Happy Friday! Today we’re talking about the most popular start up in college sports, NIL Collectives.

Most people don’t know how NIL Collectives got their start. It didn’t happen in the last 2 years, it actually started in the late 2000’s with a groundbreaking lawsuit filed by former UCLA basketball player Ed O'Bannon and Supreme Court Justice Brett Kavanaugh’s concurring opinion following the Alston decision.

We’re taking you back to school today. Enjoy!

👋 Scottie

⚡️ SPOTLIGHT

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TODAY’S STORY
💥DOES EQUAL FUNDING MATTER?

Equality is found in NIL Collectives

Gone are the days when the disparity in funding between women's and men's programs took center stage. A significant catalyst for this shift has been the emergence of NIL Collectives.

The focus has shifted from ensuring equal funding down to the last penny to a new paradigm. It's no longer about the pennies being the same; it's about the substantial sums that alumni and donors can pool together to entice athletes to join the programs of their choice.

To put it lightly.

NIL Collectives have emerged as transformative entities, reshaping the traditional dynamics of university funding and athlete recruitment. These collectives, driven by the newfound ability of student-athletes to monetize their NIL, have created a paradigm where athletes can independently navigate their financial futures, challenging established norms.

What are NIL Collectives and how do they work?

WHAT: NIL Collectives, operating as part talent agencies, part extensions of schools, and part disruptors of the college sports landscape, have become pivotal players in the financial realm of college athletics.

HOW: Collectives enter into agreements with athletes, offering them monthly payments in exchange for using their NIL in various capacities, ranging from social media advertising to appearances in commercials. While some collectives function as for-profit entities, others have acquired non-profit status for tax-related purposes, aligning their operations with charitable events.

🔍️ 👀 FUNCTIONALITY:

1. Financial Support and Recruitment: Collectives provide athletes with a financial incentive to select and remain at specific schools. These contracts are strategically designed to indirectly encourage players to join particular programs, all while adhering to NCAA rules that prohibit direct payments as recruiting inducements.

2. Financial Transparency: The lack of transparency in collective deals and the reporting of athletes' earnings have raised questions about the amounts players receive for their endorsements.

3. Regulatory Challenges: As collectives navigate the intricate NCAA rules and state laws concerning NIL, they encounter hurdles in reconciling conflicting regulations. The NCAA's assertion that its rules take precedence over state laws has resulted in confusion, prompting collectives to seek clarity and advocate for uniform NIL legislation.

The origin story of NIL Collectives

The genesis of NIL collectives can be traced back to the late 2000s when former UCLA basketball player Ed O'Bannon and 19 other athletes filed a lawsuit against the NCAA. They argued that the NCAA violated United States antitrust laws by prohibiting athletes from sharing in the revenues generated from the use of their NIL in broadcasts and video games. The lawsuit resulted in a significant legal victory, with a judge ordering the NCAA to pay $44.4 million in attorney fees and an additional $1.5 million in costs to the plaintiffs in O'Bannon's class-action lawsuit.

While the O'Bannon lawsuit marked a crucial point in the trajectory of NIL collectives, a pivotal moment came later with the emergence of a powerful advocate for change within the legal system. Supreme Court Justice Brett Kavanaugh 😲 , in a concurring opinion following the Alston decision, made a profound statement: "Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate... And under ordinary principles of antitrust law, it is not evident why college sports should be any different. The NCAA is not above the law."

Kavanaugh's opinion, while not an immediate catalyst, exposed a fundamental problem within college sports. It underscored the need for change, and less than two weeks after his statement, the interim NIL policy went into effect. This marked the beginning of a seismic shift in the college sports landscape.

There’s more?!

One more thing…The Collective Association, TCA.

Seven prominent collectives have united to form The Collective Association (TCA). TCA's mission is to advocate for student-athletes, share best practices, and act as a unified voice to shape the development of the NIL market and address emerging challenges.

TCA aims to address several key issues:

1. State Law Conflicts: TCA seeks to provide clarity when NCAA rules clash with varying state laws, ensuring smoother operations of collectives across state lines.

2. Agent Verification: The association is working towards establishing a verification process and registry of agents allowed to work with athletes, akin to the NFL's registration of agents.

3. Revenue Sharing: TCA aims to develop a revenue-sharing model for athletes, allowing them to benefit from the substantial revenue generated by college sports programs.

Final Thoughts

Now, we aren’t completely tone death over here.

We acknowledge this phenomenon is currently more prevalent in D1 Power 5 programs, but it's worth considering how smaller schools might leverage it to their advantage, if applicable.

So, does equal funding across men and women programs matter anymore in a landscape where student-athletes have diversified avenues to monetize their name, image, and likeness and showcase their talents?

Not really

With athletes placing greater emphasis on universities that provide strong NIL ecosystems and the potential for significant earnings, the conventional university funding model is undergoing construction right now and is becoming a bit archaic.

Relevant articles from today’s story

👉️ What Are NIL Collectives And What Do They Do? (Icon Source)

👉️What are NIL Collectives and how do they operate? (On3)

👉️Seven major collectives forming association to ‘shape the development’ of NIL market (The Athletic)

👉️‘Everything’s on Fire’: NIL Collectives Are the Latest Patchwork Solution for College Athlete Pay (Global Sports Matters)