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t has been just over a year since the College Sports Commission’s “NIL Go” college athlete name/image/likeness (“NIL”) agreement clearinghouse was formed. During that period, the panel has approved over $355 million in NIL deals, while rejecting nearly $90 million.
Though individual schools have been reviewing NIL deals since the advent of NIL sponsorships, college athletes must now submit proposed deals to the NIL Go clearinghouse – a review panel that was formed as part of the House settlement. NIL Go reviews deals to ensure that a school is not obscuring a pay-for-play arrangement – and uses three separate criteria when determining whether to approve or reject such deals: (1) is the marketer a school-associated entity (if so, the deal will be scrutinized more thoroughly); (2) is there a valid business purpose; and (3) is compensation within the range of “similarly situated” athletes for similar terms?
Per the College Sports Commission, “all NCAA Division I student-athletes must report third-party NIL deals with compensation that equals or exceeds $600 (including contracts or payments with the potential to meet or exceed $600 via payment structures such as royalties or bonuses),” which also includes entering into multiple deals with the same entities (or those with common ownership) and where the aggregate value of those deals meets or exceeds $600. Compensation includes both direct monetary payments and other benefits such as free car leases, airline tickets/vouchers, and gym memberships.
The most common reasons for rejecting an NIL deal are the deal not including direct activation of the college athlete’s NIL rights (i.e., the rights were simply warehoused and not used – or otherwise held for the future) or the deal was not for a valid business purpose related to the promotion or endorsement of goods or services being provided to the general public for profit. If a deal is not cleared, the college athlete can: (1) revise the deal and resubmit it; (2) cancel the deal and refund any money already received; or (3) appeal to neutral arbitration.
For the most part, typical brand endorsements or sponsorships will easily meet such criteria. However, brands (and their marketing agencies) seeking to do deals with college athletes should be aware of the foregoing and conscious of the need for approval - and the related timing aspects. A brand wouldn’t want to move ahead with a campaign only to find out that the agreement with the college athlete was rejected and at risk for cancellation.
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