/>iThe recent settlement of In re College Athlete NIL Litigation (the Settlement) has been challenged on Title IX grounds. The Settlement mandated back payments of $2.8 billion to former Division I athletes who played college sports before Name, Image, and Likeness (NIL) compensation was allowed in 2021.
Why Are the NIL Settlement Payments Delayed?
A group of female athletes filed a Title IX challenge, arguing that the distribution of the $2.8 billion, 90% to men’s football and basketball players, 5% to women’s basketball players, and 5% to all other student athletes, violates Title IX’s gender equity requirements.
Which Parts of the Settlement Will Still Take Effect in 2025?
Key components of the settlement, including revenue sharing, a new NIL framework, and revised roster limits, are still scheduled to take effect on July 1, 2025. Only the $2.8 billion in back payments is paused.
What Is the NIL Clearinghouse and What Role Does Deloitte Play?
The NIL clearinghouse is a third-party administrator of the College Sports Commission tasked with reviewing NIL agreements for compliance with the new rules regarding NIL. It will review NIL agreements involving third parties affiliated with schools, such as boosters and collectives. Deloitte will operate the clearinghouse through its NIL Go platform, which will evaluate whether athlete compensation in certain deals meets or exceeds fair market value.
Which NIL Agreements Will the Clearinghouse Review?
The clearinghouse will review NIL agreements exceeding $600 that involve “associated entities,” such as school-affiliated boosters and collectives. Athletes must disclose all agreements over $600, but only those involving associated entities are subject to fair market value review.
How Are “Associated Entities” Determined?
Entities or individuals are considered associated if they were created to support a school’s athletics program, have donated more than $50,000 to the school or such entities, or have been directed by the school to assist in recruiting or retaining athletes.
What is a “Legitimate Business Purpose” for NIL Deals?
To pass review, agreements must serve a legitimate business purpose, such as promoting goods or services to the public. Deals lacking a clear business rationale will not pass the fair market value review.
Has the NCAA Provided NIL Guidance?
In December 2024, the NCAA issued internal Q&A memos to guide schools on evaluating NIL deals; however, this guidance has not been made publicly available.
How Will the Clearinghouse Evaluate Fair Market Value?
Deloitte is expected to utilize a database of past NIL deals and consider factors such as athlete performance, social media presence, and brand influence to determine whether the compensation under a given NIL agreement falls within the fair market value. The full methodology has not been publicly disclosed.
What Happens If an NIL Agreement Is Not Cleared?
If a deal is not cleared, athletes may renegotiate, decline the deal, or proceed at the risk of losing eligibility, as determined by the College Sports Commission. Athletes can also request neutral arbitration to resolve disputes.
