Federal judge looking at NIL deals; changes could be in future

College sports leaders believe they have found a way through a massive antitrust settlement to finally separate “true NIL” for athletes from booster-funded payments they say are actually pay-for-play or recruiting inducements masquerading as endorsement deals.

If the settlement is approved by a federal judge, mandatory disclosure rules, an outside clearinghouse to assess deals and an enforcement process that includes neutral arbitrators will be used to scrutinize name, image and likeness transactions between athletes and third parties for fair-market value, with a keen eye toward so-called NIL collectives.

For some, the plan looks like an overstep by the NCAA and power conferences that will eventually lead them back to court.

“Honest question here for those in the #NIL space, as well as all fans of sports: WHY should a college athlete be required to submit, for approval by the NCAA (or any other group) an NIL deal over $600 (as proposed by the NCAA)?” Russell White, the head of The Collective Association, posted on social media.

Other legal experts see ample precedent in professional sports leagues to support the attempt to regulate NIL.

“The idea that there’s going to be a whole lot of litigation around this disclosure requirement, to me, was not completely well thought out,” said Jay Ezelle, an Alabama attorney who has been involved in NCAA cases and antitrust lawsuits.

Settlement proposal

The NCAA, Big Ten, Big 12, Atlantic Coast Conference, Southeastern Conference and Pac-12 agreed in May to settle multiple antitrust lawsuits related to athlete compensation for $2.78 billion in damages. The full term sheet for the agreement was filed last week and still needs approval by US Judge Claudia Wilken of the Northern District of California, a process that could stretch into next year.

If approved, the NCAA and conferences will rewrite rules to allow schools to direct about $21 million in athletic revenue to athletes annually, starting as soon as 2025.

As part of the agreement, NIL deals between college athletes or recruits and those deemed boosters of a school will be subject to review for “a important business purpose related to the promotion or endorsement of goods or services provided to the general public for profit, with compensation at rates and terms commensurate with compensation paid to similarly situated individuals with comparable NIL value who are not current or prospective student-athletes” at the same school.

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