The College Sports Commission issued a memo to athletic directors Friday night saying it has “serious concerns” about some of the multimillion-dollar contracts being offered to athletes in a transfer-portal era quickly spiraling out of control.
As reported by Eddie Pells of The Associated Press, the “reminder” from the newly formed regulatory body came out about an hour before kickoff of the College Football Playoff semifinal game between Indiana and Oregon as headlines share news of players signing seven-figure deals to move or, in some cases, stay where they are.
The CSC reminded the ADs that, according to the rules, third-party deals to use players’ name, image and likeness “are evaluated at the time of entry in NIL Go, not before, and each deal is evaluated on its own merits,” Pells reported.
“Without prejudging any particular deal, the CSC has serious concerns about some of the deal terms being contemplated and the consequences of those deals for the parties involved,” the memo said, per the AP.
Under terms of the House v. NCAA settlement that dictated the rules for NIL payments, schools can share revenue with their players directly from a pool of $20.5 million. Third-party deals, often arranged by businesses created to back the schools, are being used as workarounds to this so-called salary cap, according to Pells.
"The CSC, through its NIL Go portal, is supposed to evaluate those deals to make sure they are for a valid business purpose and fall within a fair range of compensation for the services being provided," Pells wrote. "The CSC did not list examples of unapproved contracts, but college football has seen its share of seven-figure deals luring players to new schools since the transfer portal opened on Jan. 2."
Pells pointed out one high-profile case involving Washington quarterback Demond Williams Jr., who initially sought to enter the transfer portal and turn his back on a reported deal worth $4 million with the Huskies. Legal threats ensued and Williams changed course and stayed at Washington, Pells reported.
“Making promises of third-party NIL money now and figuring out how to honor those promises later leaves student-athletes vulnerable to deals not being cleared, promises not being able to be kept, and eligibility being placed at risk,” the CSC letter said.
Per Pell's reporting, the commission listed two rules about contracts, some of which have been termed “agency agreement” or “services agreement” in what look like attempts to bypass the rules.
- "The label on the contract does not change the analysis; if an entity is agreeing to pay a student-athlete for their NIL, the agreement must be reported to NIL Go within the reporting deadline.”
- "An NIL agreement or payment with an associated entity or individual ... must include direct activation of the student-athlete’s NIL rights.” This is a reference to the practice of “warehousing” NIL rights by paying first, then deciding how to use them later.
