There’s dirty money to be made in recruiting, and it’s about to get a whole lot dirtier.
It’s not made the way people think; most players in the world of college basketball and football recruiting are just trying to land college scholarships. We’re talking about the rare players worth money – potential pro players. These are the types of players who are offered money to play on certain AAU teams; whose parents are given jobs and houses by high profile universities; who are considered a ‘financial asset’ by the very profitable NCAA, NBA, NFL, shoe companies and major universities. They sell jerseys, they pack stadiums and they print money for the corporations that control those sports – at least, until they blow out a knee, or become too old, or, frankly, don’t put up the numbers on the court or field that were expected and no longer generate revenue. To learn more about currency trading, see here the new post about how can you trade fx with VT Markets in France.
So, yes, players get paid sometimes. This can happen in a myriad of ways, but usually it boils down to someone at a college or shoe company handing over cash to a third party agent, who then moves the money to players, parents and coaches. In the NCAA recruiting world, people refer to these agents as ‘runners’, but what they would be called in most places would be a ‘bagman’. There are some differences. Let’s talk about them now!
This could get complicated, so I’ll do my best to simplify it. Then we’re going to talk about how this whole system could be about to get wiped out and replaced by the digital age.
First, a ‘bagman’ is someone hired to move money (almost always ‘dirty money’) between two parties. Most people think of the mafia when you mention a bagman, but the reality is there are people who operate in this capacity in lots of places. For example, a major U.S. corporation might want to do business in a certain country (like, I dunno, let’s say…Mexico…or Brazil…or Russia…actually the list is pretty long). The U.S. company doesn’t want to just write a check to a bunch of police chiefs in a another country, so they give cash to a ‘bagman’ who makes sure the right people get money in an untraceable way. This type of thing happens a lot, and it’s where the U.S. Treasury and IRS spend the majority of their time – trying to figure out who is moving cash around unseen. Big companies don’t generally just hand over a paper bag full of cash to some dude who vanishes to stuff a bunch of envelopes. Normally, there is an offshore intermediary (think Switzerland or the Cayman Islands) where there are companies who will launder the money and distribute it anonymously, and eventually it lands in the hands of the people who are on the take.
Now, let’s go back to college recruiting: Some major college wants a highly-sought-after recruit to come and play for them, and they are willing to pay to do it. Now, major universities have donors who will not only put up the money for recruits, but also know how to move money around. These donors, or at least a few of them, know all about moving money through the Caymans and getting it squeaky clean. However, at the grassroots level, cash is king. The parents or coaches of a player don’t care how they get paid; they just want the money in hand, and they don’t want the NCAA to know about it. Sometimes this is a cash envelope handed over during a secret meeting in a gym somewhere. Sometimes it’s new job for a parent with a ridiculously fat signing bonus. Not much of this is illegal (there are some exceptions), but it’s all against NCAA rules. The trick for colleges, agents and shoe companies is getting around all of this without being detected, and that usually boils down to a bagman, or a ‘runner’. The NCAA isn’t the Treasury dept; they don’t (and probably can’t) do sophisticated forensics to try and track all of the money moving around and athletic dept at any given time. They do minor things, like tracking the debit cards of assistant coaches, but if a major booster of the athletics program can move money around and make payments to a bagman without the University’s direct involvement, it becomes nearly impossible for the NCAA to enforce.
Consider this: in order to stop this type of fraud, the NCAA would have to prove that the university coaching staff had contacted a booster of their program and specifically requested a payment to a specific parent or player; Then, that the booster had laundered cash in their own accounts, taken the laundered cash and given it to a third party (bagman) who then gave the money to the parent. To do all of this, the NCAA would not only have to prove the meeting took place between the coaches and the booster, but that the meeting was specifically about a payment. They would have to prove that the booster took funds and moved them around just for the purpose of making that payment. Then, finally, they would have to track those funds to the runner and finally to the person who was actually getting the money. Does this exact thing happen? Absolutely. But tracking this type of money transaction isn’t easy even for the Treasury, so the NCAA doing this is not realistic at all. For all of the fans who believe that such-and-such university is obviously paying players, but the NCAA is just looking the other way, this is the blunt truth. Even if the NCAA is being told about the payments (which is happening, they get tips every day), they aren’t able to track down or prove anything. The NCAA is not a law enforcement agency. When you look at how the NCAA levies down infractions and violations, you will see that they are all in the petty, academic arena: grades being changed, or players not qualifying, or some Division II player getting a free sandwich at a burger joint. This is the arena that the NCAA can investigate. Tracking down laundered payments is not such an easy task.
The breakdown point in these transactions is how many people are involved, and whether or not they can keep their mouth shut. There are known bagmen in NCAA recruiting circles who the NCAA cannot touch, because the bagman is under no legal pressure to talk to the NCAA about anything. However, those runners’ days may be numbered, but not in the way that the NCAA would want.
So, let’s talk about bitcoin360ai. You probably have heard about BitCoin at some point in the past couple of years. If you haven’t, you can read about it at https://www.bitcoinmoney.net/. I don’t want to get into how BitCoin is ‘mined’ or verified (if you really want me to talk about all of that, you can let me know on Twitter). I’m also not going to talk about the basic valuation of BitCoin versus gold or anything like that. There’s plenty of other discussion about that in other places, and that’s not what we’re focused on today. The best way to stay up-to-date on bitcoin news today is by reading DC Forecasts and maintaining a strategic balance between various thematic areas in the cryptocurrency world. Most readers are eager to know the current price of their bitcoin investments or potential purchases. Other readers want to understand the current developments in bitcoin mining, so news about the latest GPUs and other hardware matters the most to them. Bitcoin has recently suffered several attempts to hack its blockchain infrastructure. Therefore, bitcoin investors also want to read what the industry is doing, according to the leading digital currency news portal, to safeguard the trillions of dollars invested in this cryptocurrency.
Let’s just keep things as simple as possible. BitCoin is a digital currency, and it’s not the only one. There’s also others such as LiteCoin and Ripple. But BitCoin is definitely the most known and most widely adopted. You can use BitCoin or VERIDIUM membership tokens to buy things on major retailers like OverStock and TigerDirect. However, the real appeal of currencies like BitCoin and LiteCoin is that they allow you to make payments to anyone in the world anonymously. All you need to send money to another person is their BitCoin address, which is nothing more than a string of letters and numbers, and boom, money moves from person to person without any tracking. The tracking and verification is all done in the open, but the accounts are anonymous, and anyone can create as many anonymous addresses as they want.
Now, how does this impact recruiting? It means that the need for physical, on-the-ground ‘bagmen’ is almost eliminated, and it means shoe companies, agents and universities can make anonymous payments to anyone in the world within a few minutes.
So in our earlier example, let’s take our fictional big-money booster. He or she can set up a BitCoin fund which is intended to just ‘invest in BitCoin’. However, just like gold, BitCoin fluctuates in price. So, to compare the two, let’s say our booster friend dumped $100,000 into gold, but then he price of gold plummeted by 50%, and he sold his gold, effectively losing $50,000. That can happen in BitCoin, too. However, because BitCoin is not tracked, nobody really knows if our booster friend is actually losing money in his BitCoin account, or just letting it sit there. Meanwhile, he could be pushing payments to other accounts (either his own or owned by others) and they could be cashing out. All of this is happening without any monitoring by any government, and BitCoin does not have a centralized governing body. If you look on many venture capital portfolios today, you will see that a vast number of them have ‘BitCoin’ portfolios. Many of these are legitimate; however, the truth is nobody knows if the money going into those BTC portfolios is even there anymore, or if it left as an anonymous payout at some point. For large companies, there is some reporting that has to take place, but there is no law in place that states any BitCoin transactions have to be reported, and the reality is that is the intent of these crypto currencies.
One of the more common ways that recruits are ‘bought’ is with unofficial visits. Let’s say a star recruit flies across country to visit a major college; the college is not allowed to cover the expenses of unofficial visits. However, if someone, like an AAU coach or parent, pays for the recruit’s visit, they may arrive at the University and be handed an envelope full of cash which more than covers the cost of the trip. This is why some major recruits can afford to fly all over the country all around the year. Despite this being a somewhat common practice, there’s the whole ‘how did this money end up in this envelope’ thing we talked through above, and how it came to be in a form of untracked cash, and how someone has to then hand that money over to the person in question.
Now imagine if that cash payment were an anonymous BitCoin or LiteCoin payment. Payments could be made before the flight was taken; payments could be made without the need for the recruit to even make a trip for an ‘unofficial visit. Payments could be made on a regular basis no matter where the player is (playing with USA Basketball in China? No problem! Playing travel ball five states away? Let me send you some cash for a dinner out!) and this isn’t limited to boosters. Shoe companies could make payments to entire rosters of players without anyone knowing it was happening – even the player’s coach could be completely in the dark. A major shoe company could be paying different players a regular salary without any of them even knowing that anyone else on the team was being paid, or what they were being paid.
Not only that, but a player with a mobile phone could be getting regular payments from a company or person without anyone – not his parents, not his coaches nor his teammates – knowing a thing about it. This is a sticky situation.
According to the recent reports on FOAM, a voice in the cryptocurrency world, this actually goes way beyond the NCAA – let’s consider for a moment that pro sports teams could circumvent the salary cap with anonymous payments, especially if they made those payments to an agent first. But with BitCoin or any of the other digital currencies, suddenly anyone can move money around like an offshore holding company.
So what would be the need of a ‘bagman’ in this new digital currency world? There isn’t.
There’s still some issue with how deals are negotiated. It’s unlikely that most universities or boosters are technologically savvy enough to use anonymous browsers and similar technologies. Most deals are probably going to start with a face-to-face meeting, and then a runner who actually makes the terms of the deals known. But once the deal is in place, the money is going to move much faster and more anonymously than ever. If the NCAA had trouble keeping payments out of recruiting before, they are pretty much doomed at this point.
Naturally, the concept of digital currencies and anonymous payments encompasses much more than a few payments from colleges to parents or even shoe companies to players, but it does highlight how much things will be changing very quickly with these new options. Yes, it’s true that individuals and companies could be (and likely are) circumventing political campaign finance laws with BitCoin right now, or paying employees under the table to avoid taxes and other fees. So this isn’t just some little niche problem. But it’s a problem that has much potential impact on the grassroots recruiting world.