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College sports leaders, House settlement attorneys in talks over whether to permit booster collective deals

ATLANTA — College sports leaders are in active negotiations with plaintiff attorneys over, perhaps, the most significant piece of the House settlement: whether to permit traditional booster collective deals to athletes.

A resolution between the two sides could shape the future enforcement of college athletics’ new revenue-share concept by potentially upending the settlement agreement’s primary goal: to limit or reduce the role of school-affiliated NIL collectives — booster-backed entities that have paid millions to athletes over the last four years.

The NCAA and power conference officials are negotiating with House plaintiff attorneys Jeffrey Kessler and Steve Berman, who, in a letter sent last week to the NCAA and conferences, accused them of violating terms of the settlement by denying certain NIL collective contracts they believe should be permissible.

In an interview from SEC media days on Wednesday, commissioner Greg Sankey described the talks as a “back and forth” that “happens in any bargaining situation.” Sankey declined further comment about the nature of the negotiations and details on the NCAA and power conferences’ response to last week’s letter from Kessler.

Kessler’s letter specifically targeted a memo sent to NCAA schools on Thursday from the College Sports Commission, the new enforcement entity designed to prevent what administrators describe as “phony” booster compensation to athletes. The CSC notified schools on Thursday it was denying dozens of NIL deals for not meeting the definition of a “valid business purpose,” many of those collective contracts with athletes. The memo explained that collectives, or any entity, whose sole existence is to raise money to pay college athletes does not meet the definition.

The plaintiff attorneys disagree. They hold authority over many decisions related to enforcement of the revenue share.

In the letter, Kessler writes that collectives should not be treated differently as other businesses. The letter requested that the power conferences — the creators and administrators of the CSC — retract the memo and, presumably, reinstate those NIL deals that were denied, or else attorneys will bring the matter to Judge Nathanael Cousins, the appointed magistrate in the settlement who has been appointed to resolve such disputes.

Sankey said Wednesday he believes that the College Sports Commission’s memo is “consistent” with settlement terms. Asked whether those collective deals not cleared would be reinstated, Sankey said, “It’s hard to predict the direction right now.”

The goal of the settlement, in part, is to shift athlete pay from these booster-run collectives to schools, now permitted to directly share revenue with athletes under the capped system that began July 1. However, many schools are still operating their collectives as a route to provide third-party compensation to athletes that does not count against a program’s cap — a way to, perhaps, legally circumvent the system.

Sankey acknowledged the importance of the topic — whether collectives are treated similarly to other businesses — as one of the key pieces to the settlement. It’s something his own coaches pointed toward this week at the four-day football media days — the unofficial kickoff to the SEC’s season.

“If there’s no teeth to it, it’s not going to matter,” South Carolina coach Shane Beamer said. “There needs to be teeth to enforcement or nothing is going to change and we’ll be right back where we were.”

If collectives are determined to be any other business, it could result in a “very different management system” and what Sankey calls a “softer cap,” a reference to the new revenue-share maximum. Schools can directly share no more than $20.5 million with athletes in Year 1 of the concept, but third-party deals, deemed to be authentic by the College Sports Commission and clearinghouse, do not count against that cap.

“Why did collectives develop? It followed state-level authority being granted for individuals to go activate their NIL. A model developed that was very different than that,” Sankey said, a gesture toward collectives paying athletes salaries disguised as endorsement and commercial contracts.

“There are ways for collectives to operate that have been contemplated,” Sankey said. “If there’s a decision that results from either negotiations with plaintiffs or a court that says differently, you have a much softer cap. That would be the description.”

For school administrators, a “softer cap” potentially means an unchanged environment from the unruly spending of the last four years — something that many within the industry describe as the “Wild West” while others describe it as a free market working to recruit and retain talent.

Some schools have shuttered their collectives in an effort to fall in line with the new era of school compensation. But not everyone has made such a move. At many places, schools continue to operate their collective, some out of fear that others will do the same and some that believe the settlement will fail under the weight of legal challenges.

“We know that some people are saying, ‘We’re not worried because we don’t think they can really enforce it!’” Ole Miss coach Lane Kiffin said here this week. “They don’t think NIL contracts are going to get kicked back (by the clearinghouse) or they think they’re not going to be able to win long-term (legal challenges) because of players rights.”

Ultimately, the schools hold authority to control their own affiliated collectives.

“For how long have people been begging for guardrails?” Sankey asked. “Well, now we have guardrails. Those broadly across the country that claim they wanted guardrails need to operate within the guardrails. If you allow what’s happened to continue to escalate, there would be a very small number of programs that would be competitive with each other and we’d not have a national sport or a national championship.”

As college administrators and attorneys embroil themselves in legal negotiations, football coaches and general managers are preparing for the first-ever Aug. 1 official NCAA “offer date,” when schools can formally offer revenue-share contracts to prospects (some have already, informally).

Across the recruiting landscape, Big 12 coaches last week at their media days and SEC coaches this week in Atlanta have detailed what they believe are signs and evidence of cap circumvention. Schools are guaranteeing third-party deals to athletes not approved yet by the clearinghouse, are making big enough contract offers to recruits that they cannot possibly remain under the cap and are paying high school players — through their collective — to commit and eventually sign.

“The prices that kids are getting doesn’t add up. The math doesn’t add up that you can pay players like that and build a roster under the cap,” Kiffin said.

Said Alabama coach Kalen DeBoer: “I think there’s a variety of ways people are looking at things. Communication from certain programs to prospects might be accurate in January, but it’s changed months later and so it’s so fluid right now.”

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