The House v. NCAA plaintiff attorneys are asking a federal judge to settle a dispute over the NIL deal approval process. If they prevail, it could mean the end of any semblance of a salary cap for Division I athletic departments.
On Monday, plaintiff attorneys Jeff Kessler and Steve Berman filed a motion requesting a court order prohibiting the College Sports Commission from considering multimedia rights holders and others to be classified as “associated entities”—the designation held by boosters and collectives that requires extra scrutiny.
The motion calls for a hearing on May 27.
The filing says the CSC was created to “review the subset of Class Members’ NIL agreements with Associated Entities or Individuals to confirm that the deals are for a valid business purpose and fall within a fair market range of compensation. The CSC, however, has instead been scrutinizing virtually every NIL agreement with a Class Member. The result is an over-zealous, over-bureaucratic, overreach that is delaying and rejecting deals that should never have been reviewed in the first place.”
In a statement to Front Office Sports Monday night, the CSC defended its position, calling its application of the rules “straightforward and fact-based.” CEO Bryan Seeley said in a subsequent interview with FOS that the timing “was no coincidence,” and that it was a direct attempt to circumvent the established arbitration process; an arbitration is set for later this month addressing the exact question of whether an MMR partner is an associated entity.
The House v. NCAA settlement, which took effect last summer, allowed all Division I schools to share revenue with players for the first time—up to $20.5 million per athletic department. But it also implemented new restrictions on NIL (name, image, and likeness) deals requiring all deals over $600 be submitted through the NIL Go reporting system and scrutinized to ensure they’re not “pay-for-play” in disguise. The College Sports Commission was created to oversee and enforce these rules; meanwhile, House plaintiff lawyers remain involved in overseeing the settlement’s implementation.
The heart of the current issue is over the definition of “associated entities.” The settlement didn’t explicitly prohibit deals brought to athletes through NIL collectives or boosters, but it did allow for these organizations or people to be designated “associated entities.” The firms have a relationship with a school with the goal of procuring deals for players; they also handle athletes’ payments (as “facilitators”). As a result, their deals are subject to extra review to ensure they aren’t in effect pay-for-play.
Extra Scrutiny, Longer Wait Times
The CSC has begun to classify multimedia rights partners like Learfield and Playfly, as well as other third parties, as associated entities in addition to boosters and collectives. MMR partners strike deals with schools to help them secure sponsorship and multimedia rights deals. In the NIL era, they’ve expanded to help schools find NIL deals for athletes as well, and have become a key part of the overall compensation package for players—and a way to get above the rev-share cap. They’re not allowed to guarantee a specific amount of money to each athlete, but can provide estimates of the value of deals they think they could get.
The extra scrutiny has caused longer wait times for CSC deals. As a result, lawyers for the House plaintiffs began asking for feedback from NIL collectives and other groups that submit deals for approval about long wait times and issues with the CSC process.
In March, the plaintiffs sent a letter to the CSC saying they received reports that the commission was counting organizations that weren’t collectives or boosters as associated entities, and they were applying extra scrutiny to deals that were only supposed to be for associated entities, according to the court filing. The letter said there were prolonged wait times for deal approval that harmed players’ ability to cash in.
In a response sent later that month, the CSC’s Seeley countered these claims, writing that 70% of deals were cleared “within seven days following submission of all required information” and that they believed their position that MMR partners were associated entities was defensible according to settlement terms. (Seeley said the CSC had not heard back from plaintiff counsel after sending the March 24 response until the filing to the court on April 20.)
Seeley says MMR companies like Learfield do not have to structure their deals this way, and that would solve the problem. “If a multimedia rights holder company is simply acting as a matchmaker and not routing the money, they shouldn’t be entered as a facilitator,” Seeley said. “And that way, the deal is not subject to heightened scrutiny.”
Seeley also accused plaintiff counsel of trying to circumvent the arbitration appeals process that was agreed to as part of the settlement, in which any deals rejected by the CSC could be appealed through third-party arbitration. (Seeley declined to confirm the school involved in the arbitration, but reports suggest it is Nebraska.)
