Keeping schools out of NIL dealings opened door for boosters

By trying to limit how much schools can help college athletes cashing in on their fame, the NCAA seems to have inadvertently opened the door for boosters to get a foothold in a burgeoning market.

Now, as the NCAA and its highest-profile Division I member schools try to rein in booster-fueled organizations known as collectives, part of the solution could be taking down the firewalls between athletic departments and athletes when it comes to name, image and likeness compensation.

“The school is who helps the athlete when they have an injury,” said Jim Cavale, the CEO of INFLCR, a company that works with more than 200 Division I schools on NIL programming and compliance. “The school is who helps the athlete when they struggle in school. The school is who helps the athlete with everything. And yet they’re not able to help here and it left a gap where the school can’t be involved and a booster and donor can.”

Earlier this week, the NCAA handed down guidance that made clear collectives should be treated as boosters, which means they should not be contacting recruits – high school or transferring college athletes – and influencing where they go to school.

Boosters can, however, be involved in NIL deals with athletes after they have enrolled.

The latest guidance was developed by a group of college sports administrators that included Ohio State athletic director Gene Smith.

“The primary concern was exactly what has emerged. It is the recruiting space,” Smith said. “We’ve got to focus on the front door.”

Smith earlier helped craft a plan to regulate NIL compensation that was never implemented by the NCAA.

That 31-page report released in April 2020 was dominated by the idea that schools should not be involved in NIL transactions amid pay-for-play concerns and fears it would eventually lead to student-athletes looking more like employees. The report included this line: “Outside the context of providing financial aid up to cost of attendance as allowed by prevailing law, schools, conferences and the NCAA should play no role in arranging NIL activities or payments for student-athletes.”

That hands-off tone was reflected in many of the more than two dozen state NIL laws, including the one in Florida where schools are barred from any involvement in outside compensation for athletes.

“It’s ironic that the NCAA drafting rules but not setting them actually indirectly created a rule that opened the door for collectives to walk in and be a solution where the school could not,” Cavale said.

What has emerged is collectives filling the role of deal maker and boosters operating with little or no accountability and oversight beyond the honor system.

“Any kind of outsourcing of benefits to athletes is not ideal. It’s suboptimal,” Florida Athletic Director Scott Stricklin said.

Stricklin said he and his staff communicate with the collectives working on behalf of Florida and are confident they are working within the rules. Highlighting the line between what is and is not allowed with boosters and NIL, however, is far easier than policing it.

“I don’t know what legal guardrails could be put in place where you could prevent donors being involved, boosters being involved on some level (with recruiting), even though none of us want that,” Stricklin said.

Louisiana and Missouri are trying to rework their state NIL laws to allow schools, and even coaches, to be more involved in how athletes are compensated.

If that happens, they will be talking with collectives that do not all operate the same way. Some are being set up to engage a university’s supporters and alumni more broadly, but others are funded and operated by smaller groups of wealthy boosters.

“So the majority of collectives currently existing are being run by alumni … boosters, people that were previous donors to the university,” said attorney Jason Belzer, whose company, Student-Athlete NIL, is managing collectives at Penn State and Rutgers.

“And I think the best way to describe it is like a money laundering machine: ‘How do we get as much dollars into the pockets of student-athletes as we can without actually having them deliver any real value in return?’ ”

Belzer said he and his clients are not concerned about the NCAA’s warning “because we were never engaging in that type of conduct (in recruiting) anyway.” Garnet Trust, a collective that supports Florida State athletics, also released a statement saying it was already operating in compliance with the new guidance.

Smith, the Ohio State athletic director, said more involvement by athletic departments with NIL would help. Schools would be better off playing the role of matchmaker between athletes and brands while still staying out of the negotiation of any deals.

“To me,” Smith said, “that’s the line in the sand.”