In a case monitored closely by college athletics departments and their multimedia rights partners such as JMI Sports and Learfield, a third-party arbitrator ruled this week that the College Sports Commission properly applied the parameters of the House v. NCAA settlement in deal proposals involving 18 University of Nebraska athletes and the school’s multimedia rights partner, PlayFly.
As reported by John Brice of USA TODAY Sports, the arbitration ruling "sent a clear message Monday: NIL deals that push boundaries without clear market justification won’t move forward."
The Nebraska athletes had retained the legal services of national firm Husch Blackwell as they fought to have their NIL proposals granted, which held seven-figure value according to multiple reports and people familiar with the Cornhuskers' case, Brice reported.
The arbitrator’s ruling is a “final, binding decision” that does not leave an option to appeal, Brice added. However, the Nebraska athletes may “submit revised third-party NIL deals that comply with the rules for the CSC’s review.”
“We are pleased with the arbitrator’s decision to affirm the CSC’s fact-based application of the rules,” CSC CEO Bryan Seeley said in a statement obtained by USA TODAY Sports. “This process shows the system is working as intended: a decision we made was challenged and a neutral arbitrator assessed the facts to inform a final decision.
“We hope and expect that the student-athletes will submit new deals that comply with the rules, so we can promptly review them.”
The CSC noted in its release that not only had the third-party arbitrator ruled in support of the group’s application of rules for vetting third-party NIL deals but that it also found the proposed deals between PlayFly, deemed an "associated entity" for Nebraska, and the university had a “lack of a valid business purpose” and also represented “a violation of the rule against warehousing NIL rights,” Brice reported.
Also, the proposed deals that were to be paid for by PlayFly were ruled to “not satisfy the Valid Business Purpose rule as they did not include goods or services offered to the general public for profit.”
Additionally, the CSC noted, the arbitrator’s finding regarding the “warehousing” of the student-athletes’ NIL rights rather than “direct activation” was essentially cataloging their images for potential use in the future but without an outlined plan for definitive application.
Per Brice's reporting, the arbitrator did not rule for either party on the actual rates of payment for the Nebraska student-athletes. The absence of tangible NIL plans precluded the arbitrator from determining if the proposed rates were in line with fair-market value.
