For several years now, the world of NIL in college sports has essentially been the Wild West. Under the current system, every player is essentially a free agent after each season, and there is no salary cap for how much money schools can spend on players.
However, that is reportedly about to change. With the dawn of the revenue sharing era, a new agency is reportedly going to enforce whether or not deals done outside of the revenue sharing system are legitimate endorsement contracts.
A report last week from Stewart Mandel of The Athletic detailed plans for the new enforcement agency.
“The recently approved House settlement, which took effect on July 1, established a clearinghouse, called NIL Go, that must approve all third-party deals for more than $600,” Mandel wrote. “The two main requirements for those deals are that they’re for a ‘valid business purpose’ and within a fair-market ‘range of compensation.’
“The goal is to prevent schools from utilizing booster-driven entities to funnel payments to recruits and transfers as a workaround to the $20.5 million revenue-sharing cap.
“Guidance issued Thursday by the College Sports Commission said that ‘an entity with a business purpose of providing payments or benefits to student-athletes or institutions, rather than providing goods or services to the general public for profit, does not satisfy the valid business purpose requirement set forth in NCAA Rule 22.1.3.’
“It then cited as an example a collective that ‘reach(es) a deal with a student-athlete to make an appearance on behalf of the collective at an event, even if that event is open to the general public, and the collective charges an admission fee (e.g., a golf tournament).’ And, ‘The same collective’s deal with a student-athlete to promote the collective’s sale of merchandise to the public would not satisfy the valid business purpose requirement for the same reason.’”
If the new system works as intended, programs will not be able to simply pay as much as they want for players. The goal is to put all schools on more of an equal playing field, rather than giving a massive advantage to the ones with the biggest collectives. It will be interesting to see if this effort is successful, or if schools continue to find new ways to get around the rules.
This article originally appeared on Trojans Wire: New agency to enforce legitimacy of NIL deals in college sports
Reporting by Adam Bradford, Trojans Wire / Trojans Wire
USA TODAY Network via Reuters Connect
