/>iOn July 10, 2025, the newly constituted College Sports Commission (CSC) issued a memorandum to university athletic directors regarding the future of third-party Name, Image, and Likeness (NIL) contracts with college athletes. Following the recently approved House settlement, universities are now authorized to enter into direct revenue sharing payments, within an agreed cap, with their athletes.
As part of this larger settlement, athletes must submit most third-party NIL contracts with entities deemed to be affiliated to their university to a clearinghouse named “NIL GO” for approval. Pursuant to CSC's memorandum, such contracts will only be approved if they have a “valid business purposes.” This memorandum does not expressly define “valid business purpose.” The clear and apparent purpose of this requirement, though, is to prevent future agreements between college athletes and outside “collectives,” which are frequently aligned with specific schools and funded through fan contributions. An association of such collectives has already threatened legal action over this new CSC guidance, as have the plaintiff's attorneys from the House case itself.
Despite this clear purpose to curb collectives, this CSC directive could restrict college athletes' contract rights even beyond that intent if implemented. For example, according to the CSC memorandum, it ties “valid business purpose” to activities that are "for profit." Accordingly, this appears to prohibit NIL payments tied with not-for-profit activities. For example, if a charitable organization wishes to pay a college athlete to appear in commercials or at events, this would not have a “for profit” purpose and NIL GO would reject it. Even if the charitable entity wished to utilize the athlete's NIL to solicit and attract donations, resulting contributions would not be “profit” or have the sort of business purpose noted in the CSC memorandum.
Additionally, there are instances in which reasonable persons or entities could seek to contract with and pay a college athlete with no expectation of resulting profit. For example, if a parent wished to pay their child's favorite college athlete to make a video or social media post wishing them a happy birthday, they would not being doing so to make money or for any business purpose. It is not uncommon for athletes or entertainers to receive and fulfill such requests through platforms such as Cameo. However, the CSC memorandum raises questions as to whether any such agreement that does not seek to drive profit would be approved.
This new “valid business purpose” test presents concerns to athletes and universities. As to the former, it creates a clear and apparent restriction on their ability to contract with various forms of entities or to be paid for any service that is not expected to return a profit. This carries obvious legal risk for the CSC, and potentially for universities that set or agree to its rules and policies.
Further, although universities can now directly contract with their college athletes, it will be essential that they assist their athletes in identifying third-party NIL deals in order to remain competitive with their peers/recruiting rivals and to find ways to compensate athletes who are not included within the capped revenue sharing payments. While restricting these deals may assist universities and the CSC in weeding out agreements they view as illegitimate or otherwise seeking to subvert the revenue sharing cap, it will also make it more difficult to find deals for athletes that are anything other than a traditional business/brand endorsement. Therefore, outside of any legal concerns that athletes or collectives may have, universities must make clear to the CSC that an overly restrictive definition of “valid business purpose” could also prove harmful to the institutions themselves.
But the bulk of the letter explained that many deals could not be cleared because they did not conform to an NCAA rule that sets a “valid business purpose” standard for deals to be approved. The letter explained that if a collective reaches a deal with an athlete to appear on behalf of the collective, which charges an admission fee, the standard is not met because the purpose of the event is to raise money to pay athletes, not to provide goods or services available to the general public for profit.
