained, the deals are more like the upfront payments musicians and authors receive for a share of future royalties.

“There is no interest,” Ricciardi said. ‘There is no obligation to repay. It’s purely a licensing agreement. I would be surprised if those people thought music advances were high-interest loans.”

But not everyone agrees with Ricciardi.

Michael Haddix Jr., who teaches financial education seminars to college athletic departments, described the schemes as “predatory.”

“To me, it feels like you’re preying on people who need the capital now and using it to cloud their focus on the future,” Haddix Jr. said. to ESPN. “It feels predatory, and it preys on young people who need money and haven’t thought about the long-term consequences.”

Courtney Altemus, co-founder of Advance NIL, which consults with athletes and schools, advises students to stick to shorter deals to avoid unforeseen problems. Plus, she says, athletes should do the math themselves so they understand the impact of this decision.

“They don’t understand it until they see the numbers,” Altemus said. “They’ll have to make their own choices, but we really want to make sure they understand how much they’re actually paying to access that money sooner.”

Gervon Dexter will pay 15 percent of his future NFL revenue to Big League Advantage

Naturally, Perkins has defended the company.

Perkins, a former high school star from Texas who jumped straight to the NBA in 2003, sees Nilly as a way to lower costs for low-income families.

“You have so many athletes and their parents who are struggling every day,” Perkins, the ESPN analyst, told ESPN. “Because we’re actually kind of betting on what the student-athlete is going to make in the NIL space, the benefit is that the child — the student-athlete — can get financial security so they don’t have to rush .’

And while most NIL deals are four- and five-figure deals for relatively unknown athletes, the numbers increase significantly when top recruits are in play.

AJ Dybantsa, one of the country’s top basketball recruits, could see anywhere from $7 million to $9 million in NIL money, according to longtime basketball reporter Jeff Goodman. And while it is unknown if Dybantsa has a deal with Nilly, such a player could end up paying millions and millions to the startup under the aforementioned contract.

Similar businesses already exist in the baseball industry, where prospects are often paid for a portion of their future earnings.

One such company, Big League Advantage, recently entered the NIL market, where a similar company, Vestible, was already operating. Both companies have paid college football players hundreds of thousands of dollars in exchange for future NFL revenue.

In one deal, former Florida defensive lineman Gervon Dexter will pay 15 percent of his future NFL earnings to Big League Advantage after the Chicago Bears rookie was paid $436,485 during his college years.