The landscape of college athletics has shifted dramatically since the 2021 Supreme Court decision in NCAA v. Alston. Student-athletes can now profit from their name, image, and likeness (NIL).
For schools that don’t pay their athletes directly, external NIL payments are a big deal. These payments come from outside parties, not the schools themselves.
It’s not as simple as just letting athletes cash in, though. Schools have to juggle NCAA rules, their own policies, and the well-being of their students.
Understanding External NIL Payments
When schools don’t opt into internal NIL (that is, paying athletes themselves), they need to pay close attention to external NIL payments. These are the deals athletes sign with third parties who want to use their name, image, or likeness.
Even if a school isn’t directly involved, it can’t just ignore the rules. NCAA compliance is still on the line, and honestly, it can get pretty complicated.
NCAA Rules and Compliance
The NCAA now lets the College Sports Commission (CSC) handle NIL rule enforcement. Both internal and external NIL deals fall under their watch.
Division I athletes have to report any external NIL deals worth $600 or more. If they don’t, it could hurt their school’s eligibility to compete.
Some big no-gos:
- Pay-to-Play Prohibition: Athletes can’t get paid just for playing, winning, or hitting certain stats. The money has to be for NIL activities—think endorsements, social media, or appearances.
- Reporting Obligations: Schools need to make sure their athletes report outside NIL payments, especially when the payor has ties to the school.
Evaluating External NIL Deals
The CSC looks at three main things when reviewing external NIL deals.
The Relationship of the Payor
First up: the connection between the payor and the athlete’s school. If the payor is an “associated entity or individual,” the deal gets extra scrutiny.
An associated entity is usually one that exists to support a school’s athletics program or its athletes. There are other criteria, but that’s the gist.
Valid Business Purpose
Next, the CSC checks if there’s a real business reason for the deal. Is the athlete actually promoting a product or service to the public?
They want to see that there’s a legitimate commercial rationale, not just a thin excuse to funnel money to an athlete.
Fair Market Value
Finally, is the athlete being paid what they’d get on the open market? The CSC compares the deal to what other athletes get for similar work.
If it all checks out, the deal can move forward. If not, well, it might be back to the drawing board.
Implications for Division II and III Schools
Division II and III schools don’t have to report external NIL deals to the CSC. That said, their own school policies or state laws might require disclosures anyway.
Reporting can also help athletes who might transfer to Division I, since those rules kick in once they enter the transfer portal.
It’s smart for these schools to help athletes keep good records and make sure everyone’s on the same page. Coordination between the school and athletes is key—no one wants a compliance headache later.
Staying Ahead of Regulatory Changes
The regulatory landscape around NIL? It’s pretty unpredictable right now. Colleges and universities really have to keep their ear to the ground or risk compliance slip-ups and maybe even some reputational headaches.
Schools need to understand new rules as soon as they pop up. Implementing and following these requirements isn’t optional—it’s just part of the game now.
For more detailed information on this topic, you can refer to the source article.
- Schools Covered
- College Football Articles
- Men's College Basketball Articles
- Men's College Soccer Articles
- Women's College Basketball Articles
- Olympic Athlete Articles
- Men's College Baseball Articles
- College Sports Media Professionals Articles
- Hall of Fame Member Articles
- Former College Player Articles
- Game Previews
