California NIL bill focused on collectives moves to governor's desk

Legislation that would require California third-party NIL collectives to provide deal information to institutions has moved to Gov. Gavin Newsom’s desk.

The California Senate passed SB906 unanimously last week, which aims to bring transparency to NIL. Introduced by State Sen. Nancy Skinner, the legislation comes five years after Skinner introduced the Fair Pay to Play Act. States across the country followed California’s lead on the Fair Pay to Play Act which ultimately played a key role in ushering in the NIL Era.

Bill SB906 would require collectives to submit details for NIL deals worth $5,000 or more to the school the athlete attends. Specifically, collectives would provide the amount of compensation and value of service to the athlete, the name of the athletic team, the athlete’s gender and the amount of compensation provided to all athletes at the school each year by sport and gender.

“SB 206 sparked a revolution in the multibillion-dollar industry of college sports,” Skinner said in a statement. “Today, student-athletes across the country are receiving compensation for their talent and hard work. That’s great news.

“But there has also been an increase in college sports boosters forming so-called ‘collectives’ and other strategies that appear to be benefitting men and once again shortchanging women athletes. SB 906 will shine a light on NIL and give us a better understanding of NIL’s impact on gender equity in college sports.”

Collectives make up for 80% of NIL dollars

The data from California institutions would then be made publicly available via anonymous aggregated data. The legislation would also require schools to provide anonymous aggregated data on revenue sharing with athletes.

More than 80% of dollars flowing in the NIL space are generated by collectives. These organizations have become imperative to fielding a top roster in both football and men’s basketball, yet all operate differently. A top NIL collective operates at a high level, working closely with an athletic department while boasting one of the top budgets.

On3 ranked the top 15 NIL collectives in the country last week, estimating the organizations will combine to spend over $200 million this year. This could be the high-water mark of dollars spent by donors on fielding top rosters. If approved, the House v. NCAA settlement would allow institutions to share $20-22 million annually in revenue with athletes. Revenue sharing could start by the 2025-26 academic year.

Major dollars are being spent on football rosters. For example, sources have confirmed to On3 and new athletic director Ross Bjork has spoken publicly about how Ohio State has spent $20 million on this year’s football roster. USC is reportedly spending $10 to $12 million this year.

Back in December, 32 current and former female athletes filed a sex discrimination class-action lawsuit against the University of Oregon. It’s believed to be the first Title IX complaint addressing athletes’ ability to monetize their brands through NIL.

“There’s an old saying, ‘Sunlight is the best disinfectant,'” Skinner added. “And hopefully, the transparency measures in SB 906 will prompt collectives and other NIL entities to do the right thing and boost funding for women athletes. And if they don’t, and college-backed NIL efforts are shown to be shortchanging female athletes and worsening gender inequity, then policymakers will have the information necessary to level the playing field.”