After an oh-so-brief interruption, it's officially time to return to regularly scheduled programming. Collectives are still allowed to funnel their millions of booster-donated pool of money directly to athletes.
For those that may have missed it, after the House settlement went into effect on July 1, the College Sports Commission -- the entity established by the settlement to validate and enforce new rules around NIL -- issued a guidance that collectives were not allowed to pay athletes directly. The reasoning was that it did not satisfy the settlement's "valid business purpose" clause. In layman's terms, whereas O'Reilly Auto Parts or Tractor Supply Co. existed to sell a product to the public and were free and clear to hire athletes to promote them, collectives existed simply to dish out bags to athletes, and so even if the collective sold T-shirts or produced an in-house podcast, it was not a "valid business."
“All of their (athletes’) deals are getting shut down by NIL Go,” a source at a collective told The Athletic. “Even deals of $5,000 or less.”
Soon after, the attorneys representing the plaintiffs raised a hand saying that limiting collective payments to athletes was not part of the scope of the settlement, and within two weeks it seemed like this new ruling would get shut down.
Sure enough, on Thursday, the CSC issued an updated guidance saying collectives are free to enter into their own deals with athletes, just as they were before July 1. Collectives will still be under the same rule as O'Reilly Auto Parts -- they can't pay a right tackle $700,000 to not show up -- but they will be under the same rules as any other business, no longer their own special, taped-off category. From the statement:
"The (CSC) will enforce the settlement as written. Pay-for-play will not be permitted, and every NIL deal done with a student-athlete must be a legitimate NIL deal, not pay-for-play in disguise," CSC CEO Bryan Seeley said.
House settlement plaintiffs attorneys Steve Berman and Jeffrey Kessler said, "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 NIL deals comply with the settlement terms."
The collective associations, seeing that the July 10 ruling threatened to put them out of business, threatened legal action against the CSC, and attorney Tom Mars indicated Thursday that may still happen. "The collectives I represented suffered a lot of damage as a result of the improper guidance given on July 10 and I will be discussing their legal options with them," Mars told Yahoo.
In the meantime, it now seems the only thing the House settlement accomplished in the day-to-day of college athletics is establishing an entity to enforce "guardrails" around NIL payments (effectiveness still to be determined) while adding up to $20.5 million to the athlete-compensation pool that schools are now responsible for paying.