House v. NCAA Decision: What Will Become of Collectives?

Following the House v. NCAA decision (more on this decision), there is uncertainty surrounding the future of booster collectives and their role in athlete compensation. Since 2021, when the NCAA began allowing athletes to profit from their Name, Image, or Likeness (NIL), these alumni-funded collectives have become a major source of income for college athletes, accounting for over 80% of the estimated $1.7 billion NIL market in 2024-25.

New Oversight Threatens Collective Deals

The newly formed College Sports Commission (CSC) may significantly limit the influence of collectives by requiring all deals over $600 to be approved through a clearinghouse. The CSC contends that many collective deals lack a "valid business purpose" because they do not license a player’s NIL for a commercial product or service (more on the CSC Clearinghouse NIL GO). This move has sparked a fierce debate, with lawyers representing athletes arguing that these deals are legitimate and essential for athletes' earning potential.

Potential Impact on Athlete Compensation

The potential crackdown on booster collectives could result in nearly $1.4 billion in athlete compensation vanishing overnight. While colleges are now permitted to directly share revenue with athletes, this new rule is unlikely to provide a material benefit to most athletes outside of football and basketball. Collectives, on the other hand, have been instrumental in providing financial support to athletes in less revenue-generating sports, like swimming and tennis.

 Opponents of the Commission's new rules argue that limiting collective deals is "anti-American" and restricts the free-market system that has emerged in college sports. Others prophesize that this will only bring back the legendary “bag man” who silently leaves bags of cash for players to bypass compensation rules.

A System in Transition

The dispute highlights a fundamental clash between the NCAA's traditional regulatory approach and the burgeoning free-market environment of NIL. While some collectives, like Texas Tech's Matador Club, are adhering to the new rules, others, such as Iowa's Swarm Collective, are in limbo, with their submitted deals awaiting approval. The situation remains fluid, with the future of athlete compensation in college sports hinging on how this issue is ultimately resolved.

Given the ongoing regulatory uncertainty, individuals considering NIL agreements should seek legal counsel to ensure compliance with current policies to safeguard future eligibility.