The NCAA delayed its vote on proposed name, image and likeness rules changes indefinitely this week after a letter from the Department of Justice warned of possible antitrust violations. Despite the delay, software and consulting firms are pushing forward with their NIL preparations—with NIL legislation still slated to become law this summer in Florida.
“It makes sense why the vote was postponed, but it does not change the fact that the market is coming,” Opendorse CEO Blake Lawrence said in a phone interview. “It’s an inevitability, regardless of what the NCAA legislation becomes.”
The delay, however, has made some companies in the space unsure of their place in the NCAA’s eventual NIL implementation plans, given concerns raised by the U.S. Justice Department about the governing body’s proposed plan to utilize one such operator as an “independent third-party administrator” of the changes.
The DOJ’s letter, and the NCAA’s delay in response to it, added to an already uncertain playing field in the budding NIL industry. The Supreme Court agreed to hear the Alston antitrust case in December, a ruling that could impact NCAA NIL rules, and Congress is considering several different proposals for federal legislation that could supersede the current patchwork of state laws and determine a different path for oversight.
Six states have already passed bills, with Florida’s set to allow athletes to sign endorsement deals and monetize their brand starting on July 1 if not hindered by legal challenges.
As Altius Sports Partners CEO Casey Schwab put it, the NIL preparation and consulting business isn’t contingent upon what the rules look like or exactly when they come, but that they are coming at some point in the near future. “The delay by the NCAA or the letter from the Department of Justice, or the legal cases, none of those things change the fact that NIL changes are coming in Florida and California, and soon,” he said.
As companies like Opendorse and Altius continue in their work with individual institutions and athletic departments in developing NIL solutions, the NCAA’s preparations are now on hold. The organization put out a Request For Proposal several months ago for a third-party partner to help with athlete deal disclosure, education and enforcement of the eventual rules. Five finalists in the process were confirmed, though selection is now at a bit of a standstill due to the voting delay.
The NCAA will not make a decision on the third-party administrator, or administrators, until after its members approve new regulations, according to someone will knowledge of the plans. The NCAA had initially planned to select a partner in late 2020, a decision that was punted twice before. A representative for the NCAA declined to comment.
While those Sportico talked to remain interested in working with the NCAA despite the delay, their faith in a feasible timeline for the construction of NIL processes has wavered.
“In order to ensure that the institutions, athletes and all third parties that are going to be a part of the ecosystem are ready and educated on what’s going on, there needs to be some runway,” Lawrence explained. “This cannot be done overnight. Developing one of the more complex solutions to ever hit the world of sports—you would desire years to make that a reality, not months. It’s not a feat that many organizations of any shape or size in any industry would ever want to have in front of them with this little time.”
The deadline looms near for the NCAA, its institutions and potential third-party partners—some of whom now question whether a role will exist for them when it’s all said and done. In speaking with USA Today about the DOJ’s antitrust warning, Assistant U.S. Attorney General Makan Delrahim expressed explicit concerns about the potential third party, wondering aloud about its personnel, priorities and possible conflicts of interest.
Schwab reads Delrahim’s skepticism about an independent overseer as a possible hint at an eventual abandonment of the concept. Some of the proposals put forth before Congress call for an administrator—though not all, and none call for the same type of third party the NCAA had planned on utilizing.
One bill, put forth by Sens. Cory Booker (D-NJ) and Richard Blumenthal (D-CT), proposes a laissez-faire approach and the creation of an unrestricted and regulated free market, which wouldn’t include such oversight. The three separate bills proposed by Sens. Roger Wicker (R-MS) Marco Rubio (R-FL) and the duo of Anthony Gonzalez (R-OH) and Emanuel Cleaver (D-MO) all had some version of an oversight committee, though the Wicker bill, for example, specifically suggests the selection of a private, independent, and nonprofit administrator to be overseen by the Federal Trade Commission.
“If this concept of oversight ends up as a pseudo-governmental entity set up by a group like the Commerce Committee, kind of analogous to how the SEC has set up FINRA [an independent body that oversees and enforces the rules governing brokerage firms and exchange markets], this whole concept of an NCAA appointed administrator goes away entirely,” Schwab said. “If it’s farmed to the government, that version of a third-party administrator wouldn’t have any connection at all to the NCAA.”
But companies like Schwab’s could still have a role in that ecosystem, even if it’s not what they initially expected. “It’s like taxes,” Schwab said. “The IRS exists, but there are a heck of a lot of CPAs and tax lawyers still making money off of helping people do their taxes.”
Eben Novy-Williams assisted with the reporting of this story.
