It's been a little over a month since a judge approved the settlement terms agreed to by the NCAA and lawyers representing Division I athletes who brought several antitrust cases against the NCAA and its conferences in federal court. Things are already getting stupid.
The purpose of the settlement was, in broad strokes, to allow schools to begin directly paying college athletes while also reducing the influence of NIL collectives over how much players are compensated. Starting this summer, the settlement gives schools $20.5 million to spend on player compensation while also putting tighter restrictions on what types of NIL deals, which do not count against the $20.5 million cap, will be allowed under new regulations. NIL collectives that were previously able to pay players without much restriction will now have to prove that each deal that is signed serves a "valid business purpose."
You don't have to look very hard to see where this is going to get messy. The settlement essentially handed schools a modest salary cap, and then asked them to practice some restraint when using NIL collectives—the sprawling salary cap circumvention infrastructure that every school spent the last four years building—to sweeten offers to recruits. If you gave a hungry and unruly child two cookies, and then asked them to only open a new box of cookies if they had a "valid business purpose" for doing so, you would end up with a very sick child.
Last week, the College Sports Commission (CSC), a new governing body charged with approving and denying NIL deals, launched its NIL Go platform. Athletes will now have to submit their NIL deals through this platform, at which point a Deloitte-designed algorithm will judge if it meets the criteria for approval. The CSC also sent a memo to power conference administrators proclaiming that the most common type of NIL deal brokered through collectives would not clear the "valid business purpose" requirement, because the collectives themselves cannot be said to have valid business purposes. Through a lot of annoying hair-splitting, the memo basically says that NIL collectives can now only function as marketing agencies. Instead of pooling money from boosters and businesses and then, say, using that money to pay a player to make an appearance at an autograph signing or a golf tournament, collectives will now be expected to directly broker deals between athletes and third parties that "provide goods or services to the general public."
Jeffrey Kessler, one of the co-lead attorneys for the plaintiffs in the settlement, fired back at the CSC with a letter of his own. Kessler urged the NCAA and conference administrators to retract the CSC's guidance, arguing that there is nothing in the settlement agreement that gives the CSC the ability to hamstring NIL collectives in this way. From Yahoo's Ross Dellenger:
“There is nothing in the Settlement Agreement to permit (NCAA and conference) or the CSC, acting on their behalf, to decide that it would not be a valid business purpose for a school’s collective to engage in for-profit promotions of goods or services using paid-for student-athlete NIL,” the letter reads. “To the extent the NIL payment is for the promotion of a valid business purpose, it is irrelevant whether that payment comes from a NIL collective or any other third party.”
Attorneys are planning to bring the issue before Judge Nathanael Cousins, the appointed magistrate in the settlement who has been appointed to resolve such disputes.
“We urge the CSC to retract the July CSC Memorandum and clarify that the valid business purpose requirement applies to NIL collectives in the same manner as any other entity,” the letter reads.
As is always the case with college sports, you need only zoom out a little bit to see how silly and stupid this all is. The settlement itself is a progressive step, but the NCAA's insistence on trying to stuff that progress into a framework of hidebound rules and bylaws that justify the organization's continued existence means that college sports will never be legible or sensible. Bag men begat NIL collectives which begat a regulatory system hinging on a phrase—"valid business purpose"—that seems specifically designed to have its meaning litigated and re-litigated in legal challenges for years to come. Whereas recruiting violations used to be defined by free tattoos and hamburgers, they will now spring from defining meaningless distinctions between a player hawking t-shirts on behalf of an NIL collective or a local hardware store.
It's not even clear who this ramshackle system is supposed to benefit anymore. The NCAA of the past at least had a clear mandate—deny college athletes the fruits of their labor—but the current iteration has no constituency or purpose. With even athletic directors and coaches begging for collective bargaining, it's never been more clear that this whole stupid system has run its course.
