Jaden Rashada is at the center of the NIL debate
GAINESVILLE, FLORIDA - NOVEMBER 12: Florida Gators commit Jaden Rashada looks on during the second half of a game between the Florida Gators and the South Carolina Gamecocks at Ben Hill Griffin Stadium on November 12, 2022 in Gainesville, Florida. (Photo by James Gilbert/Getty Images)

‘Everything’s on Fire’: NIL Collectives Are the Latest Patchwork Solution for College Athlete Pay

Why this matters

NIL collectives have sprouted up at just about every big university in the United States over the past two years, but the disorganization and under-the-table dealings have college sports insiders doubting the longevity of this patchwork solution.

Monthly Issue NIL & the Modern College Athlete

Someone in a front office builds a spreadsheet with painstaking detail. They have an exact budget they can spend this year on football players, maybe somewhere in the $5 million-to-$10 million range for a Power Five conference program. A few players will get annual payments in the low- to mid-six-figure ballpark. Others might get $20,000 or $30,000, according to one blueprint that has circulated this year among college football insiders. Star players who could choose to play for other schools will get more, but the vast majority of the roster will at least get something. Nobody works for free.

College football is not the National Football League, of course, and college teams don’t have NFL money – but the new era of name, image, and likeness (NIL) rights has been significant in a sport that didn’t let athletes collect any money at all for their efforts until 2021. College athletes can now receive payments for endorsements and appearances, but they can’t (technically) take money in exchange for playing at a given school. That, of course, is the very thing players have quietly always gotten paid to do, just like anyone else who does a valuable service for an organization with money to throw around. Universities have always needed a conduit to get money into players’ hands. Historically, the groups that did it were informal and loosely organized. Filling the vacuum in an over-the-table world now are third-party NIL “collectives,” collections of fans and boosters who pool together money that can pay athletes to play for a given school as long as they’re not officially paying them to play for a given school.

Around 200 collectives have been formed nationwide, estimates Mit Winter, a Kansas City-based attorney who advises NIL collectives at the law firm Kennyhertz Perry. Most Football Bowl Subdivision programs benefit from a collective, including all or nearly all teams in the Power Five conferences.

Collectives are a popular and essential vehicle for getting money into the hands of players, a historically unpaid labor force that is beginning to realize some of its value. A collective is part talent agency, part extension of the school, and part rogue actor shaking up college sport. Collectives negotiate agreements with athletes to pay them a monthly amount in exchange, officially, for the use of the athlete’s name, image, or likeness in such ways as social media advertising, an appearance in a commercial, an autograph signing, or, in the case of collectives that have taken nonprofit status for tax purposes, an appearance at a charitable event. (About one-third of collectives have nonprofit status, Winter says.) Collectives extend these offers with the hope that an athlete will pick and remain at a school. They often design contract language to push players in a school’s direction without being explicit enough to run afoul of NCAA rules that still ban payments as recruiting inducements.

Collectives have, in about a year and a half, grown from nonexistent to an essential part of college athletics’ economics. Some are shrouded in secrecy; others are overflowing with bluster. They are poised to play an expanding role in how schools get athletes. They are also at risk of being repurposed or even made extinct as the regulatory climate around player payments changes. Collectives are a land of contradictions, and everyone in big-time college sports is merely trying to keep up.

“Right now, everything’s on fire,” says Boise State athletic director Jeremiah Dickey. “And I have a cup of water in terms of what I can control, and I get to decide where I put it.”

A Rapid, Messy Rise

The first collectives popped up in late 2021, months after the NCAA surrendered to legislative pressure and allowed players to collect NIL payments without jeopardizing their eligibility. The people who run them are boosters, fans, and other friend-of-the-program types who often have years-long associations with their favorite athletic departments but don’t always have experience working in college athletics. Collectives are in their infancy, and some run a tighter ship than others.

“I think some of them have been a little sloppy on: Are they actually entering into written agreements with athletes?” Winter says. “Are they keeping all the promises they may have made to athletes? Are they paying athletes when they said they would pay them?”

Meanwhile, nonprofit collectives that link athletes with charitable endeavors for a fee may or may not be checking off all of the necessary compliance boxes to merit their untaxed status. “Who knows if they’ll ever get audited by the [Internal Revenue Service], but I think if some of them did get audited by the IRS, they could have issues,” Winter adds. (By claiming nonprofit status, collectives can make inbound donations tax-deductible for their donors. But the same collectives are subject to federal restrictions on how much they can pay athletes.)

Another source of messiness is a lack of transparency. Professional league deals are widely reported on to the point that media outlets can put together detailed pictures of teams’ salary-cap outlooks. Nothing like that window into sport-wide negotiations exists in the NIL market, though there are occasional glimpses at top-line numbers on popular marketplaces like Opendorse. ESPN’s Adam Schefter does not tweet out how much money a collective is paying a player. On one hand, how much money an athlete receives is nobody else’s business like he does for NFL athletes. On the other hand, one athlete’s contract could very much be another’s business, just as one NFL quarterback’s contract becomes a baseline for the next quarterback’s negotiations.

Related: How College Athletes Are Making ‘Massive Decisions’ in the NIL Era

Right now, collectives and players alike are flying blind on what constitutes market value. “I think that collectives and other businesses, maybe, will get more sophisticated in figuring out what that value is,” Winter says. Reporting that emerges about deals is sometimes chaotic, as when a series of claims and denials circulated last year about a $9.5 million offer that a particularly boisterous Miami booster may or may not have made to a quarterback who wound up at Florida. That quarterback later requested that Florida release him from his National Letter of Intent. The reason, according to On3, was "NIL missteps."

The structure of collective deals is a bit rickety, too. A collective wants an athlete to play for whichever school the organization supports, and the athlete knows the collective wants that. But under the NCAA’s rules, neither side can acknowledge that they are making that specific exchange. So, collectives have found workarounds. One is to execute contracts that require in-person appearances near a collective’s favored campus, explains Jason Belzer, the chief executive of Student Athlete NIL. Belzer’s firm operates collectives that work to benefit around 20 schools, including Oklahoma, Penn State, Notre Dame, Rutgers, Georgia Tech, Wake Forest, and Notre Dame. Under a near-campus deal, signing with another school is not a breach of contract by itself, but it could easily lead to one.

“If a kid is at our collective at Creighton and it’s Omaha, Nebraska, and they transfer to, like, Miami, are they going to get on a plane to fly back in the middle of June to do an appearance for me at a Creighton athlete event with their former teammates?” Belzer wonders. “Not happening. Highly unlikely. If it was for $20,000, maybe the kid sucks it up and does it. But that’s completely legal, right? That’s based on appearances in a certain place at a certain time. And if they don’t do that, it’s not my problem. It’s their problem.”

There’s a simpler way to pay players, but not one that college sports’ governing body currently allows.

Collecting Themselves

Collectives are likely to further entrench themselves as a critical means of enticing players to college programs, especially in the high-dollar sports of football and basketball. In late October, the NCAA issued compliance guidance that cleared the way for universities to promote favored collectives and give a fundraising hand to their operators. Many have done so, and people throughout the industry believe that schools’ willingness to back collectives reflects a belief that collectives will be pivotal to the competitiveness of their athletic departments going forward. When schools decline to work closely with collectives, uproar occurs within fanbases, like at Iowa.

Until further rules changes arrive, the current system will carry on in predictable patterns. Collectives will compete for talent. Coaches that fail to land players they want will act aghast about the role NIL might have played in their missing out. And the schools that get those players will act equally aghast that anyone thinks a player picked their school for something as trivial as money. Officially, college sports will dance around the issue.

“The reality is this has become more of a pay-for-play model, whether we like it or not,” Dickey, the Boise State athletic director, says. “That’s what you’re hearing more publicly, and obviously there aren’t specific examples, because everyone’s talking in generic [terms].”

Collectives have a difficult mission. They are supposed to help schools attract and retain athletes – and do so within rules that still say collectives and schools cannot use payments to recruit. As collectives transition from startups to more established organizations, Winter and Belzer, who advise and help run several dozen collectives between them, expect the most effective ones to be those with the sharpest organizational structures and day-to-day operations.

Explore: American Public Supports NIL Rights for College Athletes But Is Unsure of How They Should Work in Practice

“Structure” doesn’t mean only how well collectives handle compliance and documentation but also whether they have their financial houses in order. Many collectives are nominally for-profit companies, but it’s not clear how many of them are trying to run a sound business with sustainable expenses and margins.

“They’re obviously focused on making sure that they have good NIL opportunities and programs in place, which helps keep athletes at the school happy and then also allows coaches to talk about those opportunities with recruits,” Winter says. “So, they’re all focused on that for sure, but then it varies on whether they want to also make money off of it, like traditional businesses.”

Belzer believes the collectives that don’t run themselves like businesses will find it difficult to stay alive.

“What's going to end up happening is that many of these collectives were poorly operated. Probably most of them are not going to be functional in a couple of years once donors stop contributing,” he says. “And so the universities that are in a poor place from that perspective are going to suffer the most.”

Is a donor who cares enough about a football or basketball team to give to a collective ever really going to stop supporting an organization that helps get players onto their favorite team?

“What happens if the team sucks and the donor has a falling out with the coach?” Belzer counters. “What happens if the donor dies? What happens if we hit a horrible recession next year and that donor can’t come in with the money? You’re going to be in deep, and then even if you do, how are you going to manage that process?”

Part of keeping a collective in order might be consolidating the competition. A few dozen schools entered the fall sports season with multiple collectives backing them. Those collectives are competing for the same donor dollars and NIL opportunities for players, something that could in theory be good for the athletes but doesn’t help collectives and could lead to messy situations for schools. It’s easier to tell fans to go to one collective and donate than to make them pick from a buffet of options.

“They know, ‘All right, if I want to support NIL efforts and make a donation, this is the place that I do it,’” Winter says. “It makes it easier for the school, because they can direct people to this one organization and there’s only one collective.”

Some schools have made a public effort to get all of their fanbases’ NIL efforts under one collective roof.

“What I try to do is eliminate as many cooks in the kitchen as possible,” Dickey says. Boise State’s athletic department backs one NIL group, called the Horseshoe Collective.

An Uncertain Future

Nobody in college sports knows for sure what the state of name, image, and likeness regulation will be in six months, one year, or five years. The NCAA has spent several years asking Congress to establish a federal standard for NIL, one that would allow the association to regulate the space without fear of antitrust lawsuits like the one it lost at the Supreme Court in 2021. The NCAA’s Transformation Committee reiterated a desire for congressional intervention in a January report, and the association’s incoming president is a term-limited Massachusetts governor known for his political dealmaking.

But the NCAA may not get the federal help it craves, and if it does, nobody knows what the legislation would look like. That uncertainty puts schools and collectives in a precarious situation: ramping up operations for the sake of staying competitive while knowing that everything could change with the stroke of a pen.

The NCAA could eventually push for (or just as likely, be pushed toward) a direct revenue-sharing model between schools and athletes in order to impose their own control over the NIL landscape. While that would seemingly cut out collectives from their current intermediary role, Winter believes collectives could still have a place in college sports’ next iteration.

“It would really just depend on what kind of model things land on,” he says.

Another possible future for collectives involves schools paying players directly but tapping collectives for the payment infrastructure they’re currently building. In that scenario, collectives would work more formally for schools.

“If I’m a school and I have to figure out how to compensate my athletes to X, and I have a collective that’s been able to build a multimillion-dollar base of recurring revenue, the schools are going to say, ‘Hey, we want you to come in and make this part of our [operations],’” Belzer says. “And I eventually think that we will just become an extension of the university.”

Or maybe not. Perhaps schools will build their own collective-like operations, and collectives will just fade.

“I would prefer having control, and at this point, I would not outsource it,” Dickey says. “Who knows our student-athletes better than us? Who knows our communities better than us? Why not create a system where it not only benefits the student-athlete but potentially ties into sponsorships and overall agreements with the department? I see a lot of opportunities there.”

This is the odd crossroads where collectives stand as 2023 begins. They are innovating the college sports business, having grown from nothing into an industry with likely hundreds of millions of dollars flowing through it annually. But that same burgeoning field, as it scales up, could be forced to change at any moment. That uncertainty is forcing athletic directors into an awkward but necessary conversation with the collective leaders backing their teams.

“We’ve been very honest,” Dickey says. “[We’ve said,] ‘This is what it is today. It could be very different tomorrow.’ We know change is inevitable. We know our industry has been trying to navigate this for many, many years, predating my time in college athletics. We haven’t been able to come up with a solution that fits and works for everyone, and there are a lot of cooks in the kitchen, and I think now is the time for leaders to step up and lead.”

Monthly Issue

NIL & the Modern College Athlete

Nearly two years into the NIL era of American college sports, athletes have more financial freedom, while the industry is still in disarray.

We explore how different stakeholders, from athletic programs to universities to fans and boosters, can play a part in improving the system and the conditions of college athletes.