How House v. NCAA settlement could give Oregon an advantage in NIL deals
DerekJohnson
Administrator, Swaye's Wigwam Posts: 66,789 
The settlement document in the House v. NCAA lawsuit spans 136 pages. The section on definitions alone features 48 terms that help shape the groundbreaking agreement to pay billions to former collegiate athletes, share revenue with current (and future) players and create an oversight body to monitor third-party NIL deals.
All in all, the settlement, if approved by U.S. District Judge Claudia Wilken in the next few weeks, will take effect July 1 and transform college sports like nothing before it.
Six words, located in section 1, subsection e, have our attention: “Other than a publicly traded corporation.”
The section in question details the type of NIL (name, image and likeness) agreements that will be subject to fair-market-value examination by a newly formed oversight clearinghouse.
Expected to be run by Deloitte, the global auditing firm, the clearinghouse will police NIL transactions between athletes and businesses — transactions that come on top of the $20.5 million (maximum) that each school is permitted to share with athletes annually.
The aim: Eliminate the pay-for-play deals that currently control the flow of talent in both high school recruiting and the transfer portal.
In theory, the clearinghouse will be empowered to enforce so-called “true NIL,” by which athletes are compensated by businesses for legitimate endorsement and promotional activities.
But not all businesses will be subject to oversight by the clearinghouse.
Other than a publicly traded corporation.
Put another way: It’s good to be Oregon.
For decades, the Ducks have benefited from their association with Nike and relationship with the company’s founder, Phil Knight, an Oregon alumnus.
Nike founder Phil Knight walks on the field before an NCAA football game between Colorado and Oregon, Sept. 23, 2023, in Eugene, Ore. (Amanda Loman / AP)
Nike founder Phil Knight walks on the field before an NCAA football game between Colorado and Oregon, Sept. 23, 2023, in Eugene, Ore. (Amanda Loman / AP)
Nike is a publicly traded corporation with $92 billion in market capitalization, meaning NIL deals between the company and college athletes — at Oregon or elsewhere — are exempt from fair-market-value assessments by the new clearinghouse.
“Does Oregon get some benefit? Yes,” said Gabe Feldman, director of the Tulane Sports Law Program and consultant for the Knight Commission on Intercollegiate Athletics (named for the John S. and James L. Knight Foundation, not Phil Knight).
“Is it a massive advantage? No.”
Like so much else in the settlement, the degree to which Oregon — or any school with ties to a publicly traded company — will benefit from the NIL exemption is unclear.
But this much is certain: While the back-damages and revenue-sharing portions of the settlement have received an outsized percentage of the attention from the media and college sports administrators, the NIL oversight component is critical to cleaning up the player-procurement process.
To this point, the NIL marketplace has been dominated by booster-run collectives that offer payments to athletes as recruiting inducements.
The ACC, Big Ten, Big 12 and SEC, which are named defendants in the House lawsuit (along with the NCAA and the Pac-12), want to add enforcement to the NIL market and create a pay-for-work, not pay-for-play, environment.
There are two primary components to the NIL clearinghouse, according to Feldman:
— All NIL deals of at least $600 must be reported.
— Only deals with boosters or “associated entities” are subject to the fair-market-value review by the clearinghouse. (Each school is submitting a list of associated entities and individuals.)
In theory, Nike could offer Oregon’s starting quarterback $1 million for a single public appearance, with no threat of oversight or enforcement. (The list of Nike schools includes Ohio State, Alabama and Texas.)
“(The settlement) seemingly would exempt Nike,” said Sam Ehrlich, an assistant professor of legal studies at Boise State and former attorney specializing in antitrust and sports employment law. “And that would be an advantage to Oregon. But they do have shareholders to report to.”
And therein lies one of the two possible backstops to prevent publicly traded companies from conferring a massive advantage to specific schools.
“Nike is not considered a booster (under the terms of the settlement) because it’s a publicly traded company,” Feldman said, “and because it’s a publicly traded company, they have to answer to shareholders.
“Why would a company allow the owner to benefit his or her alma mater if it’s not going to help the company? You’re talking about federal laws.”
Attorneys for the House plaintiffs and the defendants “want a pro system,” Feldman added, “where you can’t have endorsement deals designed to circumvent the salary cap.”
Oregon isn’t the only school with close ties to a publicly traded company.
Michigan State donor Mat Ishbia is the CEO of United Wholesale Mortgage (market cap: $6.5 billion).
SMU donor Gerald Ford is the Chairman Emeritus of Hilltop Holdings (market cap: $2 billion).
Miami benefactor John Ruiz runs LifeWallet ($15.4 million), although the business is struggling financially.
Said a source familiar with the specifics of the clearinghouse’s marching orders: “There will be a lot of focus on companies like Nike and Adidas.”
Which brings us to the second backstop to publicly traded companies circumventing the NIL clearinghouse.
“Will Deloitte go beyond the terms of the settlement?” Ehrlich said.
That’s one of many unknowns: the extent to which the clearinghouse expands its authority beyond the terms laid out in the settlement.
Upon detecting a deal that appears excessive, the clearinghouse potentially could redefine the publicly traded company as an associated entity, thereby making its contracts with athletes subject to fair-market-value analysis.
(Also possible: The legality of the clearinghouse will be challenged immediately, on the grounds that fair market value cannot be defined by an enforcement entity. “The settlement is not a sustainable system,” Feldman said. “It’s an antitrust settlement not intended to be comprehensive.”)
Let’s examine the situation in hypothetical terms, with Nike offering $1 million to Oregon’s starting tailback in exchange for a single public appearance at the Pioneer Place outlet in downtown Portland.
It’s a ridiculous amount, of course. And the transaction would have to be recorded by Nike and therefore subject to the company’s internal auditing.
Also, the deal must be reported to the NIL clearinghouse because it exceeds $600. It would undoubtedly raise alarms, possibly leading to the determination that Nike should be considered an “associated entity.”
“The clearinghouse will apply pressure if the company is bypassing,” the source said.
In practical terms, the advantage conferred to Oregon by its relationship with Nike lies in the quantity of deals that a company with $92 billion in market capitalization could provide.
Instead of attempting to pay the tailback $1 million for a single appearance, Nike could offer 10 players legitimate endorsement deals, each worth $250,000 and each within a fair value range for the services rendered.
The deals won’t raise alarms inside Nike or with the clearinghouse, but they will create vital cap space for the Ducks.
Within the power conferences, schools are expected to devote about $15 million to the football roster, with the remaining $5.5 million split among basketball and the Olympic sports. The third-party NIL deals offer a means of exceeding the cap.
Oregon linebacker Jerry Mixon cheers before an NCAA football game in Eugene, Ore. (Amanda Loman / AP, 2024)
Oregon linebacker Jerry Mixon cheers before an NCAA football game in Eugene, Ore. (Amanda Loman / AP, 2024)
If Nike is providing satisfactory NIL money to 10 players, there’s more revenue-sharing cash available for the Ducks. They could offer a sweeter deal to the coveted quarterback, or edge rusher.
Essentially, Nike would have boosted Oregon’s cap space by 16.7 percent — the $15 million (approximate) for revenue sharing plus an additional $2.5 million in true NIL.
But here’s the hook: That option is open to any school in any conference, so long as it partners with a business willing to underwrite the football program’s cap space.
Amazon could do the same for Washington.
Google could do the same for Stanford.
The third-party NIL transactions — as defined by the House settlement and enforced by the Deloitte clearinghouse — are largely partly rooted in willpower.
In the company’s ties to the school and desire to foster on-field success while building its brand.
There are dozens of possible partnerships for FBS programs across the country. Few of them seem as beneficial as Oregon’s relationship with Nike — a decades-long relationship perfectly built for the new era.
Jon Wilner: jwilner@bayareanewsgroup.com.
Comments
Words words words.
When does Dan Lanning jump into a pool with his barbwire tattoo?🤔🤔
This sport is a fucking joke.
Just draft the kids that want to play professional sports out of high school already.
The bells tolls for thee re: men's sports at UW not named football and basketball.
Basically, we'll be running a pro football and basketball program and then a matching number of scholarships for women's sports to stay Title IX compliant.
House settlement and revenue sharing will gobble up all the athletic department budget. Gonna be kewl when UW cuts Men's Crew (our best FREE PUB sport) to pay 3 star croots who will never make a NFL practice squad.
None of this matters. NIL will kill the sport and I will be watching it about as often as I watch the CFL and Curling.
When the fans get enough of their favorite players showing up in their rival's colors from one season to the next, it will be over. All these left side of the IQ bell curve people (and you all fucking know that's true) will then realize that they don't matter in society at all except to the extent that people are interested in watching them do the physical thing they're good at doing, which they're now helping to fuck up.
The farm system in baseball is no man's land. The farm system in football will be the same. Let the Eugene Ducks and the Montlake Huskies battle it out for regional AAA bragging rights in front of 365 loyal screaming weirdo fans. NOWGAF, least of all me.
I hope it fucking dies.
Viva Los Delfines.
If you can fuckin work in a factory, serve in the military, pay taxes, vote, go to prison, etc…
BUT NO FUCKING WAY CAN YOU WORK IN THE NFL OR NBA - it's criminal the way they make bullshit rules and get rich. I agree the whole thing sucks.
Sad but true.
Oxford and Cambridge aren’t running pro soccer team. England has their shit figured out.
Private organizations can set rules for membership
The NBA has one year the NFL 3
1 out of 100 high school seniors would survive the NFL
This is what all you people have begged for the last 30 years
Enjoy it
Who here wanted to pay the players? We need receipts.
Wilner's not covering anything new here except Oregon's balls with his mouth.
There's major donor fatigue already (Barkley's quote) and I think doomsday extremes won't happen due to that and due to needing to be enrolled at the schools. This isn't a career and will never be.
You wanna just go be an employee at UW at 18? Go pick up a fucking mop and a broom. Same with ma and pa.
Pup called it years ago
I quickly gave up like 10 or more years ago, but always argued that the players were already being well compensated. If there was room to elevate their standard of living to a level where all of them, not just the stars, were happy without getting retarded then I was in favor of increasing their stipend.
I liked college sports though, and this isn't it. I'll keep watching as long as UW has a team and some other "college" teams to face, but I don't like it and don't give a fuck. The whole thing could get wiped from existence tomorrow and I wouldn't give it a second thought other than on fall Saturdays when I come here to discuss a game that never happened.
For the record, I think the SCOTUS totally fucked us on this issue. IDGAF about what their fucktard legal reasoning was: The NCAA and Universities are not equipped or well suited to run professional sports operations. Full stop.
If it was so god damned important for kids to be pros at age 18, then the free market- i.e., NBA and NFL should have figured out a way to create a minor league product.
NIL and transfer portal are cancers that go way beyond football. Imagine a WNBA minor league system paying chicks $500K a year to play hoops like the top tier Women's NCAA players receive now in NIL deals.
Later guys !!
I’ve long wondered if some sort of stipend to better represent the cost of a good college experience for the poors could have helped fend off the pro college sports era.
Oracle of Maltby.
Here we go with another Sky is Falling circle jerk. I get it. It’s not going to be as bad as everyone thinks, it’s not going to be great either. I’d argue that our local recruiting is doing as good or better recently. The only way this shit will work is having a strong local contingent on roster and getting local companies/donors/boosters to wage war on the Nike’s and Oil money schools.
Football is entertainment for me, I like watching games at Husky Stadium. I favor college football even with this BS over pro football where it truly 110% is about money. It’s completely pointless to root for a team when every single player is trying for a better contract irregardless of team association.
Meh
For the record, the NIL deals pay massively higher salaries than the WNBA can offer.
The NBA does have a minor league, the G League. NOC about it, though. You also have the Euro leagues, etc.
NFL will never create one. The costs to support large roster teams with kids on them for 4+ years while they develop would be extremely prohibitive. To Race's point, the NFL is a grown man's game and not even 1 in 100 18 year old kids could survive.
I hate the NIL stuff. It seems like, unless the players are turned into a union and a salary cap is collectively bargained, things will continue to get worse as far as tampering and whatnot. There are for more kids who would benefit from negotiating guaranteed salaries than those who'd lose money in such a scenario and that seems to be the one point of leverage the NCAA might have to reasonably constrain costs and prevent the Olympic sports from turning into club activities. Of course, the NCAA will do the dumbest thing possible and screw this up even worse than it already is.
Better pick your favorite Ivy League rowboat peter puffer skwah now.
I have zero confidence in envisioning where this goes big picture and even year-to-year. Ideally, I think the NFL could tell people to fuck off. Countless number of jobs of require an actual college degree and I assume their union could easily add an age requirement, if they haven't already.
Maybe the NFL could put their stamp on the NCAA, enforce a salary cap, allow the schools to use their revenue to fund their teams, create a top level (Big 10/SEC), AAA (Big 12, etc), AA (mid majors and small schools), and A (FCS). Keep it as close to the current format as possible.
It could work out organically with boosters getting fatigue and realizing it's not worth it to spend big bucks on anyone other than proven returning commodities. The NCAA to do just some clean up with the rules of the portal. And, 99.99% players realizing whatever scholarship and stipend they can get is a great deal for them and to not demand pay days.