College Sports Commission Says NIL Go System Under Strain

The College Sports Commission’s NIL Go system is seeing big delays due to an increase in a specific type of deal—created to exceed the House v. NCAA settlement rev-share cap. 

The College Sports Commission has approved $166.5 million worth of NIL deals since launching last June, it announced Tuesday, with $29.3 million worth of deals not cleared. But while thousands of deals have been approved, a specific type of NIL deal is causing big lags in the clearinghouse: those using “associated entities.” 

“I don’t think the system was designed with this amount of ‘associated deals’ in mind,” CSC CEO Bryan Seeley said.

Trouble With Associated Deals

On Tuesday, Seeley said that while the House v. NCAA settlement allowed for a cap on revenue-sharing, it did not allow a cap on third-party NIL deals—even if those deals offered fair market value, and weren’t pay-for-play in disguise.

Most third-party NIL deals are made by associated entities, which are multimedia rightsholders (like Learfield or Playfly), boosters or NIL collectives, or even a school’s official apparel sponsors. The goal of these deals is to offer players money above the amount schools can offer with revenue-sharing and gain an edge in recruiting.

Here’s how it works: a multimedia rightsholder, which helps get sponsorship and licensing deals for an athletic department, will also work to procure a certain amount of deals for athletes at a particular school. For example, the MMR partner could procure a sponsorship agreement for a player for Chipotle that pays the player in exchange for a social media advertisement.

A collective or apparel partner could do the same.

Between November and the end of December, 54% of the deals submitted through NIL Go for approval involved “associated entities.”  That number shot up for deals submitted between Jan. 1 and the end of February—which coincided with the football transfer portal—for a total of 78% of deals. 

“The NIL market in college athletics is not a normal organic market,” Seeley said. “It’s a market where schools are manufacturing NIL for student-athletes.”

Seeley noted these deals weren’t necessarily against the rules. But they do require more scrutiny. For example, deals must offer a specific amount of money to athletes for a specific number of “deliverables” or NIL activities on the player’s end. That money must be fair-market value—meaning the amount paid to the athlete should be commensurate with the services they provide. Associated entities can’t just say they’ll pay players a certain amount of money for unspecified NIL activities. As a result, the extra work required has caused deal flow to slow down.

Seeley said this dynamic wasn’t factored into the creation of the NIL Go system, which Deloitte built last year before Seeley joined the CSC. He said he was told that those who created the NIL Go system expected only 10% of deals submitted to be collective or associated entity deals. The rest would be more organic NIL deals offered by companies not associated with schools.

Now, the CSC must make changes to the software to accommodate for the extra work. 

“I think it was certainly foreseen that schools would be manufacturing NIL at some point, to some extent,” Seeley said. “I don’t think that people foresaw the amount of associated deals—because there’s a way to manufacture NIL too that doesn’t involve an associated entity. …. That’s just not really being done.” 

The lag time in deal approval—which in some cases has caused players to lose out on the opportunity to do deals that had a time limit or due date assigned to them—was already a known phenomenon. But now, the CSC is acknowledging a new dynamic contributing to these wait times—and says there’s no quick fix.

In fact, the problem has become so significant that House plaintiff lawyers at the law firm Winston and Strawn—who are tasked with ensuring compliance with the House v. NCAA settlement—have begun reaching out to NIL collectives to learn more about these wait times, one NIL collective head told FOS. The law firm has not taken any public action to date regarding these lag times.

Remaining Enforcement Questions

The CSC has launched multiple investigations into unreported NIL deals, and has reached out to several schools, including Nebraska . To date, those investigations were mostly resolved through communication between the CSC, schools, and players, without any penalties.

But the CSC is planning to kick off more complex investigations in the future—which it may have trouble conducting if schools don’t sign a participant agreement, in which they acknowledge they will cooperate with investigations and accept punishments without challenging them in court. 

Schools and state attorneys general previously resisted a previous version of the agreement. On Tuesday, Seeley said the conferences and the CSC are still in the process of creating new versions of the participant agreements. 

“Without the participant agreement, there will be major challenges,” Seeley said. That doesn’t mean without the participant agreement, it’s impossible. But I don’t think you’re gonna see enforcement, certainly at the speed with which the schools want it.”