Under NCAA proposal, some NIL collectives could be rendered obsolete, others redefined

NIL collectives are not a monolith. The more than 200 that operate nationwide run the gamut in ambition, sophistication, resources, mission, community involvement, staffing, business savvy and – if the NCAA’s reform proposal is adopted – survival prospects.

On the heels of the NCAA’s attention-grabbing proposal – which would for the first time allow schools to enter into NIL deals with athletes – one of the many questions stirring debate is, if the plan is adopted, what would be the fate of the current model of third-party collectives?

The answer? It likely depends on the specific collective, the individuals who operate them, and the goals of the athletic department. But make no mistake, the collective model would change dramatically. 

“It would definitely redefine collectives,” Walker Jones, executive director of the Ole Miss-focused Grove Collective and a leader in The Collective Association who has testified in front of Congress, told On3.

In the proposal’s current form “I don’t think it makes collectives obsolete,” he said. “I think it maybe refocuses collectives on those revenue-generating sports to maintain some anonymity from Title IX. Maybe collectives only focus on football and maybe men’s or women’s basketball in some cases, or baseball. It would definitely change collectives’ missions and who they are contracting with.”

Because collectives operate as third-party entities, legal experts have told On3, many schools – whether intentionally or not – evade Title IX requirements as the collectives distribute the vast majority of their dollars to male athletes. In his Tuesday morning letter, NCAA President Charlie Baker specifically noted that the two biggest changes he is proposing would ensure Title IX compliance because they would formally occur under schools’ umbrellas:

First, the plan details, a college sports subdivision – comprised of institutions with the highest resources – should be required to annually invest at least $30,000 per athlete into an enhanced educational trust fund for at least half of the institution’s eligible student-athletes.

Secondly, Baker asserts, rules should change for any Division I school, at their choice, to enter into name, image and likeness licensing opportunities with their student-athletes.

Is proposed model be better than current system?

Under this proposal, schools would be mindful of Title IX compliance when distributing dollars from the trust fund and entering into NIL deals with athletes. In theory, there could still be a role for some third-party collectives to then give players in revenue-generating sports their fair market value in NIL dollars.

“Just like the football coach is always going to make more than the softball coach, the starting quarterback is going to make more than your starting center fielder in softball, or your goalkeeper in soccer,” Jones said. “Those economic disparities already exist.”

Jones said a collective could continue to operate and perhaps exclusively distribute dollars to football and men’s basketball players, as appropriate. At the same time, within the framework of the trust fund model, the university would spend millions on non-revenue, Olympic sports athletes, he said, “which they don’t currently do.” 

In the NCAA’s proposal, if a university has some 400 athletes, it would need to pay at least 200 of them at least $30,000 annually. That’s $6 million per year – at a minimum.

Jones’ question is how this proposed model is any better than the current system. The NCAA would be saddling universities with another $6 million that needs to be spent on athletes, including those from non-revenue generating sports.

Moving closer to in-house collectives?

Through interviews with a wide array of legal experts and collective operators, if the NCAA proposal is adopted in its current form – and that remains a large question – many believe some collectives will indeed be rendered obsolete, and that that outcome was part of the NCAA’s calculus with the proposal. 

Some collectives likely would fold into the athletic department’s NIL arm. Some may continue as third-party entities, but perhaps with different value propositions. And, in some cases, new third-party entities could blossom to also assist schools when NIL activity moves in-house.

Some collective operators are influential stakeholders highly valued by athletic department officials, but most are not. Some would move to assist in the athletic department’s NIL operation, sources said, but most may not. 

Corey Staniscia, co-founder and director of the USF-focused collective, Fowler Ave Collective, tweeted that if you’re a collective operator and concerned about the implications of the proposal “get your head out of the clouds. Too much money/power went to many collectives across the country who of course want to continue feeding the beast. I welcome the day when this can be done through the institution itself.”

Staniscia added that the NCAA should allow the institutions to contract with athletes even just for their rights of publicity to directly sell merchandise, co-branded billboards, and bobbleheads for fans.

Ayden Syal, the CEO and co-founder of MOGL – a leading athlete marketplace and NIL operations software provider – said under this proposal, athletic departments will need a division responsible for distributing compensation amounts.

“It is unclear if that role would or could be assumed by collectives, but it’s important to remember that many collectives are managed by former members of athletic departments,” Syal told On3. “Because of this, collectives in theory could be brought in-house as the entity or department responsible for the management and distribution of the ‘trust funds’. Schools will likely need a robust software solution and management system to support this.”

One prominent collective operator told On3 that the proposal, if adopted, will just cause the collective to formally move in-house, a scenario many industry leaders have long endorsed because they believe it would address donor fatigue and inefficiencies, and ensure Title IX compliance. 

“We are already one small step from that [in-house model] anyway,” the collective operator said. “This wouldn’t change much.”

The collective source added that the proposal would adversely affect half of some power leagues and “completely destroy” schools that aren’t strong revenue generators. However, the source said it would help schools that have robust operating revenue but weaker donor support. 

“This thing would have to come with some kind of revenue-sharing agreement and salary cap to keep it from ruining the whole institution of college football,” the source said.

Is in-house NIL model liability risk for schools?

Not all leading stakeholders endorse bringing collective and NIL activity under schools’ umbrellas. North Carolina Athletic Director Bubba Cunningham told On3 before the proposal was unveiled that he opposed bringing collectives or NIL activity in-house.

“Universities are not prepared to bring collectives or other elements of NIL in-house,” Cunningham said. “There are too many unanswered questions about employment, compensation, antitrust, Title IX and Title VII that must be considered.”

There is another issue related to NIL activities formally moving under schools’ umbrellas that was not addressed in Baker’s letter: increased liability risk for schools.

Consider the perspective of Sean Hughes, co-founder and CEO of Athliance – a top NIL compliance solution. Hughes said liability would be the biggest issue in such a revamped structure. 

“The clear example of that is that collectives help organize a deal with, like the Utah team where their entire team gets cars,” Hughes told On3. “Now, what happens if one of those 18 or 19-year-olds gets a DUI and [hurts] somebody in one of those cars? It’s an extreme example. But there’s very clear-cut liability issues with schools being involved in facilitating those deals.”

Jones echoed potential liability concerns for schools in the in-house NIL model, adding, “As you peel back the onion, where does the liability now shift? How can a university mitigate that and then account for it when some outlying version like that Utah truck deal comes up?”

Overall, Jones gives the NCAA credit for trying to be proactive with the proposal. He wasn’t slinging an arrow at Baker when Jones added what many feel: The NCAA has long suffered from inaction and the lack of creativity.

From that view, he believes the 117-year-old association checked a box by trying to offer something tangible. But the more he dives into specifics, he said, the more problematic it appears in terms of implementation. 

“What problems does it solve that currently exist that need to be addressed?” Jones said. “It may address some – an answer to Title IX – but it doesn’t address some of the more persistent issues that we are facing.”