Statement from Class Counsel Jeffrey Kessler and Steve Berman Regarding Revised CSC Guidance for NIL Collectives

SAN FRANCISCO – Today, the College Sports Commission (CSC) issued revised guidance on establishing a valid business purpose for names, images, and likenesses (NIL) payments to conform with the terms of the class action settlement on behalf of college athletes with the NCAA, Big Ten, SEC, Pac-12, Big 12 and ACC.  This new guidance corresponds to a joint statement made by class counsel and the House defendants regarding the meaning of the terms of the House settlement which apply to NIL payments by collectives and other entities affiliated with the schools.

The updated guidance, which is consistent with the joint statement by Winston & Strawn, Hagens Berman and the House defendants, explains that collectives are permitted to enter into NIL agreements directly with student-athletes as long as the NIL deals comply with the terms of the settlement. It replaces guidance provided in a July 10 CSC memo – which was not consistent with the settlement terms.

With this new guidance, student-athletes can now devote more of their energy to their sport, knowing that the House settlement provides that NIL opportunities from collectives can be available to them as long as the NIL deals comply with the settlement terms. Such third-party NIL payments do not count against the $20.5 million pool limits on payments made directly by the schools.

A joint statement by class counsel Jeffrey Kessler and Steve Berman and the defendant parties to the House settlement is below.

To clarify the permissible scope of payments to student-athletes by collectives under the House Settlement, Class Counsel and the defendants provide the following joint statement. The CSC has issued new guidance consistent with this statement.

The traditional purpose of many NIL collectives - raising money to induce student-athletes to attend or play at an institution - does not satisfy the valid business purpose requirement for making NIL payments to student-athletes under the House Settlement. NIL payments to student-athletes may be made by Associated Entities and Individuals, including collectives, but they must conform with the requirements set forth in the Settlement.

In evaluating such payments, the Settlement's requirements focus on substance, not labels. Nothing in the Settlement prohibits an Associated Entity or Individual, including collectives, from making NIL payments to student-athletes, as long as such NIL payments have a valid business purpose related to offering goods or services to the general public for profit and fall within the range of fair market value compensation, as defined by the Settlement.

Whether or not payments to student-athletes by collectives are permissible under the Settlement will be evaluated on a case-by-case basis—first by the College Sports Commission and then by a neutral arbitrator if the CSC determination is challenged by the student athlete. NCAA rules continue to prohibit Associated Entities from making payments for play in contrast to permitted NIL payments.

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