Image Source: Nick Schultz
Key Takeaways
- The College Sports Commission issued a reminder about its rules regarding third-party NIL deals, specifically those involving MMR and apparel partners.
- The CSC expressed "serious concerns" about some terms of the deals in question and reiterated that third-party NIL deals are subject to the NIL Go clearinghouse if they’re worth more than $600.
- Investigations are progressing with regard to unreported third-party NIL deals, and some schools can expect to hear from the CSC next week.
- Deals with MMR partners must be reported, even if the partner intends to find other sponsors to help activate the deal.
- Third-party NIL deals are viewed as the next "arms race" in college sports in the post-House settlement landscape.
Introduction to the College Sports Commission’s Guidance
The College Sports Commission (CSC) recently issued a reminder about its rules regarding third-party NIL deals, specifically those involving MMR and apparel partners. This guidance comes one week into the college football transfer portal window, during which the CSC received word of schools offering deals that go against the terms of the House settlement. As the CSC stated, "Without prejudging any particular deal, the CSC has serious concerns about some of the deal terms being contemplated and the consequences of those deals for the parties involved." This statement highlights the importance of adhering to the rules and regulations surrounding NIL deals, and the potential risks for student-athletes if these deals are not properly reported and cleared.
The Importance of Reporting Third-Party NIL Deals
The CSC reiterated that third-party NIL deals are subject to the NIL Go clearinghouse if they’re worth more than $600. This means that schools and student-athletes must report these deals within a certain timeframe, typically five days of execution. Enrolling high school athletes and incoming D-I transfers have up to 14 days in some cases. The guidance also stated that deals with MMR partners must be reported, even if the partner intends to find other sponsors to help activate the deal. As the guidance reads, "The label on the contract (e.g., ‘agency agreement,’ ‘services agreement’) does not change the analysis; if an entity is agreeing to pay a student-athlete for their NIL, the agreement must be reported to NIL Go within the reporting deadline." This emphasizes the need for transparency and accountability in the reporting of third-party NIL deals.
Investigations and Consequences
The CSC also announced that investigations are progressing with regard to unreported third-party NIL deals. Some schools "should expect to hear from the CSC next week," the commission said. This suggests that the CSC is taking a proactive approach to enforcing its rules and regulations, and that schools and student-athletes who fail to report deals or comply with the rules may face consequences. As the guidance stated, "Making promises of third-party NIL money now and figuring out how to honor those promises later leaves student-athletes vulnerable to deals not being cleared, promises not being able to be kept, and eligibility being placed at risk." This highlights the potential risks for student-athletes if schools and sponsors do not follow the rules and properly report deals.
Recent Examples of Third-Party NIL Deals
The CSC’s guidance comes after several high-profile examples of third-party NIL deals. For example, Yahoo! Sports’ Ross Dellenger reported a $3.5 million offer that LSU made Cincinnati transfer quarterback Brendan Sorsby. Sorsby later committed to Texas Tech, where he’s set to receive a deal in the $5 million range, On3’s Pete Nakos reported. The offer to Sorsby included a third-party marketing deal through LSU’s MMR partner, Playfly Sports Properties. This example illustrates the complexity and potential value of third-party NIL deals, and the need for clear guidelines and regulations to ensure that these deals are properly reported and cleared.
The Future of Third-Party NIL Deals
Third-party NIL deals are viewed as the next "arms race" in college sports in the post-House settlement landscape. Schools and sponsors are increasingly looking for ways to attract top talent and gain a competitive edge, and third-party NIL deals are seen as a key part of this strategy. Tennessee and Penn State are both set to have NIL components in their upcoming apparel deals with adidas, On3 previously reported. LSU was also the first school featured in Nike’s new Blue Ribbon Elite program, and that announcement came at the same time the Tigers announced an extension with The Swoosh. These examples illustrate the growing importance of third-party NIL deals in college sports, and the need for clear guidelines and regulations to ensure that these deals are properly reported and cleared. As the CSC’s guidance makes clear, the rules and regulations surrounding third-party NIL deals are critical to ensuring that student-athletes are protected and that the integrity of college sports is maintained.
https://www.on3.com/nil/news/college-sports-commission-distributes-reminder-third-party-nil-deals-amid-transfer-portal-movement/
