The College Sports Commission (CSC) has updated its guidance to clarify its enforcement position in response to questions over the continued viability of “NIL collectives” and transactions.
The CSC established the NIL Go portal in partnership with Deloitte as part of the House v. NCAA settlement. Through NIL Go, the Commission plans to review and approve all third-party NIL deals exceeding $600 to weed out pay-for-play agreements from legitimate transactions. The CSC will evaluate these NIL based on:
a) The nature of the payor’s relationship with the athlete’s institution (Associated Status);
b) Whether the payment serves a valid business purpose (VBP); and
c) Whether the compensation is comparable to similarly situated athletes engaged in similar promotional work – Range of Compensation (RoC).
According to its updated guidance, the CSC will evaluate the VBP of a transaction to meet all of the following conditions:
(1) Involve the promotion of a for-profit good or service;
(2) Reflect fair market value; and
(3) Serve a legitimate business purpose.
The Commission clarified that its definition of “for-profit” refers to the nature of the transaction, not the tax status or profitability of an entity. This clarification will permit NIL collectives to continue using dual funding sources (donors and commercial partnerships). NIL collectives are organizations, independent of a college or university, that pool funds from donors, alumni, fans, or businesses to help student-athletes profit from their NIL rights.
This clarification builds on prior CSC guidance outlining review of Associated Status to determine the NIL transaction’s relationship with the student-athlete’s institution and RoC using external benchmarks to capture a student-athlete’s NIL value.
The update guidance allows for the CSC’s comprehensive evaluation of each NIL transaction, but uncertainty remains. There is no precedent regarding CSC’s review of these transactions. Thus, enforcement challenges based on inconsistent enforcement and lack of due process are probable. The CSC expects to review and make determinations prior to a transaction being finalized. Thus, the Commission’s ability to make timely determinations and resolve challenges, including through arbitration, surely will affect future NIL deals.
Jackson Lewis’ Higher Education and Collegiate Athletics Group will continue to closely monitor the CSC’s implementation of its updated guidance and remains available to assist institutions and collectives navigating these evolving compliance demands. If you have any questions or concerns, please do not hesitate to reach out to our team.
(Summer Associate Gabrielle Painter contributed to this post.)