In the wake of the historic House settlement that is reshaping how collegiate sports will be organized and run on a far-reaching scale, leadership in the NCAA is proudly proclaiming it now has the guardrails everyone has been asking for that will stabilize college sports. But even while the NCAA and its leadership are proclaiming they have the tools to finally police its league, skepticism does and should remain among onlookers.
Many details about these new enforcement systems were reported by Ross Dellenger of Yahoo Sports in an article last Friday. The Deloitte clearinghouse, or “NIL Go,” received its first semi-public showcase. NIL Go was created as a direct result of the House settlement which will enable universities to sign athletes to outright contracts and pay them through revenue sharing up to a cap of $20.5 million per school (that number will rise over the years as it’s directly tied to the revenue generated by power conference schools).
The hope is that revenue sharing contracts will eliminate the faux NIL payments that are merely de facto salaries under the guise of being name, image and likeness deals between businesses and athletes. A true NIL deal is meant to involve some kind of agreement where, in case of sports, a popular athlete will promote some business or brand. The most common examples being promotion through appearing in a commercial or some other advertisement. In the modern age, social media is also a tool utilized for NIL agreements.
These kind of legit NIL deals have been made across the country by thousands of athletes. However, the vast majority of dollars paid to athletes have been through so-called NIL collectives, which largely do not engage in actual NIL agreements between businesses and athletes. They are fronts for boosters to funnel money to athletes. According to Dellenger’s article, Deloitte claimed that in 80% of actual NIL deals, businesses paid less than $10,000 with 99% of those same deals paying less than $100,000. Meanwhile, athletes across Power Four conferences competing in football and men’s basketball have almost universally made six figures, with a majority of starting-caliber players making seven-figure salaries through supposed NIL deals.
And that’s where NIL Go is supposed to step in. Under this new system, any NIL deal valued north of $600 is supposed to be submitted to the Deloitte-run clearinghouse. Officials will look over every NIL deal, scrutinizing them to ensure the money paid is truly market value for what the athlete is suppose to provide a business. NIL Go even boasts an algorithm meant to calculate that market value based on a variety of factors, such as social media reach for the athlete, the school the athlete plays for and potential media market reach. If the clearinghouse determines the NIL deal isn’t representative of market value (presumably for offering too much money for not enough value from the athlete), the deal can be rejected. In the event of that happening, the athlete and business can appeal or submit a different NIL agreement.
The NCAA has put a lot of thought into this, and is proudly telling everyone of the new powers they will have to impose their will. NCAA president Charlie Baker is quoted in Dellenger’s article, bragging about the subpoena powers that the NIL Go appeals process will have. A variety of penalties for rule-breakers have and are being considered. These include the old-fashioned fines and postseason bans but also new ones like a cap on how many transfers a program may add or a reduction in the revenue-sharing cap for a university. Ohio State athletics director Ross Bjork was quoted by Dellenger saying “It’s going to be a new day,” presumably in that the NCAA will be able to impose its will after a decade of losses on the legal front.
Even so, the general public remain unconvinced, and justifiably so.
For one, how should anyone expect the NCAA to enforce rules effectively when the history of the NCAA is irrevocably tied to an understanding that under-the-table pay-for-play existed for decades with only token punishments meted out once or twice a decade? When boosters of Big Ten of SEC schools inevitably attempt to bypass these rules to try and buy better rosters, is the NCAA really going to punish its cash cow institutions? It’s a laughable assertion that the NCAA will actually police the power conferences when historically it has lacked the desire to do so.
Additionally, there are concerns over loopholes in enforcement. NIL Go is meant to police name, image and likeness contracts. However, there are potential workarounds as J.T. Rogan, a former Division I football player, coach and recruiter, wrote about back in May.
“There are so many ways to avoid the NCAA’s oversight of deals,” Rogan wrote. “What if you want to employ an athlete and pay them $250K as a consultant? Or what if you want to compensate athletes via deferred payments using a split life insurance plan—like many college coaches use to avoid heavy taxation? Or make payments via cryptocurrency, where decentralized platforms make tracking wallet owners difficult or impossible? Or even through less sophisticated means—like funneling money through a friend or family member? The workarounds are endless.”
Attorney Tom Mars also posited the idea of a “professional services contract” in which a business could simply pay a salary for presumably nominal work.
Loopholes already exist even as the ink dries on the House settlement and Deloitte is presenting its first draft of its enforcement mechanisms.
Even if the NCAA and its NIL Go clearinghouse manage to actually grow a spine and stand up to power conference schools and even if they fix the potential loopholes, there remain serious problems. Namely legal challenges.
For the past decade or so, the NCAA has been dunked on repeatedly in court by basically everyone, particularly when NIL is directly or indirectly involved. The House settlement itself stems from a lawsuit seeking back pay for money athletes lost out on due to the NCAA’s ban on players receiving NIL money. Other cases, like O’Bannon v. NCAA in 2014 were also cases where the collegiate sports governing body lost on the issue of NIL. There are other indirect cases such as challenges over restrictions on transfers and even on the eligibility rules in which the plaintiffs argue the NCAA is restricting potential NIL earnings.
With NIL Go having the very specific goal of restricting NIL payments, even if it is functioning in the spirit of true name, image and likeness deals, how on earth could is stand up to even the mildest of legal challenges? The moment any NIL deal is denied by the clearinghouse, an army of lawyers will line up to take the case of the athlete(s) whose deals were denied by Deloitte.
The one great hope for the NCAA is an act of Congress, something Baker has been begging for for years. And lucky for them, there is a bill that would seemingly satisfy most of the NCAA’s hopes. Titled the “Student Compensation and Opportunity through Rights and Endorsements Act” (or, to use the acronym they worked backward from, the SCORE Act) the bill is an attempt to formalize the terms agreed to in the House settlement. It would grant antitrust protection from the NCAA, provide a federal NIL law and canonize the one thing the NCAA wants above all else: that college athletes be forever prohibited from being considered employees.
To be clear and brief about the status of the bill, nothing is imminent. It is currently in a preliminary stage and has not been formally introduced to lawmakers. The bill is sponsored by Rep. Gus Bilirakis (R-Fla.) and has received some criticism from Democrats.
The antitrust protection is future-proofing for eventual legal action against the NCAA, but a federal NIL law is also very necessary for them as well. Right now, there’s a hodge-podge of state-level NIL laws with some state legislatures not having addressed the issue at all and others having been very proactive. Some have even taken shots at the NCAA and the House settlement. Tennessee lawmakers recently signed into law a bill (S.B. 536) that specifically grants athletes the right to receive money from NIL collectives and has language targeting any “athletic association” (i.e. the NCAA) from creating what the bill calls “anticompetitive restrictions” that would impact payments from collectives to athletes.
S.B. 536 in its very text yields to any federal law regarding NIL, as would any state’s bill on the subject, making the SCORE Act, or any similar bill, very enticing to the NCAA. To that end, and the many other issues, the power conferences put out a joint statement calling the bill “an important step to bring much-needed clarity, fairness, and national consistency to college athletics.”
If this bill is passed, the NCAA would finally have some legs to stand on legally and could potentially win some of the lawsuits that challenge its enforcement. The problem is that the bill will not be passed in time for the first case in which an NIL deal is denied. What will happen if a judge strikes down NIL Go with an injunction? What if an athlete in Tennessee sues the NCAA, citing S.B. 536? Until and unless a federal law is passed giving the NCAA the god-like legal powers it seeks, we’ll still be living in the wild west era of collegiate athletics.
