Collegiate Athlete NIL Issues - Chuck Bates

My guest for today's show is Chuck Bates.  He works for Stegent Equity Advisors, which provide comprehensive planning and managing of assets for families and individual financial needs. 

He is a collegiate planner with an expertise in helping families/students save thousands of dollars in college tuition. He understands and has researched financial aide programs, individual college business models, numerous  government grants, and scholarships available based on merit or financial needs.

We talked specifically about a program called Name Image and Likeness,(NIL) for athletes in the college arena. This program protects an athlete from the pitfalls of the financial gains and deals that are made in on their behalf in order to earn money.   

Chuck is a great resource for anyone looking for ways to save and gain money for college and for financial planning for your future. Website:  www.stegentequity.com; Linkedin - https://www.linkedin.com/in/steven-chuck-bates/; Twitter -  @CBatesSEA; Facebook - https://www.facebook.com/StegentEquity

Contact info: chuck@stegentequity.com, Phone: 832-465-3913

SPONSORED BY: Kefi Spaces, Houston, TX. https://kefispaces.com/ Co-Warehousing, Fulfillment, office space and more. Call today 713-661-2701.

If you liked today's show - please let Laura know by either contacting her at laura@fisherpodcast.com or give her a great review. Also, if you know of someone who would be an inspiring guests, let her know… even if it's you. Until then… "You better be Up to something!"

Transcript

Laura Fisher: 0:02

Welcome to small business insights where back office conversations give us insight to what's really going on. Is it grit, or luck? That gives a small business owner an advantage? Let's find out. I'm your host, Laura Fisher. All right. Well, today in the studio, I have a special guest, Steven Bates, but he goes by check. And he's from CJ equity advisors. Check, say hello.

Unknown: 0:31

Hello. Thank you for having me.

Laura Fisher: 0:32

All right. This is his first time in the studio. So I'm, I'm, I wish I could see him. He's a good looking man, you'll see a picture in the artwork and social media. But he's got some special interest when it comes to financial planning. But before we get into that, Chuck, tell me how you got here?

Chuck Bates: 0:51

Sure. So I'm a military brat. I grew up overseas. My dad was in the Air Force. I ultimately went to the University of Nebraska. After that, I'm

Laura Fisher: 1:01

supposed to say something after that Go Big Red. Okay,

Unknown: 1:04

there you go. It's especially painful today because our head coach was fired yesterday.

Laura Fisher: 1:08

Oh, my cars are just what they lose it.

Unknown: 1:12

Yeah, it was. It's unfortunate. But yeah, it's it's probably definitely warranted. All

Laura Fisher: 1:17

right. All right. So I'm sorry. I usually when somebody says it from Nebraska, they usually have something to say afterwards.

Chuck Bates: 1:23

I'm a little sad today. Okay. Yeah, so I work for Steve and equity advisors. I've been there about two years. I started into this path after 16 years at a big asset management firm here in Houston. That allowed me to be exposed to a huge number of nonprofit companies. Bridgeway gave 50% of their profits to charity. And through that process, it led to my wife and I becoming foster parents and adoptive parents. In that process, I learned that if a child has spent time in the foster care system, they get free tuition or tuition waivers to any public university in the state of Texas. And it was very curious to me, I was like, if I didn't know that, what else Don't I know? Yeah, started to study that and found out I could make a entrepreneurial career out of

Laura Fisher: 2:08

it. Out of what helping folks find Career Money helping college money.

Chuck Bates: 2:14

Yes, ma'am. Helping college bound families save, learn about how the financial aid system works. Determine what kind of student or unique situation they have in in, if you keep an open mind about your school list and where you want to go. There's a lot of money out there, and most families can save somewhere between two and$20,000 a year.

Laura Fisher: 2:31

Wow. So are you talking about student that has academics? Except excellence? Or just talking about you said, foster care? That's kind of a what a, an anomaly? I mean, how do you find out these things? That's you go to you

Unknown: 2:44

what exactly. So I started by dissecting the federal financial aid formula, it comes out once a year, and there's a lot of intro inputs that go into it. Examples would be, and they apply very much to you and your audience. If you're a small business owner, and you have more than 100 employees, they'll assess the value of your business before they give you financial aid. If you have less than 100 employees, they don't assess the value of your business. So like in a case like that a business with a modest net income of 100 $100,000 could technically be valued up to, you know, close to a million dollars, and that would dramatically impact the amount of student aid you might be eligible or based on your business not eligible for.

Laura Fisher: 3:27

Wow, I don't like the news of that. What other kinds of surprises are out there?

Unknown: 3:32

divorced families, right? If you're divorced in your student lives with a parent that has the lower income 51% of the time, they only assess some schools only assess that parents income for financial purposes. Other schools will assess both parents and some schools will assess both parents and if they've remarried the additional parents.

Laura Fisher: 3:54

So that's where you're saying you kind of know what institutions to go to and what rules. So how do you get your knowledge on things like that,

Chuck Bates: 4:02

I've been lucky to meet a number of mentors in the field. There's software out there that can help with it. So you just continue to study, you learn the formulas, you you dig into the how each school's business model works, right? Rice, for example. They don't necessarily give a lot of merit scholarships for great academic grades. But if you're good enough student to get accepted there and you have a low income, they meet nearly 100% of your need with aid and grants. So that means money, you don't have to pay back where a lot of other schools, they may meet a smaller percentage, and then of that smaller percentage, it will be a combination of grants and loans. So you're in addition to not covering the full amount, you're borrowing money that you'll have to pay back at a later day.

Laura Fisher: 4:45

All right, so as a financial planner, how do you when do you start with a family? Is it when my child is born? Like I set up the college savings account when they're six months old? Or is that house how soon you start or when do you really start?

Unknown: 4:59

That is the best time To start saving for, for sure. There's what 218 months from the time a child is born until they leave, oh my gosh, you already have numbers for college. And if you think about what it cost to go to college right now, it's about 30,000 a year. So 120,000 for four years, if you divide that number out, you're looking at five to $600 a month, and it's unrealistic for a lot of families to save that much. If you have two or three or four kids, it grows exponentially.

Laura Fisher: 5:27

Right? And how are scholarships easy to find? I know for I was disillusioned, I will tell you this, I have four children. One of my children graduated the top 10% of his class, only missed one math question on the LSAT. Okay, so he got automatically accepted into Texas a&m, but a very nominal like $1,000 scholarship. Right? That was it? Yeah.

Unknown: 5:56

So in Texas and California, those two states especially, there's such demand to get into the in state schools, that they're not necessarily very generous with either need or merit based aid, right? There's, you know, they accept maybe 8000 Incoming freshmen a year, give or take. And if you just think about the top 10%, or now it's down to top 6%. You know, there's more than enough students to fill their entire demand, where a lot of other schools don't have that same challenge.

Laura Fisher: 6:27

So that's when I come to you or a college planner, saying, I got this exceptional student, but I don't have the money to put them in there. He's got his eyes set on Texas a&m, can you help him? What steer in a different direction? Is that what you do?

Unknown: 6:42

So we would look at the student's grades and test scores, and about 85% of all scholarship dollars come from the institutions themselves. And that's kind of the middle of the road private schools that are most generous with academic finance based financial

Laura Fisher: 6:58

state schools. Exactly. Okay. And then I think, Oh, I can't afford that. Because it's a private school

Unknown: 7:04

right? There. sticker prices are typically more expensive, and parents get discouraged or scared off by that. But the reality is the net cost after the merit based scholarships, almost always bring those closer to in line with the state schools. That's their Bogey, these private schools, they realize that's who they're competing against. And a lot of them want to bring in better academic students to bring up the kind of standings or rankings, I'm sure everybody's seen money, or Forbes, or all these different rankings. And by bringing in better test scores, and grade point averages from out of state, their freshman class typically looks better, and they use that merit base made aid as an incentive to bring down the cost and get the best students.

Laura Fisher: 7:51

Now, as a financial planner, you know, I know you're going to encourage us to start saving, are there all kinds of saving packages and different ways to do it programs? I know Texas has some, I'm sure they're in other states. And then like I have, I have another son, who I've saved all this money up, but he's not going to college, what I do with all that money,

Unknown: 8:11

so all great questions, there's a lot of choices. My I have a son who has some some challenges, and college may not be in his future, we saved via UTM a account for him. It's just an investment account that is in the child's name. And that monies for has to be used for his benefit. And my goal with him is, you know, maybe he'll become a welder or H vac engineer or something. And he can use that to start a business, right? We're both entrepreneurs, we, we value that. And, you know, he may have to go through a apprenticeship, but eventually he can be a business owner. And that would be my goal. 529 plans are very flexible. If you fund that name, a beneficiary and not all the money is used or a student does does not go to college, you can change the beneficiary to another, another child or even a niece or nephew or grandchild

Laura Fisher: 9:04

that has to go towards education has to go to education. You have to stay within the state.

Unknown: 9:08

No, there's no requirements around that. And that money can be withdrawn. But there could be financial penalties. Well, that's a that's the case for anything. Yeah, exactly. So it's not like it's gone forever. And as you age, there's something called an ABLE account it can be converted to which helps with medical and other expenses in old age.

Laura Fisher: 9:29

Okay. So tell me about the firm you work for, what kind of what kind of clients do you have overall, I'm sure you do more than collegiate planning and, and all that. So tell me a little bit more about your firm. Sure stage

Unknown: 9:41

and equity advisors was founded by Lloyd stage and about 25 years ago. We manage assets for about 100 families to under a million dollars give or take. We provide tax planning, tax services, investment management, financial planning, retirement planning, small business assistance, so kind of concrete Hands of financial planning depending on where our clients are, and we do our best to meet them where they're at,

Laura Fisher: 10:05

and how many, how many planners, how many financial planners are in your office,

Unknown: 10:09

there's three, three employees in the office, two CFPs, and myself. And we work together as a team to provide those services.

Laura Fisher: 10:18

That sounds like a nice, manageable shop. Like I'd could call you and talk to somebody,

Unknown: 10:23

you'll get somebody on the phone every time. That's, that's a promise.

Laura Fisher: 10:27

That's good. All right. So you and I have been talking about this nisl. And its name, image and likeness for at athletes in the college level. So tell us what that means. And then after the break, we'll go a little bit more into it.

Unknown: 10:45

Sure. It's a relatively new development a little over a year ago, most of the states, there's 29, by my count recently that have passed laws saying that students, student athletes are now allowed to profit from their name, image and likeness, because of all the attention they bring to university. In some cases, it can be very, very profitable or lucrative. And it provides opportunities for students, student athletes that they didn't have prior to this, where they were very restricted by the NCAA rules on where and how they could earn money. Which was basically because the NCAA was saying, you know, if you give them these additional benefits, it's illegal and you'll get unfair advantage and on the sporting field,

Laura Fisher: 11:25

yeah, it looks like you're bribing or payola or some favoritism, and exactly all that good stuff. And I'm sure that has existed.

Unknown: 11:32

Oh, for sure. But but there's also been, you know, great instances, I think, you know, like Mike law of the The Blind Side, you know, there's a big kind of concern that they adopted him just to play football at Ole Miss. And

Laura Fisher: 11:46

that's right, that was implied in the movie as a great movie. It was. But a college athlete is at a disadvantage, because it takes a lot to be an athlete, it takes a lot to go through college and do both. And then they're not allowed to have a job, or some kind of outside revenue. How's that worked out? Yeah.

Unknown: 12:08

Previous to the change the there were very high restrictions about when they could work, what kind of job how they could get paid. And it was very difficult for a lot of them. Although they did receive a stipend, typically, it was not very much, typically less than$300 a month, I believe, in most cases. And that's not much to take a take a friend on a date or go out to dinner, or, in some cases even traveled to see friends or family or just buy some clothes buys. Exactly. It's the things we take for granted.

Laura Fisher: 12:39

Yeah, those entertainment dollars as are pretty important in college too. All right, so when we come back, we're going to talk a little bit about what the NIR why it came about. And maybe if you have a young athlete, what you need to be looking for and planning for as they go into college. All right. Sounds great. All right. We'll be right back.

Unknown: 13:00

Ladies and gentlemen, this is your captain speaking. Thank you for listening to small business insights. Today's show is sponsored by GAVI spaces, new location in Houston, air conditioned warehouse units with loading docks, carrier services, fulfillment, break room, free Wi Fi, the perfect place to grow your E commerce business Jeffy spaces located in the design district of Houston. And now back to small business insights.

Laura Fisher: 13:25

All right, I'm back with Chuck Bates from CJ equity advisors and we're talking about the ni l. The name image and likeness program that's going on. I don't even know what to call out

Unknown: 13:38

the country. Yes, almost half our states are more than half our states now have laws than the makeup acceptable.

Laura Fisher: 13:45

So I'm here. You know, our show here. We recorded in Houston, and I'm familiar with the Aggies. Right? And so I remember when Johnny Manziel was really big. And was he the Heisman Trophy winner? Yes. A Heisman Trophy, okay. And we were going berserk about him because he was so unpredictable and so fun to watch. He made bass F football fun to watch. But they had shirts, Texas a&m shirts with his number on it. But he wasn't getting any royalties off of that. Is that right? At least not legally. Okay, so So we'll say no, correct. All right. So that's changed. That's what this is about. Because when somebody is benefiting off of my name, and likeness and image, that's me. That's my I'm the product and here another institution was selling it and benefiting from it. And someone said, No, that's wrong. Exactly. Okay. So tell us a little bit of history about that.

Unknown: 14:49

So I think and this is just my opinion, I think it goes all the way back to 2009. There was a famous basketball player named Ed O'Bannon at the University of California, Los Angeles, UCLA. lay in there was a quarterback at Arizona State and ultimately Nebraska where I went that were part of a class action lawsuit. Basically saying it's unfair that the NCAA profits for my name, image and likeness, and I don't see any of that share of revenue.

Laura Fisher: 15:17

Yeah, they're already limiting Him on any kind of revenue, they're probably feeling hungry and whatever, you know, taken advantage of.

Unknown: 15:26

And these, these student athletes bring a lot of eyes to not only their program, but donations, donations. And, you know, if you look at the most recent big tin meteorites deal, it was $7 billion over seven years, that's a billion dollars a year, that's going into the schools that's divided to the schools.

Laura Fisher: 15:46

And the schools are dividing that however they want to,

Unknown: 15:49

yeah, they they get their portion and can use it as they see fit. And that's not going to the student athletes always

Laura Fisher: 15:56

about money, let's just break it down to that. Alright, so let's back to the student who is who's creating a sensation, alright. And they can't tell us where they are.

Unknown: 16:08

So they can now they can be a spot, or they can advertise for companies. They can nice, yeah, they can do autographs, they can have t shirts created for them. One of my favorite ones, and I apologize, I don't know the young lady's name. But during the NCAA basketball tournament, a basketball got shot up on top of the hoop and got stuck near the timeclock at the very top right, and they couldn't reach it. And they, you know, first they were trying to poke it with a broom and different things. And then eventually, two of the cheerleaders, one male and one female went over there, and the male lifted up the female, and she got the ball and the game went on, right. And they made a t shirt about that. And she was able to claim some of the profits. And that's a neat kind of unexpected way where where somebody was able to profit from being the face of that moment in time.

Laura Fisher: 17:00

Okay. All right. So how are they managing this? Well,

Unknown: 17:04

each school is required to or not required, but has a typically as a program that they provide kind of financial literacy and education. Then there's the collective. So this would be a group of fans that kind of pools their money and allows the athletes to get paid from the money but uses them whether it's on social media to advertise or market certain things. Well, I

Laura Fisher: 17:29

know when I used to work at a&m, back way back when and if you were going to use some their logo, you had to go through licensing department. So are they going to have the same thing for student athletes, student

Unknown: 17:40

athletes cannot use their logo or uniform when they're doing outside activities currently. Okay. So that's one of the things I can't do, and it could get them in trouble with compliance in this in the state law. And that's one of my biggest concerns, to be honest, is do the students, student athletes know what they can and can't do? Do the businesses that are paying them know what they can and can't do? And if a business is maybe less scrupulous, scrupulous, could they, you know, intentionally get a player in trouble or unintentionally, you know, we just want the best outcomes for everybody. So the more we can educate both the businesses and the student athletes about what is approved and not approved is pretty important. Well, yeah.

Laura Fisher: 18:21

And if I'm a student athlete, I'm not going to have the business savvy to approve or disapprove who's using my likeness.

Unknown: 18:27

Yeah, it's funny, you bring that up, because they took a survey recently of student athletes, and over 50% said they wanted more training and education around the the financial and legal ramifications of being involved in in IO. So this is a new frontier. It really is. It's it's happening on the fly. It's like, it's like building an airplane in the sky almost.

Laura Fisher: 18:50

So where do you see your part as a financial adviser? Where do you see the education begin? And how can you walk into athlete through that?

Unknown: 19:00

Really, it's just intellectual property and research. The first thing I'd say is the laws in the state you went to high school, probably aren't going to be the same as the state you're going to college in assuming you go out of state. If you stay in state, it's one thing but in a lot of cases, those laws and rules are different. The most striking one to me in Texas is that high school athletes are not allowed to profit from NFL. So we had an example of that with a young student athlete from Dallas Fort Worth. He was a highly regarded quarterback recruit, and he left the state before high school was finished, and went to college in a state where that was acceptable, and why he left. I don't know him personally, but a lot of people have speculated that

Laura Fisher: 19:43

that's the case. And so what was the consequence? He went

Unknown: 19:47

there and was able to immediately start getting in il deals. He stayed there for a year and lo and behold, he transferred back to UT started as their starting quarterback this weekend and was injured but uh oh wow. And, you know, so he left the state that it wasn't allowed him, went to another state probably made some money, but we don't really know. And his back is the starting quarterback at UT.

Laura Fisher: 20:09

Okay, let's talk about injury. So what are the consequences if they don't get to fulfill their year of playing and the expectations of the advertiser is not met?

Unknown: 20:22

That's a great question. And it's one of the biggest concerns I have, you know, what if they don't meet their obligations as a student? What are the consequences? How do they go about that? Or if, on the other flip side of that coin, if a student does everything they do, and the business doesn't meet their obligations? Right? What RAM? What? How can the student, you know, become whole? If you will,

Laura Fisher: 20:45

right? It sounds like there's gonna be a whole new industry of NIHL agents,

Unknown: 20:51

you're, you're definitely starting to see them. And that's one of the best things with most of the state rules, like, especially in Texas, and most of the other states, the students are now allowed to have professional representation. And I think that's one of the most important things for them.

Laura Fisher: 21:05

It will help what they weren't able to do that as well. That's part of it. Yeah, before you would lose your eligibility. So if I, if I was Johnny Manziel, are a high performing athlete. In college, I wasn't allowed to have an agent.

Unknown: 21:19

Correct, you would lose your NCAA eligibility. They consider that becoming a professional basically.

Laura Fisher: 21:25

So I guess they just call him a friend. Right? And you can't, there's no, there's not supposed to be any connections or ties or strings or anything attached.

Unknown: 21:34

Yeah, there was definitely a lot of that's

Laura Fisher: 21:37

a lot of promises. I mean, how does that how does a young man or young woman know that that friend is going to be credible?

Unknown: 21:46

Well, and in theory, they're not even supposed to have contact with them until they've graduated and fulfill their eligibility.

Laura Fisher: 21:51

But we know it happens. You think so?

Unknown: 21:54

In they don't. And I think that's why, you know, some athletes probably were taken advantage of. A lot of it depends on their family and the connections they have. You have, they've been through some of those things before. You know, a lot of these athletes are second generation their parents played in college in some of the same sports.

Laura Fisher: 22:13

Wow, it sounds like an opportunity. And also sounds like a big mess. As far as administration of it.

Unknown: 22:21

Yeah. And, you know, at the University of Nebraska, where I'm most familiar with the there's a gentleman who left the football program to create a business, athlete branding and marketing. And that's specifically what he does. He's an agent now and helps provide the legal compliance financial accounting tax advice to the students, as they get deals.

Laura Fisher: 22:44

Wow. Wow. And they have to be good at it. I mean, an exceptional athlete, I used to one of my, I have quite a checkered past. But one of them was my I got my degree in music business. And I learned there that I like the back office side, I'm a musician, but I like to, I like the back office business side of it. And when you have, when you let the athlete or the performer do their thing, you don't you don't have them worry about the back office thing. So they can concentrate on their craft. And that can be very distracting. I mean, I know in college, when I was at a&m and advising those college students, boyfriends, and girlfriends can just be a huge distraction, I can imagine financial deals and expectations and having an advertiser say, Hey, you didn't perform like I wanted you to Saturday, I'm gonna back out of this deal. I mean, I'm sure that kind of stuff half is gonna happen,

Unknown: 23:44

that could happen. And my concern is, you know, some of these deals are not cash deal. So maybe you get an apartment and you do social media appearances, or you get a car and you get to drive it for a year. But all of those things are considered alternative compensation. And the IRS may be looking at these deals to make sure they're getting their fair share of the taxes. Absolutely. An expensive car. Driving that for a year could generate a tax burden between five and $13,000, depending on how long you drive the car and the value of it

Laura Fisher: 24:16

and and they wouldn't even thought about hey, I've just driving a sexy new car.

Unknown: 24:21

Exactly.

Laura Fisher: 24:23

That would be so that's where you're gonna come in.

Unknown: 24:26

I'd like to make them aware of those things. Understand the difference if they're a W two employee, which as an entrepreneur, I'm sure you understand, you know, you get paid a salary, you're withholding everything's taken out or are you 1099 contractor where you're responsible for those taxes, Social Security, different things like that. And if you are, that can be a big, big surprise at the end of the year when that tax burden comes due or you get, you know, a bunch of 1090 nines for just over $400 Each or $500 Each that you have to be responsible for.

Laura Fisher: 24:58

Wow, okay, so Um, if my listeners are interested in talking to you some more, and learning more about this for their loved ones, or maybe figuring out how to make it into a career themselves, and I know you're going to be growing your career in this in this area. So tell us how to reach you

Unknown: 25:18

can reach me via email Chuck at Steve's inequity.com. That's by far the best way.

Laura Fisher: 25:22

I'll have that in the show notes. And how about are you on LinkedIn?

Unknown: 25:26

I'm on LinkedIn. I don't know my profile. That's right. I'll put that on LinkedIn, and Twitter. And we also have a Facebook page.

Laura Fisher: 25:34

All right, well, I find it fascinating. And I think we need to revisit this as it goes along. Because I well, I don't know that it actually impacts the small business community, but it's just business. And those they're small. I mean, those are, those are baby entrepreneurs, right? They're trying to do something with their talents. And for that matter, it does matter to keep people informed.

Unknown: 26:03

Absolutely. They're all entrepreneurs, and it's ongoing financial literacy. Those are things that will make life better for everybody. The more entrepreneurs in the world, the better off we're gonna be. I think

Laura Fisher: 26:14

so here in America. All right. Well, thank you so much, Chuck for stopping by. And I look forward to seeing how your career grows in this in this specific field. Thank you for having me. All right. Until next time, you better be up to something. Thanks for joining us this week on Small Business Insights, make sure you visit our website at Fisher podcast.com where you can follow the podcast on iTunes or your favorite podcast platform, so you'll never miss a show. If you enjoyed and found value in today's episode, we'd appreciate a rating and review on iTunes or simply share it with a friend that would help us out to make sure you tune in next week for our next episode. Until then, you better be up to something