Given the increasing revenue sharing in university sports, are NIL collectives a problem or part of a solution?

By RALPH D. RUSSO

When the NCAA lifted its longstanding ban on college athletes earning endorsement money in 2021, there was no such thing as collectives.

Now, donor-funded organizations are ubiquitous and a common way for athletes to make money, as compensation for name, image and likeness quickly became a substitute for salary – much to the chagrin of many in college sports.

Revenue sharing with college athletes is now on the cards as part of a $2.8 billion antitrust settlement agreed to Thursday by the NCAA and the country's largest conferences. But the collectives' future seems uncertain, even if the roles they perform will soon become more important.

“One of the most important responsibilities of a collective is to properly manage payroll for a sport. And those skills that have been developed will now be required for every single (power conference) school,” said Blake Lawrence, whose company Opendorse works with dozens of schools and more than 40 collectives on NIL activities.

“Will schools hire key members of their collective who are responsible for administration and money transfer and negotiation with parents and players and handle that internally?” he added. “Or would schools hire the collective as their NIL agency and shift some of their risk from the school to a third party to manage the distribution of those NIL payments?”

The revenue-sharing model proposed in the settlement and agreed to by the NCAA, Big Ten, Big 12, Pac-12, Atlantic Coast and Southeastern conferences would allow schools to pass on up to 22% of the average Power League school's annual revenue to athletes, equivalent to about $21 million per year and increasing as revenue increases over the 10-year agreement.

In a letter to Division I members obtained by The Associated Press on Friday, NCAA President Charlie Baker estimated that athletes would receive between $1 billion and $1.5 billion in annual revenue under the proposed model.

The 22% cap has already been criticized by those who support athletes' rights. In the major professional sports leagues, the split between players and teams is about 50:50.

“Our expert said in a world without (NCAA) rules, athletes would get 10% of broadcast revenue. We agree to 22%, double zero. And you could say that component is pay-for-play,” said Steve Berman, one of the lead attorneys for the plaintiffs in House v. NCAA, the case at the center of the settlement.

Berman said if scholarships and other current benefits for athletes were added to the new shared revenue, schools would spend about 45 percent of their athletic revenue on their athletes.

“Pay-for-Play” remains a sensitive term in college sports, especially in connection with NIL and collectives.

Instead of a model where athletes receive their market value, NIL filled that gap. NCAA rule changes designed to allow athletes to capitalize on their fame by endorsing and sponsoring companies and brands resulted in high-profile athletes earning hundreds of thousands of dollars through contracts with collectives for some personal appearances and community service.

The NCAA is trying to implement new rules to encourage schools to bring NIL activities in-house, allowing athletic departments to be more involved in crafting contracts for their athletes. The NCAA also passed a NIL law that it hopes will increase transparency and accountability, including disclosure rules for contracts over $600 and the creation of a contract database to determine fair market value.

“I will say that we have heard from some collectives and their reaction has been, 'Thank you. We are getting out of the collective business,'” Berman said.

If revenue sharing is to replace zero salary payments, some college administrators fear collective payments will be a way to get around the 22% cap. Can the NCAA fix that? Probably not without the help of federal legislation.

Enforcement of the NIL is currently on hold after attorneys general in Tennessee and Virginia sued the NCAA, challenging regulations that prohibit recruiting incentives and pay-for-play.

“Overall, I believe this agreement demonstrates the urgent need for Congress to act and provide an opportunity for the more than half a million student-athletes across the country to continue to use sports for education and life skills development for their future,” Senator Ted Cruz (R-Texas) said in a statement Friday.

James Clawson of Spyre Sports, which runs the Vol Collective for Tennessee athletes – and has come under fire from the NCAA – said that even if the revenue was split among all athletes, top football players would still be underpaid.

“Until there is a model where players are paid more fairly based on the revenue they generate, there will always be a need for a collective to complement the services provided by the athletic departments,” Clawson said.

Russell White, chairman of the Collective Association, said it would be better for college sports officials to work with collectives rather than try to force them out of business.

“The universities that align with their collectives in whatever way … I think the ones that do it the fastest, from a real partnership, are going to reap tremendous benefits,” White said.

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