To manage the uncertainty of an athlete's draft position, specialized lenders calculate a projected draft value by averaging multiple "big boards" and then applying a downward standard deviation. They further mitigate risk by lending a maximum of only 10% of this conservative, de-risked projection, ensuring a high margin of safety.

Unlike traditional debt, selling a percentage of future earnings can lead to predatory lending lawsuits, as seen with Fernando Tatis. He received $2 million for 10% of future earnings as a teenager, which became a $33 million liability after his mega-contract. This model's high effective cost creates significant legal and reputational risk for funders.

Not all debt is negative. Using leverage to acquire assets that generate returns—like real estate, inventory, or business investments—is a smart wealth-building tool. Conversely, financing depreciating lifestyle items ('flexing') creates a financial hole that's nearly impossible to escape.

Scott Galloway's Prof G Media, a $20M business, rejects entire ad categories like crypto and gaming. He believes they prey on young men, and accepting their money would undermine audience trust. This strict vetting process results in a small, curated list of just 38 advertisers, prioritizing brand integrity over revenue.

The NIL arms race has created a new financing need for universities themselves. They are now turning to private credit funds for multi-million dollar loans to cover recruiting expenses and six-figure commitment bonuses. These loans are secured by the athletic department's predictable TV revenue, creating a stable, asset-backed lending opportunity.

Recent "canary in the coal mine" cases like First Brands, often blamed on private markets, were not PE-owned and were primarily financed in liquid markets. In fact, it was private credit firms pushing for deeper diligence that exposed the issues, strengthening the argument that private credit offers a safer way to access the asset class.

Corporations are increasingly shifting from asset-heavy to capital-light models, often through complex transactions like sale-leasebacks. This strategic trend creates bespoke financing needs that are better served by the flexible solutions of private credit providers than by rigid public markets.

Programs like the Thiel Fellowship are rare because of the asymmetric risk to a sponsor's reputation. If one sponsored individual fails spectacularly, the sponsor gets significant negative press. In contrast, when a university graduate fails, the institution absorbs the blame, making large donations a safer form of patronage.

Despite high earning potential, young athletes are often rejected by conventional private banks. Bank regulations require underwriting based on historical balance sheets, which a 21-year-old lacks. This creates a market gap for specialized lenders who can underwrite based on guaranteed future contract value, not past financial history.