Name-Based Organizations Persist, Yet an Enigma Remains: What Exactly is NIL?
The landscape of college athletics has undergone a significant shift, with the emergence of Name, Image, and Likeness (NIL) collectives now being permitted to pay college athletes under certain conditions. This change comes after the House v. NCAA settlement, which reversed an earlier blanket prohibition by the College Sports Commission (CSC).
The agreement between attorneys for the House plaintiffs and defendants has clarified that NIL collectives cannot be singled out and must be treated like any other legitimate business involved in the college sports ecosystem.
According to the CSC's latest guidance, NIL collectives can enter into agreements directly with student-athletes, provided the deals comply with the settlement terms. Payments from collectives must be tied to legitimate NIL activities, such as autograph signings or social media promotions, and not simply serve as a conduit to funnel booster money to athletes without a genuine business purpose.
Collectives and athletic programs must show that each deal requires the athlete to promote a product or service that generates profit, with documentation evidencing the collective's effort to profit from the agreement. There remains a cap on direct revenue-sharing payments from schools to athletes, making collective deals beyond this cap important in recruiting and competition dynamics.
NIL collectives will face heightened scrutiny under the new enforcement regime to ensure compliance with the settlement's intent to prevent unfair competitive advantages or circumvention of rules. Steve Berman and Jeffrey Kessler, the attorneys for the House plaintiffs, have emphasized that the new guidance benefits student-athletes by enabling greater NIL opportunities through collectives while ensuring compliance with the settlement.
The revised rules represent a major development in the enforcement structure and avoid immediate litigation, though legal challenges remain a possibility as the industry continues to evolve. The House settlement also indicates expanding compensation avenues for student-athletes that combine direct payments from schools (revenue sharing) and NIL compensation from third parties, including collectives.
This represents a significant shift away from the former amateurism model and includes ongoing discussion about equity and tax implications. Controversy has arisen regarding the determination of an NIL deal's purpose, which will be done on a "case-by-case basis" by the CSC, and any challenges will go to a neutral arbitrator.
Arbitration for parties whose NIL deal is rejected, as required by the House settlement, will reduce the likelihood of litigation. The CSC's analysis of payments will focus on the substance, not labels, meaning nothing in the settlement automatically blocks collectives from making NIL payments to athletes.
If athletes were recognized as employees, they could likely unionize under the National Labor Relations Act, with terms in a Collective Bargaining Agreement exempt from antitrust scrutiny. However, inducing matriculation and retention at a university through NIL deals is not considered part of the right of publicity and will be rejected by the CSC.
In summary, NIL collectives are currently allowed to operate and pay athletes within the settlement framework, conditional on adherence to regulations designed to prevent abuse and maintain competitive balance, as confirmed in the College Sports Commission’s updated guidance and the legal agreement between power conference lawyers and House plaintiff attorneys.
- With the recent changes in college athletics, people are analyzing potential partnerships between student-athletes and NIL collectives, as these entities can now make payments under certain conditions, provided they comply with regulations and the House settlement terms.
- The increased presence of NIL collectives in college sports has sparked debate about fair competition, especially since some collectives can arrange deals for athletes to partake in activities like autograph signings or social media promotions, which may generate profits.
