What information is needed to predict market value?


In college sports, there is a rapidly growing cottage industry around the financial value of an athlete's Name, Image and Likeness. College athletes can now sign endorsement deals, promote products on social media, give private lessons, etc. The market is pretty new (only about a year old) and collecting accurate data has been a major challenge.

The largest service that tries to predict "value" of an athlete's NIL comes from a company called On3. They explain their algorithm here that they use to assign valuations. Most notably, to an idiot like me, they say that their service is not a deal tracker, and does not adjust their ratings based on deal flow or current deal activity.

I'm not asking for specific projections about social media marketing or the NIL industry...but I would like to know, as an economist, what data is typically required to be able to confidently project a range for a product or service's 'valuation?', especially in a newer market? Consumers can get a relatively reliable range for what their home might sell for, what they could earn in a particular job, how to pay for a used car...what would they need to be able to do the same for say, what their Instagram might be worth as a college soccer player?


I believe the question being asked is how to calculate what an NIL deal might be worth to a college athlete?  In particular, the focus of the question also seems to be on determining what a college athlete could get paid to be a sponsor, a spokesperson, or serve as a testimonial for a product or service that is being sold by a business.  The athlete is compensated by the selling firm (or entity) for promoting a company's product or service.  There are a lot of factors that go into determining the value of this promotion to a company including 1) the size and demographics of the market in which the promotion takes place, 2) the profitability of what is being sold, along with 3) how well known, likeable, and marketable the athlete is (i.e. how much influence will a hired athlete have on sales).  What someone is willing to pay is the best measure of value to an economist.  Economists would collect willingness to pay values for different types of promotional activities (e.g. commercials, Instagram posts, public appearances, etc.) and then adjust them for influencing factors noted above to hone in on a specific value for a specific NIL deal..  While there are reports of some college athletes being paid 'millions' of dollars for NIL deals, the reality is that the 'average' deal value is likely to be much smaller, likely in the low 'thousands' of dollars at the present time.

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Last updated on
October 25, 2022

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