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NIL vs. Recruitment: As deals explode, NCAA board, others call for more enforcement of long-established rules

By Michael Smith
Twins Haley and Hanna Cavinder of Fresno State — transferring this year to Miami — quickly joined the NIL party on July 1 when they signed a deal with Boost Mobile and appeared in New York’s Times Square.Boost Mobile

The first email to hit the inbox on July 1, 2021, announced the signing of Illinois basketball player Edgar Padilla Jr. to an endorsement deal with Six Star Pro Nutrition. In a staged photo, Padilla innocently held up a $1 bill, indicating the first dollar he had made from his name, image and likeness.

 

With that, NIL was off and running. Fresno State basketball’s Haley and Hanna Cavinder appeared in Times Square to promote a deal with Boost Mobile later that day. Unilever introduced its Degree “Breaking Limits” campaign with college athletes. Two Nebraska men’s basketball players started a podcast sponsored by local businesses. An Auburn football player endorsed a tea.

NIL had been unleashed. It didn’t take long before it became unhinged.

“What’s happening now is not name, image and likeness,” said Florida-based attorney and founder and CEO of Athliance, Peter Schoenthal, who consults with schools on NIL matters.

That’s why the NCAA’s Division I board of directors called what amounted to a 20-second timeout last week for everyone in the space to take a deep breath. After a 10-month sprint from July 1, the first day athletes were permitted to sign NIL deals, until now, the concept has begun to take on different meanings.

“Just think about this,” said Jim Cavale, founder and CEO of INFLCR. “We have a system where donors can interface with student athletes, but the schools and their staff cannot. Hurt your hand? Here’s a trainer. Struggling with a class? Here’s a tutor. But if you need help with NIL, they’re not allowed to help. Boosters can. There’s still quite a need for more regulation.”

The line between legitimate NIL arrangements and recruiting inducements has become blurred as coaches and some donor-run collectives push the envelope looking for every competitive advantage. That has led to stories about football and basketball players being offered NIL money to go to a particular school.

The NCAA board sought to redraw the line between NIL deals and recruiting inducements by issuing reminders that boosters are not allowed to be involved in the recruiting process. That restriction has been around as long as the NCAA itself.

Edgar Padilla Jr., an Illinois basketball player, signed the first announced NIL deal with Six Star Pro Nutrition, posing with a $1 bill. Getty Images

College leaders, meanwhile, made it clear that they want NCAA enforcement to start investigating the boosters and the booster-run collectives that are notoriously active in recruiting.

“In anything this new, there are going to be pros and cons,” said Keith Marshall, a former Georgia football player who is a partner in The Players Lounge, an NFT business that works with more than 100 college athletes. “There have been more pros than cons so far, but I would support more structure, more regulation, to make sure we’re providing protection for the athletes so they’re not taken advantage of.”

The growing pains are typical of any new endeavor, said Schoenthal, who contends that “we are where we’re supposed to be.”

“Whenever you have new legislation, whether it’s name, image, and likeness, the criminal world, the civil law world, you always start off with a vague statute,” he said. “Then the statute starts to play out. People look to take advantage of the statute and look for loopholes. Then you realize how you need to further define and narrow the scope of the statute.

“Once that happens, you let the space further play out. You conduct investigations against those that are still violating the rules, and then you bring enforcement, which brings everyone to an even playing field and usually a uniform space. I think that’s just what’s happening with NIL. It’s why I’ve always said it’s going to take 36-48 months to figure out.”

With regulation and enforcement, industry experts say, comes the concern over antitrust issues. Any activity that limits an athlete’s ability to make money is going to attract lawsuits, they say, and some administrators like Ohio State AD Gene Smith acknowledged as much last week.

But Schoenthal responded that the NCAA might be better positioned than first thought if it creates new NIL legislation that puts the governing body back in court. Here’s why:

The board in its guidance last week simply defined boosters and inducements so there can be no confusion among those who work in the NIL space.

Athletes will not be the target of NCAA enforcement — it could offer some protection if a booster or collective screams antitrust. Can you argue antitrust if the NCAA already has declared the athletes off limits?

If boosters do take the legal route, they’ll most likely have to open up their books, text messages and other evidence, something they likely don’t want to do.

The missing piece so far has been NCAA enforcement. Commissioners, ADs and coaches alike have voiced their concerns over a lack of enforcement, especially amid reports of million-dollar contracts that don’t seem to require much, if any, NIL activity from the player.

But by waiting, the NCAA might have exposed the most egregious violators by letting them think enforcement would always be this lax.

“If the NCAA is taken to court on, say, restriction of commerce, I actually think they’re going to be OK,” Schoenthal said. “The analysis is going to be boosters that formed LLCs (collectives) to pay recruits versus the side of uniform rules focused on competitive balance. I think the NCAA could actually win that one.”

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