Nevada committee recommends changes to NIL disclosure process

The decision to repeal Alabama’s NIL law, the suspension of South Carolina’s law and the amendments passed in numerous states have shown the ever-changing role of state legislation in NIL. State legislation that was widely viewed as necessary a year ago has since become a potential deterrent, especially regarding the ability of institutions to facilitate NIL deals and the involvement of collectives.

In Nevada, a state-appointed committee was tasked with studying state laws and athletic association bylaws in order to make recommendations for future legislation.

When Nevada Gov. Steve Sisolak signed into law Assembly Bill 254 in May 2021, the law approved the creation of the Committee to Conduct an Interim Study Concerning the Use of the Name, Image and Likeness of a Student Athlete.

Later this month, the Committee on Education will receive the NIL committee’s final report and recommendations. The Committee on Education could introduce those recommendations as legislation for the 82nd Session of the Nevada Legislature, which begins Feb. 6, 2023.

The NIL committee’s final meeting on June 23 showed the potential challenges of well-intentioned recommendations that are crafted in part by college athletics outsiders.

‘My humble opinion is we want to do less with [NIL] disclosure and not more’

Disclosure requirements were the committee’s fifth and final recommendation topic, which resulted in roughly 25 minutes of discussion, questions and motions. Earlier motions regarding NIL best practices and a proposed study of the implications of NIL on the state’s gaming industry took only a matter of minutes.

The recommendation for amended disclosure requirements showed a contrast between the changes that members of legislative bodies may want regarding NIL and how those recommendations could conflict with athletes, athletic departments and donors who have more hands-on experience.

Currently, under Assembly Bill 254, college athletes in Nevada must disclose to their institution any NIL contracts they sign. High school recruits must do the same with any previous or existing NIL contracts before they sign their National Letter of Intent.

However, a work session document prepared for the latest NIL committee meeting recommended legislation that would require that third-party entities be held responsible for disclosing NIL deals to institutions.

“They would probably keep a tighter and a better record,” Assemblyman Cameron Miller, the committee chair, said during the meeting.

According to the document, the institution would then have to report NIL activities to the Nevada System of Higher Education (NSHE).

While the recommendation would remove the burden of disclosure from athletes, its implementation would add a state government unit into the reporting process while raising questions about privacy, enforcement and whether a recommendation requiring boosters to register with the state would limit athletes’ NIL opportunities.

“Although I appreciate that something should be done with respect to disclosure,” said UNLV Deputy Athletics Director, Chief Operating Officer Eric Nepomuceno, a member of the committee, “my humble opinion is we want to do less with disclosure and not more with disclosure in terms of creating parameters that could prevent NIL deals.”

‘If it got into larger amounts of money, then we’d want to know’

Nepomuceno motioned that the NIL committee recommend the disclosure to NSHE of any NIL activity worth at least $10,000, or an amount decided upon by the Committee on Education.

Miller and Vice Chair Roberta Lange had previously discussed the $10,000 threshold for disclosure, even though it’s admittedly a high bar.

“It wasn’t a lot of the deals and the things that we were hearing a lot of the students are getting right now,” Miller said, “but if it got into larger amounts of money, then we’d want to know. We want to track that a bit.”

Nepomuceno said a lot of the NIL activities UNLV athletes have agreed to have been on the level of an appearance at a child’s birthday party in exchange for $25. He said a potential five-figure financial threshold that would require disclosure should be tied to potential tax implications, as well as to confirm the NIL deal achieved quid pro quo in accordance with the NCAA’s interim NIL policy.

“If I saw that, regardless of whether or not that was in legislation, I would look into, ‘Why was that value so high?'” he said. “And also, quid pro quo. Was the service being provided in return, could that justify that figure? Because that’s exactly what the NCAA is looking at right now.”

At the University of Kansas, just 11 of the 289 NIL activities that athletes disclosed from July 1, 2021 through May 30, 2022 resulted in compensation of $10,000 or more. That’s just 3.8 percent of the disclosed NIL activities at a Big 12 university whose men’s basketball team won the 2022 NCAA Tournament and whose top-20 women’s volleyball team advanced to the third round of the NCAA tournament.

On3 obtained a copy of the disclosure records, which didn’t include any personally identifiable information about the athletes or the businesses involved, through an open records request.

NIL technology provider Opendorse projected that for the second year of the NCAA’s NIL era, Group of Five athletes, which includes those at Nevada and UNLV, will earn an average of $5,572.

However, there were still several major questions about NSHE’s involvement in the disclosure of athletes’ NIL deals.

Disclosure to centralized source intended to protect students and institutions

College of Southern Nevada Director of Intercollegiate Athletics and Recreation Dexter Ervin, then later Nepomuceno, asked about the function of reporting deals to NSHE.

“Are they going to being an enforcing entity assuming contracts don’t make their way, not only to NSHE, but to the institution?” Nepomuceno asked.

He also wondered aloud what NSHE would do with the contracts.

What about disclosure deadlines and penalties?

Miller said said the goal of the recommendation is to remove the disclosure responsibility from athletes but also to “capture the information that is now already required to be reported in a centralized place.” He said this would help protect students and institutions in Nevada.

Whether it’s nationally or on a state-by-state or institutional basis, centralized NIL data is often hard to come by. Some universities intentionally distance themselves from the disclosure process.

UNLV’s Nepomuceno: ‘We don’t want to be the custodian of the [NIL] contracts’

UNLV’s third-party athlete service provider is NOCAP Sports, who provide the school a free portal to track and monitor their athletes’ NIL deals. The portal also aggregates all NIL data for institutions, provides a marketplace and includes a free education portal.

“And that’s intentional,” Nepomuceno said. “We don’t want to be the custodian of the contracts.”

Ervin said an overview of an institution’s NIL transaction data could be included in annual reports that institutions already report to the Board of Regents and NSHE. He was concerned that the wording of the initial recommendation might require NSHE to approve athletes’ NIL activities, which could bog down the process.

“I am not sure that at this point we need to collect that information from institutions,” said Terina Caserto, a senior policy analyst from the Department of Academic and Student Affairs at NSHE. “In the future, this may be information we may want to look at. We may ask for them to report. We can figure out the parameters if the Board of Regents wants to look at this in the future but at this point, it does not appear that it’s necessary to report these pieces to the Nevada System of Higher Education.”

The NIL committee’s ultimate recommendations regarding NIL disclosure is for third parties, rather than athletes, to disclose NIL activities valued at $10,000 or more to institutions — unless the Committee on Education decides another amount is appropriate. The NIL committee recommends that the Committee on Education determine the appropriate method to gather NIL transaction data in a centralized location.

If you’re second-guessing your ability to follow along, you’re probably not alone. It was just another day in the world of NIL policymaking.

“I’m going to try to get this together in my head here,” Miller said at one point, laughing.