The Future of NIL Collectives Post House Settlement

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College sports have lacked stability since the inception of NIL in 2021. Athletic departments across the country scrambled to put systems in place to handle the new NIL deals their athletes were signing. With very little oversight and regulation, colleges created their own NIL collectives to manage NIL and recruitment at their schools. Now, with the potential revenue-sharing model following the House settlement (if it gets approved), colleges will face a new battle of figuring out how their collectives can support a pay-for-play type of revenue-sharing model that will be ushered in.

The House settlement creates a future model in which schools can pay their athletes millions of dollars annually. The new model will likely feature a $22 million maximum salary cap and rules that prohibit athletes from inking compensation deals with boosters. The question following this new revenue-sharing model is what happens to the NIL collectives schools were using to recruit athletes and manage NIL deals? Many believe that collectives won’t be going away any time soon. Rather, they will be transitioning into quasi-marketing agencies, funded not just by boosters but by the athletic department or university itself. According to the terms of the settlement, third-party NIL compensation to athletes outside of the revenue-sharing structure does not count toward the annual cap. The method of using an outside party to facilitate athlete pay gives schools the ability to exceed the cap, distance themselves from legal issues around Title IX and continue operating as many of them do now — with the school’s influence but outside of its umbrella.

However, Title IX will continue to be an issue for this revenue-sharing model. With most schools functioning based off the funding from football and basketball only, many school administrators will face difficulty in sharing that revenue with Olympic or women’s sports, which typically cost more money to operate than what they can bring in profit wise. Not sharing this revenue equally among female athletes implicates the legal issues related to Title IX, but dividing revenue could trigger another legal challenge from the football and basketball players, who can claim that they are not receiving enough of a share of the revenue that they are generating.

Schools, once again, are forced to switch gears and find ways to get ready for another change in the college athletics landscape. Some schools are already better positioned than others. In Missouri, state law has allowed schools’ collectives to receive institution funds for distribution to athletes. Other states and collectives are reaching for that goal. Ole Miss’s collective, The Grove, already started the transition from a booster-funded collective to an agency funded by the school. Schools need to decide whether to start their transitions now or wait until the House settlement is confirmed, but those who wait may fall behind their competitors. 

The evolving landscape of college athletics presents challenges and new opportunities for schools and their athletes. The prospective transition from booster-funded collectives to quasi-marketing agencies funded by the schools themselves represents a shift towards a potentially more regulated and structured system. However, the issue of equitable distribution of revenue among athletes, particularly regarding Title IX, remains a concern that schools will need to address. As colleges navigate these changes, it will be important for them to consider the implications for all athletes among their programs to ensure compliance with regulations. As always, the future of college sports remains uncertain, and we will have to watch and see how colleges adapt to this new era.

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