In June, a district court ruled that universities were permitted to distribute a portion of revenue directly to athletes, upheaving the decades-old rules that prohibited direct revenue distributions. This year, universities will distribute $20.6 million in revenue directly to athletes.
Part of that ruling involved regulating the name, image and likeness (NIL) space that has transformed college athletics in the past four years. In 2021, a judge ruled that the NCAA could no longer prohibit college athletes from profiting off of their NIL, and athletes started cashing in.
While some athlete endorsements were legitimate, profitable business ventures, many were “pay-for-play” deals to draw athletes to their schools. As a result, athletes were being compensated well over their “fair market value.” The majority of this compensation came from NIL collectives, fundraising organizations established by boosters to bring athletes to their schools. To raise money, collectives hold events like dinners and autograph sessions featuring their schools top athletes.
But the recent ruling ends these pay-for-play deals, forcing changes to the operational models of many collectives. Beginning this academic year, all third-party NIL deals will have to be approved by the “NIL Go” clearinghouse, operated by the consulting firm Deloitte, to confirm that the deal compensates athletes for their fair market value. Among other metrics, “NIL Go” will analyze an athlete’s performance, social media presence and brand influence to make such determinations. Deloitte estimates that 70% of past deals would have been denied under the current rules.
The Wolverines’ NIL collective, Champions Circle, was founded in 2022 and became an official partner of the athletic department in 2023. Since then, they’ve spearheaded multiple fundraising campaigns, including the Those Who Stay campaign, which was launched after the 2023 National Championship to help keep Michigan’s top talent at Michigan. Further, the collective played a role in bringing blue-chip quarterback recruit Bryce Underwood to Michigan, and they launched a March With May campaign this spring that helped the Wolverines land the second-best transfer portal class in the nation, according to 247Sports.
“We are closely monitoring the situation to ensure that we continue to conduct ourselves in a compliant manner,” Champions Circle Co-Founder Jared Wangler told The Michigan Daily in a statement. “Given our experience in this historically unpredictable market and the broad spectrum of offerings in our fan engagement platform, we are confident that the commercial infrastructure we have built will allow us to evolve and thrive no matter the changes in the collegiate NIL landscape.”
In early July, the College Sports Commission, an independent organization created to oversee the new revenue-sharing regulation, banned collectives altogether. They reversed their guidance before the end of the month, giving collectives the authority to compensate athletes — but only for their fair market value. Now, the role of NIL collectives is to provide payments to athletes to supplement the money they’re receiving from their schools.
“Pay-for-play will not be permitted, and every NIL deal done with a student-athlete must be a legitimate deal, not pay-for-play in disguise,” College Sports Commission CEO Bryan Seeley said in a statement.
With that, Champions Circle will continue to offer the events — including autograph signings and exclusive dinners — used to provide athlete compensation. But post-regulation, they’ll have to ensure the services athletes provide to Champions Circle are fair market value for the compensation the athletes receive.
But here’s where Michigan’s advantages come in — the block ‘M’ and Michigan brand are powerful. While most NIL collectives, including Ohio State’s “THE Foundation”, Southern California’s “House of Victory” and Texas Tech’s “The Matador Club” operate as 501(c)(3) not-for-profits, Champions Circle is a for-profit entity. While no one can be certain without seeing the financials, it’s certainly possible that Champions Circle is able to generate value more than the collectives of the Wolverines’ competitors. Therefore, the fair market value — and the corresponding compensation athletes can receive — for Champions Circle services likely exceeds that of many other schools.
“Our continued competitiveness in the NIL space will augment all of the other long-standing differentiators between Michigan and other universities to ensure that Michigan maintains its historical competitive advantages,” Wangler said.
The new regulations limit how influential NIL money can be in bringing athletes to certain schools. Collectives can no longer shell out whatever it takes to bring an athlete to their school, just as Texas Tech’s NIL collective ponied together $5o million to support their rosters this year. And similarly, the compensation schools can provide to athletes is capped.
“We hope that such a compensation model also ultimately results in a fair (and evenly -applied) oversight and enforcement structure,” Wangler said. “We believe that those are the components to ‘leveling the playing field.’ The House settlement is a step forward in this regard, but there remain differences in state laws and other regulations that ‘tilt the playing field.’ ”
Between extra COVID eligibility, record numbers of transfers via the portal and rapidly increasing NIL price tags for top talent, the college sports landscape has been vastly unpredictable in recent years. After decades of flimsy regulations and perpetual uncertainty, the new rules bring stability to college sports.
