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File this one under “things you could’ve seen coming a mile away.”
Less than a week after the NCAA agreed to an historic settlement that paves the way for college athletes to be paid directly by schools as part of a revenue share model, college football programs (and athletic departments as a whole) have already found a workaround.
Intended to eliminate collectives, the NCAA’s settlement has triggered their next evolution.
Many are transitioning into university-funded “marketing agencies,” positioning schools to circumvent the cap & mitigate legal risks.
Has a loophole been found?https://t.co/t8nL7Zt29H
— Ross Dellenger (@RossDellenger) May 28, 2024
The settlement also introduced a new model that would place a salary cap ($22 million annually) on athletic departments as well as a new enforcement arm and rules that prohibit athletes from striking compensation deals with boosters.
But as well all know, rules are meant to be broken. Or, at least, meant to be worked around.
So that’s what college football programs are doing.
Ross Dellenger of Yahoo Sports reports that programs have already found ways to bring NIL collectives in-house and effectively increase their salary cap in the process.
College Athletic Departments Are Exploiting A Big Loophole In The NIL Rules
How are they doing it? We’ll let Dellenger explain.
“Often with their schools’ support, the collectives are planning to, or have already, transitioned into marketing agencies, funded not solely by booster dollars but by the athletic department itself or the university’s fundraising foundation, he states. “For some, the wheels of such an evolution aren’t just now cranking to life. They’ve been rolling for a while.”
Dellenger then points to a Missouri law where universities are allowed to fund collectives that, in turn, fund athletes.
“According to the settlement terms, third-party NIL compensation to athletes outside of the revenue-sharing structure does not count toward the annual cap,” the report states. “The method, using an outside party to facilitate athlete pay, affords schools the ability to exceed the cap, distance themselves from legal issues around Title IX and continue operating as many of them do now — with the school’s influence but outside of its umbrella.”
So essentially, universities are paying collectives which are they paying players. But because the money is not flowing directly from schools to players, it’s not technically a cost against the salary cap.
Which essentially makes the salary cap irrelevant.
So it took less seven business days for college football programs to blow up the new rule set. What could possibly go wrong?