Financial Realities - Some Programs Have HUGE $$

[NickRU714]

My understanding is that the words 'valid business purpose" are in the settlement agreement.https://www.bradley.com/insights/pu...d-bring-significant-changes-to-college-sports

“Instead, restrictions will focus only on groups "of entities and individuals closely affiliated with the schools," such as collectives. Any NIL deals involving these "associated entities or individuals" must be approved through a third-party clearinghouse.”


So this doesn’t really change anything.
It just makes formal “collectives” less impactful.

If Dave Portnoy wants to pay a Michigan QB $5m to appear at a party - no review or valuation done.
Or if a Texas booster and his friends pool money to play a round of golf with a UT WR.

This seemingly will have minimal impact.
Just makes the boosters handle things directly - which most major boosters were likely already doing.

 

[retired711]

“Instead, restrictions will focus only on groups "of entities and individuals closely affiliated with the schools," such as collectives. Any NIL deals involving these "associated entities or individuals" must be approved through a third-party clearinghouse.”


So this doesn’t really change anything.
It just makes formal “collectives” less impactful.

If Dave Portnoy wants to pay a Michigan QB $5m to appear at a party - no review or valuation done.
Or if a Texas booster and his friends pool money to play a round of golf with a UT WR.

This seemingly will have minimal impact.
Just makes the boosters handle things directly - which most major boosters were likely already doing.

You didn't quote far enough: "The NCAA will not be responsible for reviewing these agreements; instead, they will be subject to neutral arbitration. An arbitrator will determine whether the NIL deals serve a "valid business purpose" or are merely pay-for-play schemes disguised as NIL agreements."

BTW, challenging an arbitrator's decision in court is *quite* difficult.

 

[NickRU714]

You didn't quote far enough: "The NCAA will not be responsible for reviewing these agreements; instead, they will be subject to neutral arbitration. An arbitrator will determine whether the NIL deals serve a "valid business purpose" or are merely pay-for-play schemes disguised as NIL agreements."

BTW, challenging an arbitrator's decision in court is *quite* difficult.

It doesn't ultimately matter who reviews them.
The universe of deals being reviewed are only collective deals.

If I wanted to pay Francis $1m to show up at my daughters 9th birthday - that's not subject to review or "valid business purpose" justification.

How are they going to define "individuals closely affiliated"?
I'm not an employee or hold any official relationship with Rutgers.
Is donating just $1 mean you are closely affiliated?

 

[NickRU714]

It's two steps:
1. Is the NIL deal even subject to review?
2. If yes, what valuation will be put on it?

 

[NickRU714]

A private Washington car dealership hiring Lathan for various appearances for $500k as part of their annual advertising budget doesn't seem like it'll be subject to review.

 

[-RUFAN4LIFE-]

Why is it odd? Isn't a player's NIL driven by speculation?

Because you're confusing pay-to-play with NIL.

 

[Greene Rice FIG]

Eventually the way I'm seeing the public talk about student loans and the people that owe them. I expect most government funding for universities to be cut. Eventually it will only be the ivies, big time football schools, community college and trade schools. Bringing back manufacturing jobs to America so there will be plenty of options for those that can't get into the universities that are left .

Agree with 2/3 of this.

Don't agree with the last sentence.

 

[Greene Rice FIG]

Because you're confusing pay-to-play with NIL.

no. i am just point out out that valuation models and what actual prices are are 2 different things....that was my argument with you.

 

[retired711]

It doesn't ultimately matter who reviews them.
The universe of deals being reviewed are only collective deals.

If I wanted to pay Francis $1m to show up at my daughters 9th birthday - that's not subject to review or "valid business purpose" justification.

How are they going to define "individuals closely affiliated"?
I'm not an employee or hold any official relationship with Rutgers.
Is donating just $1 mean you are closely affiliated?

It is not true that "only collective deals" are being reviewed. Go back and read the passage you quoted.

If you pay an athlete to show up at a party, that is invalid precisely because it doesn't have a valid business purpose.

The NCAA has dealt with the "individuals closely affiliated" language by subjecting *all* deals to review by Deloitte; see the NCAA site I linked. In practice, only booster deals are likely to be a problem because Nike, say, is not going to pay $1 million to Francis unless Nike reasonably thinks he's worth $1 million

 

[retired711]

Some here seem to be assuming that the restrictions on NIL in the settlement agreement are either a sham or obviously unenforceable. They're certainly not a sham; the parties wanted even greater restrictions. Maybe they won't work, but we shouldn't assume they won't. Deloitte is a reputable firm and it would be silly for it to design an enforcement system if it obviously won't work.

Let's at least give the thing a chance. If it works, it's going to do a lot to even the playing field for schools like ours that lack "whales."

 

[rutgersal]

IIRC those payouts were towards the end of the deal not at the start.

The payments are supposed to to escalate significantly year 3, which is this year. Hopefully we’re close to $80 M this year, and closer to $100M by the end of the contract

 

[toby83]

If someone writes a check of $100,000 to Jeremiah Williams to attend a wealthy kid's bar mitzvah how can Deloitte say the player isn't worth that?

A 93 year old guy with cancer and $36,000,000 wants to pay $1,000,000 to Emanuel Ogobole to hang out with him for a few days as he is dying. How can Deloitte come in and say sorry he isn't worth that.

The price is where supply meets demand. Supply in certain instances could be 1.

Exactly

There are at least 62 people out there that would pay $100 for a Brutus Beefcake personalized video. I would say it's worth nothing, but obviously I'm wrong.

 

[toby83]

Side note what a deal for Howie Rose I think he's underestimating himself

 

[NickRU714]

It is not true that "only collective deals" are being reviewed. Go back and read the passage you quoted.

If you pay an athlete to show up at a party, that is invalid precisely because it doesn't have a valid business purpose.

The NCAA has dealt with the "individuals closely affiliated" language by subjecting *all* deals to review by Deloitte; see the NCAA site I linked. In practice, only booster deals are likely to be a problem because Nike, say, is not going to pay $1 million to Francis unless Nike reasonably thinks he's worth $1 million

From the article you posted:

Under the preliminarily approved settlement, enforcement authority over third-party NIL deals will no longer extend to all third parties, including broadly defined boosters. Instead, restrictions will focus only on groups "of entities and individuals closely affiliated with the schools," such as collectives. Any NIL deals involving these "associated entities or individuals" must be approved through a third-party clearinghouse.


It literally says "restrictions will focus only on groups......"

Additionally, from the NCAA item you posted - they specifically say:

The committee has also been working closely with Deloitte to create a system to track and evaluate all Division I student-athletes' third-party NIL deals valued at $600 or more, which would be required to be reported under the proposed settlement.

Conferences share new and significant progress toward implementation of House settlement - NCAA.org

Pending final court approval of the proposed settlement in the House v. NCAA, Hubbard v. NCAA and Carter v. NCAA cases (collectively, "the House case"),

www.ncaa.org

So only items that must be reviewed (see the 1st item) will be reviewed. Not all NIL.

 

[retired711]

"groups *and* entities." You are an entity. The drafters aren't so stupid that they would exempt an individual booster using an NIL deal to entice a kid

On further review, I agree that only deals with boosters are subject to review. But, as i say, there is little danger that, say, Nike is going to engage in a transaction without a business purpose.

I wish I could find the full text of the agreement on-line. FWIW, here's an excerpt from what Temple is telling its athletes:

• Third parties who are “associated entities or individuals” (that is, certain boosters and all collectives like the TUFF Fund): These entities and individuals may engage in NIL agreements with student-athletes only if the NIL money is paid for a valid business purpose to promote goods and services provided to the general public for profit, with payments at fair market value rates, consistent with existing NCAA rules. These assessments will be subject to challenge in a new neutral arbitration system overseen by Deloitte, who has been contracted by the NCAA.
• Third parties who are not considered “associated entities or individuals”: Agreements with other third parties are permissible and not subject to further review but must be disclosed if payments exceed $600 in total. https://owlsports.com/sports/2025/3/31/faq-house-settlement

 

[Greene Rice FIG]

So if I want to pay $58,000 to Gavin to come to my Poker night am i one of those 3rd parties?

 

[retired711]

Here, in all its glory , is the settlement agreement for those with the courage to read it. (qq) on page 11 seems to be the best description of the third-party NIL rules. it uses the term "booster" which is defined early in the agreement to be defined the same way as in the NCAA's existing bylaws.

https://www.collegeathletecompensat...nded_stipulation_and_settlement_agreement.pdf

BTW, making a donation to a school's athletic department or a booster organization makes you a booster under 8.4.2 of the NCAA's bylaws.

 

[-RUFAN4LIFE-]

no. i am just point out out that valuation models and what actual prices are are 2 different things....that was my argument with you.

That's not how Deloitte will be reviewing potential deals. Trust me, boosters will get very creative once they understand where the grey areas are and then it will get interesting.

 

[PSAL_Hoops]

Are they going to factor in what High School and home town people went to?

“I don’t care that Dylan Grant is the most valuable player overall. Bryce Dortch went to my high school and hometown. He’s more valuable to my local deli for an advertisement than Grant.”

Is that going to be factored into the valuation models?

Yes it 100% absolutely should.

But to be clear, the FMV of an advertisement for your local deli isn’t that high to begin with. If your deli doesn’t normally pay $1M for ads Deloitte likely wouldn’t conclude there is reasonable basis now for anyone - even a revered HS star. The way FMV would be established would be to look for reasonable comparables. If other similar companies and prior ads for your deli only cost 10K there isn’t going to be a basis to charge 1M now.

Being able to establish an existing relationship with the brand selected would have to be the first step though and it presumably could fail often under the new rules. If some Washington car repair company is paying $850 to Lathan to appear in an advertisement that is an immediate red flag. Lathan has no prior ties to Washington or the company he’s representing in the ad. There’s no reasonable basis to assume that his selection for the part in the ad had a business purpose for the car company. Thats where I can see a glimmer of light at the end of the tunnel. It’s a lot easier to establish the basis for choosing a well known kid throughout NJ like Geo or Caleb to appear in a Jersey Mikes commercial. That’s one low ball example, but it’s a universal concept with broad implications. Real NIL deals (outside the one and dones) need the player to have an established brand.

 

[FastMJ]

It will not be permitted for a booster to pay individual players unless there is a "valid business purpose" for the deal. Again, we'll have to see if that works.

They will just come up with a bunch of phony baloney business deals. The most we can hope for is that the terms of these phony business deals need to be disclosed and legal contracts.

 

[retired711]

They will just come up with a bunch of phony baloney business deals. The most we can hope for is that the terms of these phony business deals need to be disclosed and legal contracts.

It's not going to be that easy. The phony baloney deals will be forbidden for lacking a valid business purpose.

 

[FastMJ]

It's not going to be that easy. The phony baloney deals will be forbidden for lacking a valid business purpose.

Highly skeptical that any real teeth are ultimately brought to bear with this new “system”. Gray areas will be exploited incessantly.

 

[PSAL_Hoops]

Highly skeptical that any real teeth are ultimately brought to bear with this new “system”. Gray areas will be exploited incessantly.

On one hand I agree, but we can’t forget that the bluebloods with the power were the ones pushing for this. Teams with rich football followings like Michigan want this. Between incoming lottery types and muti-year kids in the program, they’ll have plenty of opportunities to pay large, justifiably NIL deals (that will clear Deloitte review) outside the allocation. SMU and Miami will have a much harder time. That’s the goal.

It’s going to be difficult for the blue bloods to come up with different standards for their step sister BB programs. Hoops are not the same. Only 13-15 players in total and basketball isn’t presumed religion at Michigan. They won’t be able to justify market value for some random mid-major transfer guard any more than the SMUs. Not for hoops if the rules are consistent.

We’ll see what happens.

 

[Greene Rice FIG]

Again...what stops using cryptocurrencies as a way to get athletes paid by boosters? Top 20 owners on dortchcoin are invited to watch the Masters with Dortch and light snacks and soft drinks are included.

 

[bac2therac]

 

[Greene Rice FIG]

what does hospitals have to do with anything???
this makes no sense

 

[bac2therac]

what does hospitals have to do with anything???
this makes no sense

we shall call them the Champion Blue Wildcats as we go to the professional soccer model

maybe Rutgers will be the Jack Russel Rescue Fund Scarlet Knights

if I was Pike I would be contacting the Saudis for funding

 

[Greene Rice FIG]

At the end of the day all I see as beneficiaries of what has become over the past 30 years are coaches.

Yes players are getting paid but to me it seems like the preparation of life after basketball is completely thrown out the window. How can you really be a good student when you play conference games 3 time zones away and are changing schools every year.

All this money in the game and Rutgers losses $50+ million every year.

Fans get to watch EVERY game on TV, but need 4 different TV packages and have to watch some games at 630 and some at 1030 and everything in between.

 

[Greene Rice FIG]

That's not how Deloitte will be reviewing potential deals. Trust me, boosters will get very creative once they understand where the grey areas are and then it will get interesting.

believe me i know they will

 

[runrutgersrun]

View embedded media

Lololol...such an illustrative, great post. After all the dust settles from all this nonsense, do you know where we will probably be? Right back to where this all started 3-4 years ago. There will just be more pointless, unenforceable mumbo-jumbo in writing than ever before....new "guidelines" that the major players will only ignore or circumvent more than ever before. This was all heading to an exclusive, rich school, media-dominated world anyway without all these annoying NIL/portal detours! Even now...just substitute "whales" for out of control boosters in any of our long-past or present conversations about schools that have cheated and tampered. Saddest part...the old time student athlete type will bemoan the fact this new landscape may have even fewer opportunities to get any kind of reward (silly old things like scholarships, room-and-board) for their hard pre-college work than there was before these much desired NIL/unlimited transfer days arrived. Perfect example of be careful what you wish for. Go RU!

 

[bac2therac]

At the end of the day all I see as beneficiaries of what has become over the past 30 years are coaches.

Yes players are getting paid but to me it seems like the preparation of life after basketball is completely thrown out the window. How can you really be a good student when you play conference games 3 time zones away and are changing schools every year.

All this money in the game and Rutgers losses $50+ million every year.

Fans get to watch EVERY game on TV, but need 4 different TV packages and have to watch some games at 630 and some at 1030 and everything in between.

stop it

all 95% of these kids care about is the bag, not an education

 

[rucoe89]

I'm not sure I understand what you're saying. The deal says that schools can make annual payments to athletes up to a cap. These payments are formally for NIL, but they amount to revenue sharing. Players can continue to make additional NIL deals with third parties -- those other than schools. But NIL deals with boosters -- (in the settlement's words) " entities and individuals closely affiliated with the schools," are allowed only if they have a valid business purpose -- that is, the player has to be giving something of equivalent value to the booster. The deal can't be, in effect, pay to play.

If enforced, that is going to be a tremendous curb on the kind of NIL deals we are now seeing; there is no way that those kids at Michigan can be said to be giving a million dollars of value to those who are paying them.

Judge Wilken is about to approve all of this, assuming that the NCAA agrees to phase in roster limits, as a settlement of the athletes' antitrust suit. The NCAA and those who brought suit know that the deal does not bar someone else (or the government) from bringing an antitrust suit of their own. As I understand it, the settlement says just that. But it seems unlikely that the Trump Administration is going to bring such a lawsuit, and it may be that no athlete feels sufficiently outraged by the settlement to bring a lawsuit.

Ideally, Congress would, as you say, write the settlement into law to bar additional lawsuits. But that isn't necessary so long as neither the government or another athlete overturns the settlement through another lawsuit.

Edit: the cap is a restraint on trade because it limits the deals that schools can make with athletes. But most restraints on trade are legal so long as they are 'reasonable." So anyone bringing suit would have to show that the entire settlement scheme, including the cap, is "unreasonable." That is not an easy (or cheap) thing to prove. The Biden Administration did argue in its final days that the cap wasn't reasonable; but I can't see the Trump Administration challenging it.

Jumped to a few conclusions. Bottom line though was I think the "valid business purpose" will be very loosely interpreted by many courts and hence the open-endeness. I also don't think Congress is going to lean into all of this too much. Not sure what solution, if any, will evolve to bring some sanity to everything.

 

[Fat Koko]

Bloomberg had a long, thoughtful article out last month on the NIL situation.

Opendorse co-founder Blake Lawrence sees the Deloitte clearinghouse as unworkable.

Key paragraphs from article which is behind a weak paywall:

“The logistical task before Deloitte in setting up a clearinghouse, Lawrence says, is a daunting one: ‘I wouldn’t wish it upon my worst enemy, because I’ve done it.’ Let’s assume, however, that Deloitte can get the job done. That’s when the problems really begin.

Schools are counting on athletes to report their deals. Not all will. While the NCAA has a rule requiring disclosure, many players have decided it’s toothless and have opted to ignore it. Lawrence estimates that 80% of NIL transactions go undisclosed, a rate he expects to stay the same once the settlement is in effect. This leaves the NCAA in the familiar position of having to decide what to do when a star recruit from a low-income family shows up to school in a Lamborghini.”

Deloitte has its hands full here. With 14,000 FBS football players and 4,000 men’s basketball players - and my guess is most having NIL deals >$600 triggering Deloitte’s review - Deloitte and the NCAA could be facing an insurmountable task.

For example, what do they do about the 80% of deals that are not reported?

 

[retired711]

Jumped to a few conclusions. Bottom line though was I think the "valid business purpose" will be very loosely interpreted by many courts and hence the open-endeness. I also don't think Congress is going to lean into all of this too much. Not sure what solution, if any, will evolve to bring some sanity to everything.

The courts won't be involved in determining what is a "valid business purpose." Deloitte will be doing it with an arbitrator as the final decision-maker. Challenging an arbitrator's decision in court is *very* difficult. And, although there will doubtless be some border line cases, almost all of the current NIL deals clearly involve an athlete being paid much more by a booster than the athlete is doing for the booster in return. Those deals will be knocked out as lacking a valid business purpose if the scheme works as designed.

 

[Nycrusupporter]

Bloomberg had a long, thoughtful article out last month on the NIL situation.

Opendorse co-founder Blake Lawrence sees the Deloitte clearinghouse as unworkable.

Key paragraphs from article which is behind a weak paywall:

“The logistical task before Deloitte in setting up a clearinghouse, Lawrence says, is a daunting one: ‘I wouldn’t wish it upon my worst enemy, because I’ve done it.’ Let’s assume, however, that Deloitte can get the job done. That’s when the problems really begin.

Schools are counting on athletes to report their deals. Not all will. While the NCAA has a rule requiring disclosure, many players have decided it’s toothless and have opted to ignore it. Lawrence estimates that 80% of NIL transactions go undisclosed, a rate he expects to stay the same once the settlement is in effect. This leaves the NCAA in the familiar position of having to decide what to do when a star recruit from a low-income family shows up to school in a Lamborghini.”

Deloitte has its hands full here. With 14,000 FBS football players and 4,000 men’s basketball players - and my guess is most having NIL deals >$600 triggering Deloitte’s review - Deloitte and the NCAA could be facing an insurmountable task.

For example, what do they do about the 80% of deals that are not reported?

The NCAA will get tough and go after Fordham for noncompliance . . .

 

[Hondo77]

It's not going to be that easy. The phony baloney deals will be forbidden for lacking a valid business purpose.

Just like all the money under the table was forbidden.

 

[Hondo77]

So if I want to pay $58,000 to Gavin to come to my Poker night am i one of those 3rd parties?

Nah, he’d probably end up losing all that money.

 

[retired711]

Just like all the money under the table was forbidden.

The money will go back under the table. Even that's a gain. People are less likely to participate in an activity when it is against the rules than when the rules permit it. (Sports gambling was less frequent when it was against the law outside Nevada.) That's why we have rules.

 

[bac2therac]

The money will go back under the table. Even that's a gain. People are less likely to participate in an activity when it is against the rules than when the rules permit it. (Sports gambling was less frequent when it was against the law outside Nevada.) That's why we have rules.

there are no rules now in college sports at least for those not at the bottom of the food chain like Fordham

Scotus really did a number with their initial ruling and now there is no way anything is going to against these poor taken advantaged student athletes...every decision continues to go there way

 

[Scarlet Craig]

We'll see if that's true. There's no way to know yet whether and how the House settlement's ban on NIL deals between boosters and athletes that lack a valid business purpose will work.

It will make it worse. Do we really think that the under the table stuff stopped with NIL? NIL and unrestricted transfer portal make NCAA sports no longer worth paying attention to.