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Yahoo
a day ago
- Business
- Yahoo
What is NIL Go, and why is it the latest subject of debate among college sports leaders?
ORLANDO, Fla. — The man steps onto a raised platform, walks behind a podium and leans toward the microphone. Before him, more than 200 college athletic administrators shift to the front of their seats. For months now, they've been waiting for this moment. Advertisement 'I'm Karl,' the man says, 'with Deloitte.' Karl Schaefer is a young man with perfectly cropped hair, a sharp grin and slender frame. He is here to lead a 40-minute presentation on the single most talked-about concept of college athletics' new revenue-sharing era: the Deloitte-run clearinghouse dubbed 'NIL Go.' Though it remains unsaid by those in power, the goal of NIL Go is quite clear: prevent booster payments to athletes that, for four years now, have been masquerading as commercial and endorsement deals. As Schaefer flips through slides of the NIL Go software system, for the first time revealed publicly, whispers within the room build to murmurs. Attendees capture slides with photos. Some video the entire event. Others scribble notes on a pad. How Deloitte and the new enforcement entity, the College Sports Commission, plan to prevent booster pay is the target of much criticism and fascination — plenty of it shrouded in secrecy for the last many months. Advertisement In central Florida, at an annual conference of administrators this week, the shroud was at least partially lifted. Not only was the platform's interface shown on a giant projection screen during Schaefer's presentation — including the six-step submission and approval process — but, in interviews with Yahoo Sports or during other public presentations, college sports executives who helped craft the system answered questions that, up to this point, had remained unanswered. While many doubt that the clearinghouse will withstand inevitable legal challenges, administrators here provided legitimate reasons for why they believe in its long-term survival. Most notable of those, says NCAA president Charlie Baker, is that the clearinghouse's appeals process — arbitration — is equipped with subpoena powers. 'They do have that power,' Baker told Yahoo Sports this week. 'Arbitration typically has subpoena power and I'm pretty sure since this one sits inside an injunction, they will have it.' Officials at the power conferences confirmed that 'significant subpoena powers' exist under the arbitration appeals process, but those powers are less expansive than subpoena authority within a courtroom. The decision to use subpoena powers and how exactly to use them — limited or broad — is expected to rest with the arbitrator presiding over the appeals process. Advertisement A subpoena compels individuals or entities to produce evidence under penalty of law, such as turning over text messages, emails and phone call logs as well as testifying before investigators. It is one of the more important tools for officers of the law, such as police investigators — and something that was never available to the NCAA enforcement staff. 'We won't have complete subpoena power, but if an athlete goes into arbitration … those records, you can get access to some of those records,' said Ohio State athletic director Ross Bjork, who is a member of a settlement implementation committee that helped construct the new enforcement entity. 'It's going to be a new day.' The algorithm Back in the Deloitte presentation room, Schaefer is explaining the submission process for NIL Go. Athletes are required to submit third-party NIL deals of $600 or more using a web-based submission system, not unlike an online registration system for, say, a passport. Advertisement Shaefer explains, gesturing toward a giant projection screen, that the clearinghouse makes three determinations once a deal is submitted: Is the third party an 'associated entity' with the university, such as a booster, or a business contracted with a school like a university sponsor or apparel brand? If so, more intense scrutiny is applied in the vetting process. Public companies can, and many of them will, be deemed as associated entities. Is the deal for a 'valid business purpose?" The third-party business, brand or individual must be receiving true value from the activities, such as an autograph session, television commercial or speaking engagement. Is the deal within Deloitte's 'range of compensation' paid to similarly situated individuals? This is perhaps the most criticized of the concepts. Deloitte created 'the range of compensation' through an algorithm using fair market value analysis, comparing similar types of NIL deals struck between an athlete and the third party. More is now known about that algorithm. Clemson athletic director Graham Neff, one of the implementation committee members, details the factors used to form a compensation range: 'Athletic performance is a big part of it. Your social media reach and following. Market — where schools are at. The reach of your school within said market.' This will vary by school. Neff offers an example. 'The reach of Georgia Tech in Atlanta is different than the reach of Georgia State,' he says. Advertisement Neff believes that a 'majority' of NIL deals will derive from 'associated companies,' as school sponsors, multi-media rights partners and individual alumni and boosters work to provide universities with additional compensation so they can exceed the $20.5 million revenue sharing cap that each school is afforded. Third-party NIL compensation that passes the clearinghouse does not count against the cap. Even those who helped craft the new enforcement entity acknowledge that the system is attempting to do a very difficult thing: bring regulation to an enterprise that has, for four years now, seen little to no regulation or enforcement of athlete compensation. 'There's some toothpaste back in the tube a little bit given the environment,' Neff said. For example, Deloitte officials claim that 70% of past deals from booster collectives would have been denied in their algorithm, while 90% of past deals from public companies would have been approved. Deloitte has also shared with officials that about 80% of NIL deals with public companies were valued at less than $10,000 and 99% of those deals were valued at less than $100,000. Advertisement These figures suggest that the clearinghouse threatens to significantly curtail the millions of dollars that school-affiliated, booster-backed collectives are distributing to athletes. 'No one is trying to restrict someone's earning potential, but what we're trying to say is, 'What is the real market?'' Bjork says. 'Everybody you talk to about the pro market will tell you that NIL deals for pro athletes are really small. In the collective world, we created a false market.' Denial, approval and arbitration Displayed on the giant screen before hundreds of athletic administrators is the six-step clearinghouse submission and approval process. Advertisement Step 6 lays out the process for a player if his or her deal is denied by the clearinghouse because it either is not struck for a valid business purpose or it does not meet the compensation range. (1) Revise and resubmit the deal so that the compensation amount falls within the algorithm's range. For instance, if the clearinghouse deems that a submitted $1 million deal should be $500,000, the athlete can resubmit for $500,000 and the school, if it so chooses, can compensate the athlete for the other $500,000 through its revenue-share pool. (2) Cancel the deal completely. (3) Request arbitration as an appeals process. Advertisement (4) Accept the rejected deal as is. In this case, the athlete 'may face enforcement consequences (e.g., loss of eligibility),' the Deloitte presentation slide reads. According to settlement terms, attorneys for the plaintiffs (the suing athletes) and defendants (NCAA and power conferences) will work together to select a neutral arbitrator or arbitrators to preside over these cases. Individual arbitration processes are expected to last no more than 45 days. In an interview last fall, plaintiff lawyer Jeffrey Kessler described the arbitration as a trial-like set of hearings in front of an arbitrator — the new enforcement entity on one side (NCAA and power conferences) and the athlete on the other side. NCAA president Charlie Baker says the new NIL enforcement process will add accountability to the system, as long as athletes and schools follow the rules. (Photo by) (Kevin Dietsch via Getty Images) How an arbitrator rules may 'depend on what evidence' each side produces, Kessler said. As Baker and others have noted, that evidence may now be generated through limited subpoena power. Advertisement But one lingering question remains: Will an athlete's school fight alongside him or her in the case? 'I expect that if the athlete pursues it, the school will support the athlete and help provide the athlete with counsel to help represent them in that challenge,' Kessler said. Penalties for NIL violations Implementation committee members say they are finalizing a 'menu' of penalties for those found to commit violations within this new revenue-sharing era, most notably those found to have (1) circumvented the cap with old-fashioned cheating or intentional or accidental miscalculations; and (2) tampered with another college athlete or prospect who is under contract. Officials decided against using a set penalty matrix as the NCAA currently does (Level I, Level II, etc.). Instead, they are providing the new College Sports Commission CEO, Brian Seeley, with the flexibility to choose penalties from a wide range of options, depending on the individual circumstance. Advertisement 'Those penalties being worked through are going to be significant and are going to be different than any penalties we've had previously,' said new Michigan State athletic director J Batt, a member of the implementation committee. An example of a new kind of penalty is a reduction in transfers that a school can acquire from the portal, Bjork says. But there are others. A postseason ban remains among the penalties, said Desiree Reed-Francois, the Arizona athletic director and implementation committee member. There are also stiff fines — multi-million dollars in value — that may be levied against schools, administrators and coaches. Suspensions, for coaches and administrators, are on the penalty menu as well. 'The fines are substantive,' Reed-Francois says. Advertisement One penalty is off the table. Administrators say that reducing a school's revenue-share pool for subsequent years is not permitted. The settlement guarantees that schools are afforded the same revenue share pool. Pushback The clearinghouse has made its way to the U.S. Capitol. During a congressional hearing over college sports on Thursday, Rep. Lori Trahan, a Democrat from Massachusetts, chided college leaders for instituting a new enforcement process that 'guarantees people in power always win and the athletes who fuel this multi-billion dollar industry always lose.' One of the witnesses in that hearing, Ramogi Huma, the executive director of the National College Players Association, chimed in as well, accusing the NCAA and conference leadership as wanting to 'shut down boosters' ability to pay players just to monopolize it' themselves. Advertisement College executives reject these notions and consider all of these elements — even the new enforcement process — as protected by a legally binding settlement. The new enforcement entity was not created by committee members in some 'backroom,' Bjork says. The implementation committee only provided structure to an enforcement piece that is 'codified' within the settlement. 'There are processes here that have been approved by the court and the plaintiffs and the defendants that people are going to be expected to follow,' Baker told Yahoo Sports. 'Given so much of what's been going on in the third-party space hasn't been accountable or transparent, and has made a lot of people outside of college athletics a lot of money, I can understand why there might be some grumpiness about this.' Soon, power conference schools — and others opting into the settlement — are expected to sign an affiliation or membership agreement. With this binding document, schools waive their right to sue over enforcement decisions and commit to settlement terms, even if their state laws contradict them. The agreement — itself the subject of legal concerns, even from some schools — is an indictment on an industry of stakeholders that, for competitive reasons, are constantly scrambling to bend, break and shatter rules to gain even the slightest edge. Advertisement Earlier this week in Orlando, members of the implementation committee publicly implored schools to follow rules. 'This has to be a mindset change,' Bjork told the audience. 'We see all the reports and naysayers, that 'we're going to go back to old-school cheating and all these things and that this is not going to work.' This has to work.' 'This will work if we make it work,' Reed-Francois said. 'We need to shift our mindset and make this work.' Can it be done? But what if athletes decide not to submit any of their third-party deals at all? 'People will be turning in people,' Reed-Francois said. 'There's a lot more `transparency now.' Advertisement Back in the convention hall, Schaefer, from Deloitte, is winding down his presentation. He thanks the crowd before beginning to walk off the stage. From among the crowd, a few raised hands emerge. Folks have questions. Others in the audience remind the hand-raisers of something announced before the presentation began: The Deloitte employees are not taking questions.
Yahoo
07-06-2025
- Business
- Yahoo
NCAA's House settlement approved, ushering in new era where schools can directly pay athletes
College athletics is officially entering a new world. A California judge on Friday granted approval to the NCAA's landmark settlement of three antitrust cases, often referred to as the 'House settlement,' ushering in an era where schools are permitted to share revenue with athletes within a new enforcement structure led by the SEC, Big Ten, Big 12 and ACC. Advertisement Claudia Wilken, the 75-year-old presiding judge in California's Northern District, granted approval of an agreement between the named defendants (the NCAA and power conferences) and the plaintiffs (dozens of suing athletes) to settle three consolidated cases, all of them seeking more compensation for athletes. Unsuccessful in so many legal battles recently — most notably a 9-0 loss in a 2021 Supreme Court decision — the NCAA and its richest, most influential conferences decided last spring to strike a revolutionary agreement by settling these cases instead of risking a court defeat that might cost them as much as $10 billion. The House settlement will pay thousands of former athletes — playing from 2016-2024 — a whopping $2.8 billion in backpay from lost name, image and likeness (NIL) compensation. Even more groundbreaking, the settlement paves the way for schools, for the first time ever, to directly compensate athletes in a system that features an annual cap and a new enforcement entity that is expected to more heavily scrutinize booster-backed payments. While paychecks can begin to be distributed from schools to athletes on July 1 — the official start date of settlement implementation — the new enforcement entity, the College Sports Commission, an LLC operated mostly by the power leagues, immediately takes effect with Wilken's approval of the agreement. Advertisement It means that any new contract struck between an athlete and a third-party entity, such a business, brand, booster or collective, is now subject to the new Deloitte-run NIL clearinghouse. The clearinghouse, dubbed "NIL Go," is charged with evaluating NIL deals between athletes and third parties to determine their legitimacy. It puts an end, perhaps, to schools hurriedly signing current players and transfers to new contracts before the approval of the settlement in deals that frontload a majority of the compensation. Contracts signed before the settlement approval and paid out before July 1 were not subject to the clearinghouse or cap, leading to a 'mad dash' in the basketball and football portal. Power conference leaders are targeting a Major League Baseball executive to manage the College Sports Commission as CEO, multiple sources tell Yahoo Sports. Bryan Seeley, a former assistant U.S. attorney who has served for more than a decade as MLB's vice president of investigations and deputy general counsel, is believed to be the preferred candidate for the CEO role of college sports' new enforcement entity. Despite plenty of hurdles in the settlement's years-long approval process, those who negotiated the deal have long expected it to be approved because of the sheer numbers involved. More than 85,000 athletes have filed claims for the backpay and just 600 have opted out or objected to the agreement — a paltry number that did not phase the judge. Advertisement Wliken's decision, coming XX days after the final hearing in Oakland, California, puts an end to what was thought to be one of the last looming hurdles of a deal: roster limits. In a concept authored by the power conferences, the settlement imposes new limits on sports rosters, many of which had not previously existed. In a recent filing, the NCAA and power leagues agreed to revise settlement language to permit schools to grandfather-in athletes on existing teams or those who have been cut this year, as well as recruits who enrolled on the promise of a roster spot. College sports is about to enter a whole new era. (Taylor Wilhelm/Yahoo Sports) With its approval, the settlement ushers into college sports a more professionalized framework but one, many believe, that is ripe for more legal scrutiny. Already, attorneys are gearing up for future legal challenges over, at the very least, the new NIL clearinghouse, Title IX and the capped compensation system — much of which can be resolved, legal experts contend, with a collective bargaining and/or employment model that college executives have so far avoided. Advertisement The settlement's approval is only the first in what many college leaders describe as a two-step process to usher in stability in the college sports landscape. Step 2 may be even more difficult: lawmakers producing a congressional bill to codify the settlement terms and protect the NCAA and power conferences from legal challenges over enforcement of their rules. Five U.S. senators have been meeting regularly in serious negotiations over legislation, but no agreement has been reached. Here's an explainer of college sports' new world delivered by the settlement's approval: Revenue-share pool Each school is permitted — not required — to share up to a certain amount of revenue annually with their athletes (the cap). Per the settlement agreement, the cap is calculated by taking 22% of the average of certain power school revenues, most notably ticket sales, television dollars and sponsorships. Advertisement In Year 1 — July 2025 through June 2026 — the cap amount is projected to be $20.5 million. While each school is charged with determining how to distribute those funds, most power conference programs are planning to distribute 90% to football and men's basketball, as those are, for the most part, the only revenue-generating sports for an athletic department. In Year 1, that's about $13-16 million for a football roster and $2-4 million for men's basketball, with the remaining amount shared with women's basketball, baseball, volleyball and other Olympic sports. While the 22% cap will remain the same through the 10-year settlement agreement, the cap money figure will rise based on built-in escalators (4% increase in Year 2 and Year 3), scheduled recalculations (after each third year) and additional cash flows into athletic departments, such as when conferences enter into new, more lucrative television deals or/and begin receiving new College Football Playoff monies. Advertisement Ohio State athletic director Ross Bjork told Yahoo Sports this summer that he expects the cap to break $25 million by the time the Year 4 recalculation happens. There are exceptions, though, that can artificially lower the annual cap, most notably up to $2.5 million in additional scholarships that a school offers. Enforcement entity A new non-NCAA enforcement entity — an LLC predominantly managed by the power conferences — will oversee and enforce rules related to the revenue-share concept. The company, College Sports Commission, is expected to be headed by a CEO as well as a head investigator for enforcement matters. The entity is charged with assuring that schools remain under the cap and that third-party NIL deals with athletes are not the phony booster-backed deals so prevalent over the last four years. Advertisement An enforcement staff is expected to be hired to investigate and enforce rules related to cap circumvention, tampering, etc., and are charged with levying stiff penalties. Violators may be subject to multi-game coach suspensions, reductions in a school's rev-share pool as well as reductions in allowed transfers, and significant schools fines. However, the biggest looming uncertainty of the settlement agreement involves a Deloitte-run NIL clearinghouse that must approve all third-party NIL deals of at least $600 in value. The "NIL Go" clearinghouse is using a fair market value algorithm to create 'compensation ranges' for third-party deals. Deloitte is expected to approve or disapprove deals in as little as one day, and athletes can resubmit rejected deals at least once with alterations suggested by the clearinghouse. For example, Deloitte deems a submitted $100,000 deal between an athlete and third party to actually be valued at $50,000. The player can alter the deal to align with the clearinghouse's suggested figure or the school can cover the difference by accepting a reduction against their revenue-pool cap. Deals rejected for a second time are referred to the CEO and enforcement staff and are then processed through an appeals system via court-overseen arbitration. Arbitration rulings are expected within 45 days, according to the settlement. Advertisement Athletes who lose arbitration cases and still accept compensation in the rejected deal are deemed ineligible. Rev-share contracts Starting with the fall basketball and football signing periods, schools began readying for this new era. Some even signed players to revenue-sharing agreements that begin to make payments on July 1 or later, contingent on the settlement's approval. Other players signed contracts with school booster collectives that featured a clause assigning the contract to the school on July 1. For the most part, the contracts grant schools permission to use a player's NIL rights — a reason for the compensation — but these agreements feature language often found in employment contracts, including buyouts, athlete requirements and prohibitions as well as the freedom for schools to reduce the players' compensation based on their academic standing and performance. Advertisement Already, the agreements are a subject of legal scrutiny. In January, Wisconsin defensive back Xavier Lucas left the university to enroll at Miami despite signing a revenue-share contract with UW. In public statements, Wisconsin has suggested it will pursue legal action against Lucas and/or Miami, which, it suggested, tampered with an athlete under contract. Lucas' representatives believe the contract is not enforceable as it was contingent on settlement approval when signed. The situation is a potential landmark case on settlement-contingent revenue-sharing agreements.
Yahoo
20-05-2025
- Business
- Yahoo
Power conferences working on contract to bind schools to new enforcement rules, with strict punishments
On May 1, in perhaps an intentionally quiet signing, Tennessee Gov. Bill Lee scrawled his name across the bottom of a six-page state bill. Tennessee Senate Bill No. 536, its details unearthed last week, paves the way for state schools — University of Tennessee, Vanderbilt, Memphis, etc. — and their affiliated collectives to break House settlement-related rules and prevents college sports' new enforcement entity from penalizing those schools. In layman's terms, the law is a launched missile toward plans from the NCAA and power conferences to police the revenue-sharing era of college sports, taking aim at the athlete compensation cap, the severe penalties for rule-breakers and the policies that prevent phony booster-backed name, image and likeness deals to players. But power conference executives have plans to combat such laws. Officials from the Big Ten, SEC, Big 12 and ACC are circulating a draft of a groundbreaking and first-of-its-kind document intended to prevent universities from using their state laws to violate new enforcement rules and, in a wholly stunning concept, requires schools to waive their right to pursue legal challenges against the new enforcement entity, the College Sports Commission. The document, now viewed by dozens of leading school administrators, would bind institutions to the enforcement policies, even if their state law is contradictory, and would exempt the CSC from lawsuits from member schools over enforcement decisions, offering instead a route for schools to pursue arbitration. The document, described as an 'Affiliation' or 'Membership Agreement,' is not finalized but a draft of the contract has been distributed to several school presidents, general counsels and athletic directors — many of whom have expressed legal concerns with several of the document's concepts, which are now being refined. The document is meant to be signed by all power conference schools, perhaps as well as others opting into the settlement, as a way to bind the group and provide stability around the enforcement of rules. That includes, most notably, decisions from the new Deloitte-run NIL clearinghouse, dubbed 'NIL Go,' an entity expected to more strictly enforce booster pay. The consequence for not signing the agreement is steep: a school risks the loss of conference membership and participation against other power league programs. 'You have to sign it,' says one athletic director who has seen the document, 'or we don't play you.' 'As a condition of membership, you must comply with the settlement and enforcement,' says a power conference president with knowledge of the document. The membership agreement has evolved since Yahoo Sports first learned of its existence in February. Over the last few weeks, administrators received the latest version. But the document's future remains murky. Firstly, a finalized version cannot be signed until the House settlement is granted approval from California Judge Claudia Wilken. At that point, will all schools sign a document that, many legal experts contend, creates legal issues for public universities? Are these concepts even enforceable? 'Arbitration itself isn't surprising but saying that you agree not to follow your state law … that may or may not be enforceable,' said Gabe Feldman, a sports law professor at Tulane and an expert on college sports legal matters. 'No matter what the sides do, they're going to be sued. This is an effort to rein in the lawsuits. It's just not clear how enforceable all these provisions will be.' Signing an agreement that exempts a state university from following its own state law is particularly troubling, says Ramogi Huma, the executive director of the National College Players Association. That's especially true when the consequence is potential eviction from your own conference. Such a concept is actually addressed in Tennessee's state law. The law prevents an athletic association from adopting and enforcing rules that violate state law and prohibits any association from 'interfering' with a school's membership status, voting rights and revenue distribution. Huma has helped dozens of states adopt laws that provide their universities with advantages in the NIL era. He calls the affiliation agreement a 'literal smoking gun in liability' for public universities. Mit Winter, a sports law attorney at Kennyhertz Perry LLC who works with both schools and collectives, unearthed details of the Tennessee law last week. The law gives schools and third parties in the state 'cover' not to follow rules that may be subject to antitrust scrutiny, he says. Many of the House settlement-related concepts — most notably the clearinghouse — could be in jeopardy of such scrutiny. 'Even if Judge Wilken approves the House settlement, her order will not address whether new NCAA rules that come out of the House settlement comply with antitrust law,' Winter says. 'She's only ruling on whether the settlement agreement is fair to absent class members.' The settlement — an agreement by the NCAA and power conferences to settle consolidated lawsuits over athlete compensation — will usher in a new more professionalized model where schools can share millions of revenue with athletes in a capped system that features a new enforcement arm to police booster deals. A decision to approve or deny the settlement is now in the hands of Wilken. While the timeline is at her own discretion, the settlement's revenue-sharing concept is scheduled to begin July 1 — a fast-approaching date that launches college athletics into a new world. At the center of much of the scrutiny around the settlement is 'NIL Go,' the Deloitte-run clearinghouse charged with determining if third-party NIL deals with athletes are legitimate and of fair market value. The clearinghouse is using an algorithm to establish a 'compensation range' for an assortment of deals — a concept that many legal experts expect to trigger a bevy of legal challenges. In a gathering at ACC spring meetings last week, Deloitte officials shared notable figures with athletic directors and coaches, including that 70% of past deals from booster collectives would have been denied, while 90% of past deals from public companies would have been approved. In March, Deloitte shared more figures with administrators. About 80% of NIL deals with public companies were valued at less than $10,000 and 99% of those deals were valued at less than $100,000. These figures suggest that the clearinghouse threatens to significantly curtail the millions of dollars that school-affiliated, booster-backed collectives are distributing to athletes — salaries that are masquerading as endorsement or commercial contracts. The affiliation agreement aims to, above all, protect the clearinghouse's decisions, exempting it from lawsuits filed by schools and preventing those schools from circumventing the settlement's compensation cap through affiliated entities, such as collectives. 'If we go back to external NIL that is separate from the House pool revenue share and back to a pay-for-play model, then why did we settle?' asks Baylor athletic director Mack Rhoades, who is aware of the affiliation agreement. 'We are going to spend $20.5 million [the per-school cap in Year 1] and then on top of it go to pay-for-play with collectives?' 'In this new era, we are already trying to circumvent the rules,' Colorado athletic director Rick George said during a panel at the Fiesta Bowl Spring Summit earlier this month. 'We've got to stop trying to circumvent the rules.' State NIL laws permit schools to do just that, and many of them were adopted after encouragement from school administrators seeking an advantage for their university. At a recent meeting of SEC administrators, Oklahoma athletic director Joe Castiglione addressed the subject of circumvention in an impassioned plea to colleagues. 'We understand [the settlement] may not be perfect, but we all must commit to it, and I mean truly commit to it, or it doesn't have a chance of working,' Castiglione told Yahoo Sports in a recent interview. 'There's more talk out there about people already dismissing the chance of this working than finding durable solutions. It's up to us to change the narrative.' State laws have been a prickly issue for NCAA and conference administrators. The laws vary greatly by state, providing schools, even within the same conference, different and often advantageous ways to skirt league and national standards. For instance, while 14 states currently permit direct school-to-athlete payment, another nine states have laws prohibiting such. According to research from the NIL platform Opendorse, roughly half of the states in the U.S. have adopted NIL laws with language that may delegitimize the impending House settlement regulations and enforcement rules. In fact, the five-year-long, multi-million-dollar congressional lobbying effort from NCAA and conference executives is rooted in encouraging lawmakers to pass a federal bill that, among other things, preempts these varying state laws. The attempt to exempt the College Sports Commission from legal action from schools is an example of the liability that faces any new entity, says Julie Sommer, executive director of the Drake Group, an organization whose mission is to defend academic integrity within college athletics. The CSC, soon to hire an executive director, board and enforcement staff, is expected to manage the enforcement and infractions of the new athlete revenue-share era, in a way replacing a much-maligned NCAA-controlled process of lengthy investigations, controversial enforcement decisions and what some believe to be unnecessary committee hearings. 'The NCAA is an association of its member schools,' Sommer says. 'The same challenges of potential monopoly power and antitrust issues that the NCAA currently faces could easily transfer to a new, similarly structured organization. You can leave the NCAA, but you can't escape the problems of the NCAA.'
Yahoo
20-05-2025
- Business
- Yahoo
Power conferences working on contract to bind schools to new enforcement rules, with strict punishments
On May 1, in perhaps an intentionally quiet signing, Tennessee Gov. Bill Lee scrawled his name across the bottom of a six-page state bill. Tennessee Senate Bill No. 536, its details unearthed last week, paves the way for state schools — University of Tennessee, Vanderbilt, Memphis, etc. — and their affiliated collectives to break House settlement-related rules and prevents college sports' new enforcement entity from penalizing those schools. Advertisement In layman's terms, the law is a launched missile toward plans from the NCAA and power conferences to police the revenue-sharing era of college sports, taking aim at the athlete compensation cap, the severe penalties for rule-breakers and the policies that prevent phony booster-backed name, image and likeness deals to players. But power conference executives have plans to combat such laws. Officials from the Big Ten, SEC, Big 12 and ACC are circulating a draft of a groundbreaking and first-of-its-kind document intended to prevent universities from using their state laws to violate new enforcement rules and, in a wholly stunning concept, requires schools to waive their right to pursue legal challenges against the new enforcement entity, the College Sports Commission. The document, now viewed by dozens of leading school administrators, would bind institutions to the enforcement policies, even if their state law is contradictory, and would exempt the CSC from lawsuits from member schools over enforcement decisions, offering instead a route for schools to pursue arbitration. Advertisement The document, described as an 'Affiliation' or 'Membership Agreement,' is not finalized but a draft of the contract has been distributed to several school presidents, general counsels and athletic directors — many of whom have expressed legal concerns with several of the document's concepts, which are now being refined. The document is meant to be signed by all power conference schools, perhaps as well as others opting into the settlement, as a way to bind the group and provide stability around the enforcement of rules. That includes, most notably, decisions from the new Deloitte-run NIL clearinghouse, dubbed 'NIL Go,' an entity expected to more strictly enforce booster pay. The consequence for not signing the agreement is steep: a school risks the loss of conference membership and participation against other power league programs. 'You have to sign it,' says one athletic director who has seen the document, 'or we don't play you.' Advertisement 'As a condition of membership, you must comply with the settlement and enforcement,' says a power conference president with knowledge of the document. NEWARK, NJ - JANUARY 21: A fan holds a sign about name, image and likeness (NIL) payments for college athletes during a college basketball game between the Seton Hall Pirates and the Marquette Golden Eagles at Prudential Center on January 21, 2025 in Newark, New Jersey. (Photo by) (Porter Binks via Getty Images) The membership agreement has evolved since Yahoo Sports first learned of its existence in February. Over the last few weeks, administrators received the latest version. But the document's future remains murky. Firstly, a finalized version cannot be signed until the House settlement is granted approval from California Judge Claudia Wilken. At that point, will all schools sign a document that, many legal experts contend, creates legal issues for public universities? Are these concepts even enforceable? Advertisement 'Arbitration itself isn't surprising but saying that you agree not to follow your state law … that may or may not be enforceable,' said Gabe Feldman, a sports law professor at Tulane and an expert on college sports legal matters. 'No matter what the sides do, they're going to be sued. This is an effort to rein in the lawsuits. It's just not clear how enforceable all these provisions will be.' Signing an agreement that exempts a state university from following its own state law is particularly troubling, says Ramogi Huma, the executive director of the National College Players Association. That's especially true when the consequence is potential eviction from your own conference. Such a concept is actually addressed in Tennessee's state law. The law prevents an athletic association from adopting and enforcing rules that violate state law and prohibits any association from 'interfering' with a school's membership status, voting rights and revenue distribution. Huma has helped dozens of states adopt laws that provide their universities with advantages in the NIL era. He calls the affiliation agreement a 'literal smoking gun in liability' for public universities. Advertisement Mit Winter, a sports law attorney at Kennyhertz Perry LLC who works with both schools and collectives, unearthed details of the Tennessee law last week. The law gives schools and third parties in the state 'cover' not to follow rules that may be subject to antitrust scrutiny, he says. Many of the House settlement-related concepts — most notably the clearinghouse — could be in jeopardy of such scrutiny. 'Even if Judge Wilken approves the House settlement, her order will not address whether new NCAA rules that come out of the House settlement comply with antitrust law,' Winter says. 'She's only ruling on whether the settlement agreement is fair to absent class members.' The settlement — an agreement by the NCAA and power conferences to settle consolidated lawsuits over athlete compensation — will usher in a new more professionalized model where schools can share millions of revenue with athletes in a capped system that features a new enforcement arm to police booster deals. A decision to approve or deny the settlement is now in the hands of Wilken. While the timeline is at her own discretion, the settlement's revenue-sharing concept is scheduled to begin July 1 — a fast-approaching date that launches college athletics into a new world. Advertisement At the center of much of the scrutiny around the settlement is 'NIL Go,' the Deloitte-run clearinghouse charged with determining if third-party NIL deals with athletes are legitimate and of fair market value. The clearinghouse is using an algorithm to establish a 'compensation range' for an assortment of deals — a concept that many legal experts expect to trigger a bevy of legal challenges. In a gathering at ACC spring meetings last week, Deloitte officials shared notable figures with athletic directors and coaches, including that 70% of past deals from booster collectives would have been denied, while 90% of past deals from public companies would have been approved. In March, Deloitte shared more figures with administrators. About 80% of NIL deals with public companies were valued at less than $10,000 and 99% of those deals were valued at less than $100,000. These figures suggest that the clearinghouse threatens to significantly curtail the millions of dollars that school-affiliated, booster-backed collectives are distributing to athletes — salaries that are masquerading as endorsement or commercial contracts. Advertisement The affiliation agreement aims to, above all, protect the clearinghouse's decisions, exempting it from lawsuits from schools and preventing those schools from circumventing the settlement's compensation cap through affiliated entities such as collectives. 'If we go back to external NIL that is separate from the House pool revenue share and back to a pay-for-play model, then why did we settle?' asks Baylor athletic director Mack Rhoades, who is aware of the affiliation agreement. 'We are going to spend $20.5 million (the per-school cap in Year 1) and then on top of it go to pay-for-play with collectives?' 'In this new era, we are already trying to circumvent the rules,' Colorado athletic director Rick George said during a panel at the Fiesta Bowl Spring Summit earlier this month. 'We've got to stop trying to circumvent the rules.' State NIL laws permit schools to do just that, and many of them were adopted after encouragement from school administrators seeking an advantage for their university. Advertisement At a recent meeting of SEC administrators, Oklahoma athletic director Joe Castiglione addressed the subject of circumvention in an impassioned plea to colleagues. 'We understand (the settlement) may not be perfect, but we all must commit to it and I mean truly commit to it or it doesn't have a chance of working,' Castiglione told Yahoo Sports in a recent interview. 'There's more talk out there about people already dismissing the chance of this working than finding durable solutions. It's up to us to change the narrative.' State laws have been a prickly issue for NCAA and conference administrators. The laws vary greatly by state, providing schools, even within the same conference, different and often advantageous ways to skirt league and national standards. For instance, while 14 states currently permit direct school-to-athlete payment, another nine states have laws prohibiting such. Advertisement According to research from the NIL platform Opendorse, roughly half of the states in the U.S. have adopted NIL laws with language that may delegitimize the impending House settlement regulations and enforcement rules. In fact, the five-year-long, multi-million-dollar congressional lobbying effort from NCAA and conference executives is rooted in encouraging lawmakers to pass a federal bill that, among other things, preempts these varying state laws. The attempt to exempt the College Sports Commission from legal action from schools is an example of the liability that faces any new entity, says Julie Sommer, executive director of the Drake Group, an organization whose mission is to defend academic integrity within college athletics. The CSC, soon to hire an executive director, board and enforcement staff, is expected to manage the enforcement and infractions of the new athlete revenue-share era, in a way replacing a much-maligned NCAA-controlled process of lengthy investigations, controversial enforcement decisions and what some believe to be unnecessary committee hearings. 'The NCAA is an association of its member schools,' Sommer says. 'The same challenges of potential monopoly power and antitrust issues that the NCAA currently faces could easily transfer to a new, similarly structured organization. You can leave the NCAA, but you can't escape the problems of the NCAA.'
