This article originally appeared in SportBusiness, and is republished here with permission.
Pretend, for a moment, that you are 17 years old and the top-ranked high-school basketball player in the United States. Your ultimate goal is to play in the best league in the world, the National Basketball Association. But under the current NBA collective bargaining agreement, you cannot enter the league until the year in which you turn 19. So, what do you do until then?
If the year were 2017, the likely best option to enter the NBA Draft would be to first attend a top-level university led by a nationally renowned coach for at least one year before declaring professional intent. This option remained the prime destination for top high school prospects for several reasons, including:
- the National Collegiate Athletic Association pipeline remains the number one feeder into the NBA by a wide-margin with 84.5 per cent of current NBA players having played collegiately
- the NCAA provides the greatest level of exposure to NBA scouts and general managers (as well as to future endorsers once one turns pro) through its primetime television deals with partners like ESPN, CBS, and Turner Sports, culminating in its showpiece basketball event “March Madness,” annually one of the most-watched sports events in the United States.
- an incredible network of coaches and alumni who are often very well connected to NBA stakeholders, typically as former NBA players and coaches themselves.
Back then, the chief downside to entering the NCAA pipeline as a top-ranked high school player was the lack of money-making opportunities. While the path to the NBA from a top school seems straightforward and appealing, the threat of catastrophic injury while still an amateur is enough to give anyone pause with potentially millions of dollars at stake.
In 2017, the only viable alternatives to a college career were pursuing a career overseas playing professionally in China or Europe or entering the NBA G League. Playing overseas back then came with a couple of benefits over the NCAA: the ability to play at a professional level from the same, or even earlier, age, and compensation for playing.
But the amount a player could earn varied widely among the various leagues in Europe, China, Australia, and elsewhere, ranging from league averages in the $50,000-$60,000 (€44,456-€53,347) annual range for American players for lesser-known leagues to $2.5m per year in China, and as high as $4m in Europe.
Despite the potential for immediate, robust compensation, the allure of foreign leagues remained low for US-born players whose ultimate goal was to become a top NBA draft pick. From 2006-2017, Brandon Jennings was the only American-born, top-ten NBA Draft pick who played in Europe rather than college.
Additionally, player contracts overseas do not operate as their American counterparts, and teams have (or often attempt to exercise) full discretion when determining what a player is owed. Players signing a “guaranteed” contract with overseas teams may face costly litigation or arbitration to recoup what they are owed, making the choice to play for any of these teams a potentially precarious one.
In 2017, the NBA had just re-branded its developmental league as the “NBA G League,” and it, too, presented a credible alternative path to the NBA. The late former NBA commissioner David Stern wanted the G League to serve as a genuine minor league system for the NBA, and over the years the number of players making the jump from the G League to the NBA was steadily increasing. As of 2017, though, new G League players earned as little as $19,500 per season, far less than what a player would have received overseas.
Now, fast-forward to today, and times indeed have dramatically changed. Starting in October of this year, some of America’s top high school-aged basketball players have the opportunity to become full-fledged professional athletes via an academy-based model in the United States.
Overtime, a fast-growing, New York-based sports media company, has formed its own basketball league, Overtime Elite (OTE), which has created a compelling professional basketball opportunity for approximately 25-30 of the top high school rising juniors, seniors, and post-graduates.
Players train, study, and compete with other OTE athletes at the company’s facility in Atlanta, Georgia under the tutelage of highly qualified teachers, coaches, and leadership executives. OTE players also compete against other domestic and international teams, and earn a guaranteed annual salary of at least $100,000 plus bonuses, equity in Overtime, and any revenue generated from use of their name, image, and likeness (NIL) rights. Players receive additional health benefits designed to protect them in the event of injury.
On academics, OTE provides traditional coursework in small class settings, along with a supplemental focus on life skills for professional athletes, such as financial literacy and media training. Furthermore, Overtime guarantees players up to $100,000 for college tuition should they decide not to pursue a career in professional basketball.
With this comprehensive program, OTE attempts to address many of the important factors a promising young basketball player would likely consider when making this type of choice about their future. Since its founding in 2016, Overtime has developed an audience of 50 million users, generating billions of content views across social media platforms. With experienced leadership and strong financial backing, Overtime seems poised to become a serious alternative to the NCAA and other professional leagues for young players on their path to the NBA.
When first debuting, OTE appeared to be filling a void around compensation that colleges and the NBA’s developmental league would not or could not fill. Since then, there has been even more change. Perhaps in response to OTE’s competitive challenge, the NBA’s G League made considerable changes in its approach to player compensation and its overall program, presumably to make it a more enticing alternative for serious NBA prospects.
Beginning with the 2019-2020 NBA season, elite prospects who are eligible to play in the G League but not yet eligible for the NBA are eligible for “Select Contracts,” with annual salaries reaching at least $125,000 per season, which is significantly more than the average G League salary of $35,000. Players also have access to teachers and coaches for both on-and-off court professional development as well as other off-court opportunities, similar to OTE, should a professional basketball career ultimately not take shape.
Top high school players like Jalen Green, the second overall pick in 2021 NBA Draft, and Isaiah Todd, the 31st overall pick, opted for a “Select Contract” to develop their brands for a year in the G League before entering the NBA draft. With a high profile success stories like Green and Todd, other top players could opt for the G League over college or OTE.
In the meantime, the economics of college basketball have been undergoing significant change after a years-long legislative and jurisprudential push to free student-athletes from NCAA restraints that prohibited them from receiving compensation or benefits beyond an educational scholarship.
With multiple states passing laws that allow student athletes to sell their NIL rights, and following the U.S. Supreme Court’s decision in NCAA v. Alston, which effectively exposes NCAA restrictions on student-athlete compensation to scrutiny under the Sherman Antitrust Act, the NCAA recently adopted policy measures that, for the first time, allow college student-athletes to benefit from their NIL without fear of NCAA penalty.
With NIL rights suddenly in play, the NCAA, perhaps unwillingly, has met the compensation challenges of OTE and the G League, as top basketball players can now earn substantial money on their NIL rights. It remains to be seen whether and how this sea change around NIL rights dampens any enthusiasm for OTE or the G League’s Select Contract option, notwithstanding that each entity still offers something different and more than just opportunity for compensation.
Even with all this change in the U.S., playing overseas has continued to be a viable option given recent the success of players like LaMelo Ball and Killian Hayes, who were both lottery picks in the 2020 NBA Draft after foregoing college to play in Europe. But when choosing to play overseas, Ball and Hayes did not have the option to join OTE or exploit their NIL rights playing college basketball. Their choice might have been different if these options had been available to them.
In the span of four years, the pre-NBA playing landscape for top high school basketball prospects has changed significantly, particularly in the US. OTE, the G League, and NCAA basketball all offer these prospects something dramatically different now in terms of opportunity to gain experience, compensation, and exposure prior to declaring for the NBA draft.
While OTE may have set out to grab an untapped position in the market for these prospects, the G League and the NCAA (perhaps unintentionally) went through significant changes that allow them to better crowd that competitive space with OTE. With this overall competitive regrading of the pre-NBA basketball landscape truly in its nascency, it remains to be seen how each of these platforms will perform in attracting talent. What is certain now, however, it that top U.S. basketball prospects have more and better options than ever before to chart a pre-draft path to the NBA.
Adam J. Kleinfeld, attorney at Foley & Lardner LLP and member of the firm’s Sports & Entertainment Group. Jacob Koffsky, formerly a Foley & Lardner associate and now a law clerk for the Honorable Roy K. Altman in the United States District Court for the Southern District of Florida, contributed to this piece.