The College Sports Commission issued revised guidance Thursday that restores the ability for collectives to make name, image and likeness (NIL) deals with athletes, after its original directive drew the ire of lawyers and those who run the booster-fueled businesses.
The CSC, a recently launched enforcement agency run by the power conferences, oversees the revenue-sharing system being implemented in college sports as part of a $2.8 billion antitrust lawsuit settlement.
The plaintiffs’ attorneys in House v. NCAA took issue with the CSC’s July 10 guidance related to financial agreements between collectives and athletes and whether they could meet the “valid business purposes” standard needed to be cleared. Attorneys claimed the original guidance violated terms of the settlement agreement by unfairly restricting NIL compensation to athletes and threatened to go back to the court with their complaints.
Last week, lawyers on both sides reached an agreement to revise the language in a way that would allow collectives to be treated like any other business, though details still needed to be worked out.
The new guidance allows collective deals as long as the athlete is promoting “for profit” goods or services to the public. The first guidance essentially invalidated the collective business model and allowed for any deal from a collective to be denied. Collective operators railed against possibly being shut down by the CSC and the stage seemed set for a legal challenge. Now, the deals will be scrutinized individually.
“Whether or not payments to student-athletes by collectives are permissible under the Settlement will be evaluated on a case-by-case basis — first by the College Sports Commission and then by a neutral arbitrator if the CSC determination is challenged by the student athlete,” the Big Ten, Big 12, ACC, SEC and Pac-12, along with plaintiffs’ attorneys, said in a joint statement. “NCAA rules continue to prohibit Associated Entities from making payments for play in contrast to permitted NIL payments.”
The NIL Go clearinghouse, run by the accounting firm Deloitte, must approve all third-party NIL deals of more than $600. The two main requirements for those deals are that they’re for a “valid business purpose” and within a fair-market “range of compensation.” The goal is to prevent schools from utilizing booster-driven entities to funnel payments to recruits and transfers as a workaround to the $20.5 million revenue-sharing cap for 2025-26.
“The College Sports Commission will enforce the settlement as written,” CSC CEO Bryan Seeley said in a statement. “Pay-for-play will not be permitted, and every NIL deal done with a student-athlete must be a legitimate NIL deal, not pay-for-play in disguise.”
In the four years since the NCAA lifted its ban on college athletes cashing in on their fame, collectives affiliated with specific schools have made hundreds of millions in deals. They pool funds from donors and boosters and use them to license the NIL rights of specific athletes in exchange for things like public appearances, social media posts and autograph signings. College sports leaders have long lamented that those deals are de facto pay-for-play inducements, not legitimate endorsement deals.
The settlement cleared the way for schools to directly pay athletes, but those payments are intended to be NIL compensation.
The CSC sent a new guidance memo on Thursday to the more than 300 Division I schools that have opted to take part in revenue sharing.
“The CSC’s ‘for profit’ inquiry focuses on whether the sale of goods or services is for profit and not whether the entity itself is operating at a profit or a loss at any given time,” the memo said. “As part of this inquiry, the CSC may require student-athletes or the entities with whom they seek to enter NIL agreements to provide information and documentation to establish compliance with the requirements, including the entity’s efforts to profit from the deal.”
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