David Kaye

Transcript

Derek Smith:
Hello and welcome to Baylor Connections, a conversation series with the people shaping our future. Each week we go in-depth with Baylor leaders, professors and more, discussing important topics in higher education, research, and student life. I'm Derek Smith, and today we are talking college athletics, specifically name, image, and likeness, NIL. And we're visiting with David Kaye. David Kaye is in his first year as NIL general manager in Baylor Athletics, but he's a long-time Baylor Athletics staff member and leader, the Baylor alum who assumed the role this spring of NIL general manager after leading the department's NIL initiatives since January of 2023. GXG is Baylor's NIL collective that we'll be discussing. It was developed by Startup Waco to connect student-athletes at Baylor with business opportunities, entrepreneurial development, and more.
Well, David, welcome to Baylor Connections. It's great to have you on the program. I know we're going to talk about some topics that people have a lot of questions about.

David Kaye:
Yeah, I'm really excited to be here. NIL is a topic that people, it's very polarizing. A lot of people don't understand it, don't know how it works. So really excited about any opportunity I have to kind of explain it a little bit and give people maybe some peace of mind that Baylor's doing it well.

Derek Smith:
Yeah, maybe a little NIL 101 and then a kind of sense of what Baylor's doing as we visit here for the next 20 minutes or so. I do want to ask you though, kind of fun way to start off, saw on social media not too long ago the We Pay Players t-shirts that were going out. Saw Baylor coaches and fans getting in on the act, making a donation to GXG, get those shirts. So tell us how that came about.

David Kaye:
Yeah. I mean, obviously that was a play on Coach Aranda's quote at Media Day where someone asked him, it was Craig Smoak with SicEm365 who asked him, "How are you guys turning this around with recruiting so well?" I mean, it's been so impactful. Everyone's seen the 2025 commitments we have. And he said, "We're paying players." It was tongue in cheek because if you listen to the rest of that quote, he's talking about the balance of all of that. You can't lose who you are. You have to be in the game, and we can get into that later, but you have to be competitive with NIL if you want to recruit. But at the end of the day, it's about who you are and it's about the fit and the relationships and all of that. But obviously the We're Paying Players, that was the quote that went viral and made everyone laugh a little bit.
So we just wanted to ... It was a play on that. At the end of the day, it was, "Let's have a little fun with this. Let's be a little edgy." Honestly, it also helps generate revenue to continue doing that. So the we is more of a collective we. I understand you look at the shirt, it's a Baylor logo, and it's like Baylor. Well, it's a collective we. This is a massive group effort. And at the end of the day, the funding right now is coming from GXG to our athletes. Now we're helping to make that happen because we're committed to do that. There's a day coming where the funding probably will be coming directly from Baylor to athletes. But right now, it's GXG.
I looked at it this morning, and I saw on Twitter, it was over three million impressions. It has gone pretty viral as we expected it probably would. And we knew not everyone would love it. We get that, we're not going to be able to please everyone, but we wanted to have a little bit of edge and bring a little bit of attention to our football program and the recruiting they're doing right now. I feel like it achieved that. If you're someone who was offended by it, I get it. I apologize for that. That's not the intent. But hopefully you can see where we're going with that.

Derek Smith:
That was a classic dry Coach Aranda quote, very honest quote from Coach Aranda, and having some fun with it for sure. You mentioned this is a changing environment that we're in right now. I almost use that cliched example of boy, if someone slipped into a coma a few years ago and woke up all of a sudden and the things they see are very different. Paying players, it was a no-go just a few years ago. In fact, the ultimate no-no in a lot of ways. Now it's not. Even for you being on the inside of this, how rapidly changing has this all been?

David Kaye:
I mean, it's been fairly rapid. I think anyone who saw this coming and saw where it would all head isn't really shocked by it. But it's also been a drastic change. I mean, I worked in college athletics starting in full-time in 2008. So I had what, 12, 13 years of no NIL, and this is just completely off the table. It's been to me refreshing to see how it's changed in that, at the end of the day, particularly athletes in revenue sports are generating a lot of revenue for the universities. I think the intent of NIL, if they should be able to capitalize off of their true name, image, and likeness, I don't know that there's many people who disagree with that. I think what it's become, I get it where people are frustrated by it of it feels like pay-for-play, you've got collectives involved, and we can talk about that.
But at the end of the day, to me it's more about, hey, let's do this intentionally and let's do it well and let's set our athletes up for success and help coach them and guide them through this process so that they take advantage of this opportunity and it benefits them for the long term. So you don't really see ... I'm sure you've seen some social media posts from other schools, athletes, driving Lamborghini's and crazy. You're not really seeing that at Baylor, and that's part of who we are with our NIL program. It's not to say, at the end of the day, how an athlete chooses to spend their money is their business, but we're going to work with them and try to encourage them to make smart decisions with it, set themselves up for future success, be prepared for tax time, all of that.
It's a massive amount of programming. But at the end of the day, yes, it did change very rapidly. It has grown exponentially. I'm optimistic about the future because of the way this house settlement is structured, that we can get it back to a place that makes some sense. Right now, if you didn't have this settlement, I'd be worried about where it's heading long term. But I feel like there's still going to be a lot of trial and error in figuring things out, but the settlement is going to really help put some guardrails in place.

Derek Smith:
Everyone does it different, but is it fair to say when you think about Baylor's Christian mission and the idea preparing champions for life, that really does shape how we approach NIL?

David Kaye:
Absolutely, it does. I mean, at the end of the day, I tell every recruit I visit with, we are not hoping that we're going to be the most NIL you can possibly make. If you're looking for the most NIL you can possibly make, Baylor's probably not going to be the place for you. At the end of the day, we want to be competitive enough to where it's not the highest factor in your recruitment. If the relationships are there, the talent is there, the fit is there, we don't want NIL to be what stops you from coming to Baylor. We're transparent about that, and we talk about transparency throughout this whole process with them.
So it is like, I understand it feels that way, that you hear these huge dollar amounts, you hear crazy things in the media. Not all of that is true, but it is part of our mission of, hey, we just have to be competitive in this. It all goes back to Baylor Athletics winning, it helps us fulfill our mission. And we need to need to win. We need to be competitive in athletics. That's the whole reason to have it. If you're not competitive and you're not shining a light on everything that Baylor's doing, then what's the point? So yeah, it is very much intentional with our mission to try to make sure that we're doing it the right way and that we're doing it in a way that is benefiting Baylor University and our alumni as a whole.

Derek Smith:
Visiting with David Kaye.
David, let's define a few terms for people here that are all somewhat interconnected in different ways. First, for those who aren't totally sure, NIL, what is that and what is it now?

David Kaye:
That is name, image, and likeness. It is essentially just, I own my own name, my own image, my own likeness. So if someone's going to monetize that, I should be able to capitalize on it. So think football jerseys sold in the bookstore. They used to just have a number and no name. Now you can go to the Baylor bookstore and get any one of our athletes' jerseys with their name and number on it, and then they earn a royalty off of that. So it's monetizing your own name as you should be able to. The college football video game that recently came out, that's a part of it. They're all now in the game instead of in the past. It was someone who was kind of like them, but not really them. NIL is just the ability to monetize your own name, image, and likeness. Basically acknowledging you own it, and if someone else is going to use it, they should have to compensate you for that.

Derek Smith:
That's kind of where it all began, what we're talking about. All right, what about collectives and Baylor's collective GXG?

David Kaye:
Our collectives, GXG, basically the way collectives all started is that donors got together and said, "Let's create NIL opportunities for our athletes. Let's pull our money and create NIL opportunities." Some people formed collectives just as a way to do that. That's obviously a goal that a lot of people have. We wanted to be a little more intentional with it. So we worked with Startup Waco. Startup Waco helps entrepreneurs start up businesses. So essentially we want our athletes to think of their NIL as their own startup business. So that's where Startup Waco and GXG became a great partner. They formed GXG, which is essentially short for green and gold. They formed that to be a branch of Startup Waco to work with athletes, to help them learn how to treat their NIL as a startup business, help them with tax prep if you need to form an LLC, anything like that that an entrepreneur might need. GXG and Startup Waco, just tremendous partners in that space.

Derek Smith:
Yeah, they're educational by nature really, aren't they, in a lot of ways.

David Kaye:
Yes. And that's where you hear some things where people say collectives are going to go away. I don't know how true that is. Ours is never going to go away. I don't plan on it going away as a whole because that mission still aligns. We still want our athletes to treat their NIL as their own startup business. When they're filing taxes, they're filing self-employed. So I still think GXG has a long-term future working with Baylor athletes. But what it all looks like, obviously that's to be determined.

Derek Smith:
You mentioned a house settlement earlier. What's the elevator version of this house settlement?

David Kaye:
Yeah. So it essentially is, Power Four schools can start making direct payments to athletes. It's expected to start this coming summer, summer of '25. I don't want to get too deep into the terms because it's not finalized, but essentially there's going to be a pool of money that they say schools can pay up to this much in direct payments to athletes. How that all works, we'll have to see. But there also is part of the house settlement, there's back pay going back five years to student athletes who should have earned money off their name, image, and likeness. I believe it's mostly related to the broadcast TV rights. But long story short, the way it's going to change things is, it just will simplify into where schools don't have to find workarounds and basically go to our donors and say, "We need you to give to this collective," which is permissible. We're doing that right now.
Once the house settlement becomes reality, the schools can just make the payments directly to the athletes. So I feel better about the control that we'll have at that point. I feel better about less student athletes will be taken advantage of, hearing crazy things from collectives. You've seen stuff in the news where collectives have done all kinds of wild things that pique public interest and sometimes end up in lawsuits. You haven't seen any of that with Baylor and GXG because we work very closely with GXG, and they're a tremendous partner to us. But yeah, it's much more complex than that. But essentially, it's, schools can make direct payments to athletes once this house settlement kicks in.

Derek Smith:
A couple more definitions here. In-house unit, what's that?

David Kaye:
So we have our NIL in-house unit, which right now is myself as the general manager. And Haneen Rashwan is our director of NIL administration. That's basically our unit to help our athletes provide resources to them to help them with their NIL. So things like you sign up with a group called Brander Group. They do our co-branded group licensing. It essentially works as an athlete, works with Brander, and says, "I'm agreeing to where you can make products with my name and number, and then sell those products and pay me your royalty off of those." So we were the ones who helped facilitate all of that. The ONIT trading cards that you saw for football, men's and women's basketball, baseball and softball last year, those were all through this Brander Group licensing deal.
So it's essentially passive income. We help structure that. We set up the Opendorse marketplace. We help them. We're basically GXG's conduit to our athletes, helping them when they want to bring in a tax advisor to talk to them. We can help coordinate that. We can do that on campus. So the in-house NIL unit is really just, we do recruit visits as well. It's just everything that we're permitted to do with NIL is done through the in-house unit. And there's some things that have to be separate and outside, and that goes to GXG.

Derek Smith:
Okay. Last definition, revenue sharing, what's that exactly?

David Kaye:
Yeah, that's essentially what the house settlement becomes, is the schools generate more than a hundred million dollars of revenue a year. Some of that can soon be shared with athletes directly. So I get a lot of people are frustrated and don't think athletes should get more than their scholarship. I think when you look at the numbers, particularly in the sports that generate the most revenue, it's not really equitable when you consider the scholarship value versus how much total revenue is being brought in. So that's all part of it. It'll essentially be, I believe it will be still an NIL deal. So there'll be obligations and things that you have to do to earn that revenue sharing, but it'll be made available to our athletes that way.

Derek Smith:
This is Baylor Connections. We are visiting with David Kaye, Baylor Athletics, NIL general manager.
So you just defined those terms for us and they're all interconnected in different ways. But I'm curious, when you think about the interplay between fans, student athletes, the programs that we all care about, and the university itself, what's the simplest way for us to envision what that healthy relationship looks like and will look like going forward?

David Kaye:
Yeah. Well, I mean, I think fans right now purchase tickets, and going forward, revenue generated from ticket sales can go to pay athletes. So the broadcast TV rights, right now the Big 12 has TV contracts that pay tens of millions of dollars a year to the schools. That revenue moving forward after this house settlement can be shared with the athletes. So what that does is, now it changes where we don't have that funding to fund other areas, travel, staff salaries, all of that. So that's where we're still going to need our donors to contribute to help us fund this operation.
So at the end of the day, if you're giving to Baylor Athletics, it's about helping us be successful on the field in one way or another. It doesn't have to be money directly to an athlete. It can be helping with all kinds of different things We do lots of professional development. Any of that can come through just a general donation to Baylor Athletics. So the interplay is essentially just, we need your help financially to help us be competitive. And at the end of the day, we're still preparing champions for life. We're still helping our athletes learn to monetize their way, their NIL, in a advantageous way that's responsible. And it all aligns with our mission. It's just a matter of, the way we do it now is changing a little bit.

Derek Smith:
When you talk to fans or when you talk to even outside the industry really, what are some of the most common questions you get when they find out you're involved with NIL?

David Kaye:
Yeah, a lot of people just are like, "Oh, that must be crazy." I mean it is a little bit, but we try to make it as simple as possible and as transparent as possible. I just visited with our football recruits at junior day, and I told them we take pride in being the most transparent athletic department in the nation when it comes to NIL. We truly are transparent with you. We're going to have one-on-one meetings with you when you're on your visit. You're going to leave our meeting with no questions unanswered. You're going to know how it works, you're going to know we do it the right way, and that it's all above board. 
You hear a lot of, "Oh, I saw in the media this quarterback had offered $13 million. That's just crazy. How is that sustainable?" The most common question is, how is it sustainable? The reality is, it's probably not if we don't put some guardrails around it. So there are going to be guardrails because it has to be sustained. That's the most common, is just how does it even work? It feels like pay-for-play to people and all of that. Every conversation I have about it, I just want them to know that I can't speak for how other schools are doing it. I can't speak for how other collectives are doing it. I can for Baylor and GXG, and I feel really good about we work closely together. They're not doing anything crazy that's going to put them in a negative light. I challenge you to go find a Baylor athlete who would say GXG did not follow through on anything they committed to them. I don't know of one out there. And that's very intentional. We work closely with them to make sure that they don't do anything crazy.
Our advancement team, development team does a tremendous job with helping to get funding to GXG. That is allowable. We can request donors give to GXG. So we work really collaboratively with them to make sure it's all ... Because at the end of the day, their reputation, whether we want it to or not, is going to reflect on us. So we want to make sure they have a great reputation. We want to make sure they're intentional in everything they do. We want to make sure that they're following through on their promises they make and the commitments they make. So far no concerns there. They have been tremendous partners.

Derek Smith:
David, what about questions from prospective student athletes and their families? What are some of the things you hear?

David Kaye:
I actually ended up on a Zoom with a congressman about a year ago where they were kind of asking us, what are some things that you need to see changed? What I said is, I understand the reason it was structured this way, but it needs to change. It was structured where you couldn't use NILs or recruiting inducement. Collectives can't make offers to recruits on their visits and all of that. Well, it's well intended, but it's not the reality.
So what was happening is that we would get recruits coming to visit who say, "Hey, I was just down the road at another school and their collective offered me a hundred thousand dollars." And the first question I have is, "Well, is that a hundred thousand dollars over your four years there? Is it a hundred thousand dollars upfront? Is it negotiable at some point throughout the process? Is it an exclusive deal or non-exclusive deal?" Because that's a huge difference. Some collectives are doing exclusive deals where they basically buy your NIL rights and then they can go monetize those and you can't make any additional. Our collective does everything non-exclusive where they want you to go monetize rights.
So most common questions are like, how does it all work? So I was talking to Congressman about, I know it was meant to be that way, but the reality on the ground is that they're getting offers. So it would be better if they could just get an offer in writing and know exactly how it works and know the payment schedule, know whether it's exclusive, the general terms, and all of that. It wasn't legislation that ended up changing that. It ended up being a lawsuit that basically said that the collectives can do that moving forward. So that has helped because you don't want ambiguity there. You don't want a kid hearing something different than what is the reality, and then coming back later and saying, "This isn't what I thought it was." You'd rather it be above board.
I look at it as if you're a general student applying to Baylor, you have an idea of how much scholarship money is available to you when you come to Baylor. And I know scholarships are different than NIL funding, but it is similar that way in that when you're making your decision, you should have all the information. So our collective visits with our football team, anyone who can return another year, they visit with them before the transfer portal even opens because we want them to have all the information to make an informed decision when that time comes. So that's how they've been able to retain so many players, that's how they've been able to recruit well, is all just being above board, being transparent, making sure everyone knows what exactly is available to them. That has really changed things.
So back to your question of what are the most common questions, a lot of them are just like, why aren't other schools being this transparent? And the honest answer is I don't know. I can only speak for us. We want it to be transparent and we want you to leave here feeling good about the way we do it and knowing that, "Hey, Baylor may not be the place I can make the most possible NIL money, but I feel good about it." So it's a less risky decision essentially.

Derek Smith:
Well, you talk about the risk that ties into something I was going to ask, maybe this is to state the obvious, but you've got, in a lot of cases, young men and women who are 17, 18 already making a big decision for their future. A lot of people in their ear. How vital is it for Baylor to be a place where if nothing else, that they can know one way or another what they're accepting or rejecting?

David Kaye:
Yeah. I mean, I think it's super important. There is the amount of pressure on especially high school, but it happens in the transfer portal too, and people telling them what they should be doing. There have been agents ... There are a lot of really good agents out there. I actually have liked dealing with agents and kind of explaining how we do things. But there's been some stories of those who ... Because there's no certification process for NCAA agents right now, anyone can basically just claim to be an agent. So someone will call and say, "I'm representing this kid in the transfer portal. How much NIL can he get if he comes to your school?" And then you talk to the kid as they're coming on their visit and they're like, "I don't even know who that is." So it's just wild how many people are trying to manipulate the situation. So yeah, it's just really important for us that we do this above board, we do it within the rules, and that the student athletes leave feeling really good about that Baylor treated them the right way and did right by them.

Derek Smith:
Visiting with David Kaye here on Baylor Connections.
David, as we head into the final few minutes here, a few more questions for you. For someone who might want to give, could you give us again just kind of the very brief path of if you want to give to athletics specifically, does that stay the same? Or if you want to give to NIL opportunities for student athletes, what that looks like?

David Kaye:
Yeah, if you want to give to NIL, GXG is the way to do it. You can go to gxg.startupwaco.com. All the information's there. Jon Passavant is the CEO there. He's a tremendous partner. He's got an entire team over there. You can also always reach out to me to talk through the process. My email is david_kaye@baylor.edu. My phone number is 254-709-5147. I am always available to talk NIL to anyone who doesn't understand it, or anyone who just has a general question or wants help with it. That's my job, is to help with it. So if you give to GXG, the way it works is that we have an NIL advisory council, six generous Baylor donors who have stepped forward to help us strategize on all this. They've been tremendous partners for the last few years. I mean really just incredible people who truly care about Baylor, and I can't say enough good things about them. It's Mark McCollum, Cary Gray, Larry Heard, Jeremy Fudge, Dan Hord, Kevin Cherry. Tremendous allies in this space.
So they're the ones who decide when NIL funds are given to GXG through their general fund. Those guys decide how they want to allocate it. And then they communicate that to us. We work together with GXG to make it happen. I just want our donors to know we're very intentional. We do not take their money for granted. We work with GXG closely to make sure that it's being used wisely. We cannot go to GXG and say, "This athlete needs more money, this athlete needs more money." That's completely illegal. But we can work with them on general strategy. So we talk through that a lot. It's just, anyone who thinks that Baylor is out there with our collective, trying to money whip recruits and say, "Come to Baylor, we're going to offer you more than anyone else," that's just not reality. That is not happening. That is not a good use of our donors' funds. We're intentional to try to make sure we're competitive so that if everything else lines up, they choose to be a Baylor bear.

Derek Smith:
As you look on the horizon, what are some potential changes that Baylor is trying to be ready for?

David Kaye:
Yeah. So you might've seen the announcement that Playfly Max is coming. Basically we have a partnership with Playfly where they manage all of our multimedia rights. And then they're starting a branch of that team in Baylor Sports Properties that is focused on NIL. So they're going to hire someone to oversee that area. It'll essentially be when someone has a multimedia rights agreement with Baylor, maybe a commercial sponsor, how can we tie NIL into that? So maybe if you're a car dealer in town who has a deal with Baylor, can we get a Baylor athlete involved in the promotion of that deal?
So really just trying to be strategic in how we do that because with this house settlement, there's going to be essentially a cap, a max that the schools can pay to athletes directly. It's going to be a high number, but at the end of the day, schools are going to find ways to go above that number. One way to go above it is true market value. NIL deals with corporate partners, those do not count against the revenue share. So we're working with Playfly a year out in advance, trying to prepare for that day to make sure that we can remain competitive when that time comes. So I think there's a day coming when a lot of those multimedia rights deals are going to have student athlete involvement, whereas right now, very few do. I think once the schools have more ability to execute those deals, you're going to see it become much more common.

Derek Smith:
Finally, a question I don't always ask on this show, but I think it kind of fits with this topic with all the complexity of it, as we close here, if a listener was really just going to take one thing away from this whole conversation that you'd want them to take away, what is that?

David Kaye:
That Baylor is doing it transparently with our student athletes and that we're doing it to remain competitive. At the end of the day, we're going to be intentional about it. We're going to help our student athletes make sound financial decisions. We're going to help set them up for success. We're going to make sure that come tax time, that they're prepared for that. I think you're going to see a lot of that in the news in the next few years where student athletes were completely unprepared for taxes. There's complexities to filing self-employed where you need to be paying ahead on your second year. It's more complicated than that, but essentially you risk an 8% penalty if you're not paying ahead on your taxes when you're self-employed. So just all of those things, we're very intentional about it.
I just want our donors and our fans to know that Baylor is really trying to do this the right way. It's all about we're doing it well and we're doing it to remain competitive, but at the end of the day, we're going to do it in a way that benefits our student-athletes long-term and that we're going to do it transparently. The last thing we want is some negative headline where an athlete as Baylor took advantage of me. That's not going to happen.

Derek Smith:
Well, David, thanks so much for taking the time. To share what David said, gxg.startupwaco.com, or people Google Baylor NIL, they can find more about you and your office there.

David Kaye:
Yep, absolutely. Please, I shared my contact information earlier. It's available online if you go Google it. I'm happy to talk through with anyone who's interested.

Derek Smith:
Thanks very much. Appreciate it.

David Kaye:
Thank you.

Derek Smith:
David Kaye, NIL general manager in Baylor Athletics, our guest today on Baylor Connections. I'm Derek Smith. Reminder, you can hear this and other programs online, baylor.edu/connections, and you can subscribe on iTunes. Thanks for joining us here on Baylor Connections.