Little concern in NIL market about potential NCAA crackdown: 'It's adorable'

Little concern in NIL market about potential NCAA crackdown: ‘It’s adorable’

SCOTTSDALE, Ariz. — The news coming out of last week’s Big Ten, Big 12 and Pac-12 spring meetings was the NCAA’s impending attempt to crack down on schools’ boosters using NIL payments to land recruits. New, clearer NIL guidelines drafted by a subcommittee that includes Ohio State athletic director Gene Smith and Big East commissioner Val Ackerman are expected to spur the NCAA’s enforcement arm into action, sources told The Athletic. Smith said in an interview this weekend that he hopes the new recommendations are endorsed by the Division I Board of Directors on Monday.

Sports agent Russell Smith, whose Utah-based firm Oncoor Athlete Marketing represents around 80 college athletes, had this reaction: “I think it’s adorable that the NCAA is acting as if they’re going to crack down on anything.”

In conversations over the weekend with boosters, lawyers and agents involved in the types of NIL deals of concern to administrators, few believed the NCAA has the capacity to curb the budding “over the table” pay-for-play market. Not after Supreme Court Justice Brett Kavanaugh’s concurring opinion in last summer’s NCAA v. Alston antitrust decision that warned: “The NCAA’s business model would be flatly illegal in almost any other industry in America.” While not legally binding, his screed all but invited future lawsuits challenging the NCAA’s broader amateurism model.

“​​The moment they come to try to interfere with one of my clients’ deals — the next day is the moment they get hit with an antitrust lawsuit,” said attorney Mike Caspino, who represents several football recruits that have landed six- and seven-figure deals with school-specific booster collectives. “They’re saying there’s a whole class of people (boosters) who can’t participate in the market for athletes’ NIL rights. That’d be like saying red-haired people can’t buy meat. That’s antitrust.”

The scars of the Alston ruling last summer led to the NCAA scrapping a detailed set of NIL “guardrails” it had been working on for more than two years and instead issuing a bare bones “interim policy” just prior to various state NIL laws taking effect on July 1, 2021. The only specific warning language reminded members to “avoid pay-for-play and improper inducements tied to choosing to attend a particular school.”

Ten months and dozens of school-specific collectives later, the subcommittee felt compelled to clarify that its existing booster rules include such groups — and should be enforced.

“We had to make a business decision to say, ‘You know what? This is a line in the sand,’” Gene Smith told The Athletic. “There’s going to be risk with the position that we’re going to take. There always is with these types of things. We could get sued. But, for the betterment of the whole and all the student-athletes we serve, we’ve got to take that risk.”

Ohio State’s AD said he hopes that the infractions process on these types of violations is expedited so cases aren’t being adjudicated years after the alleged offenses occur. He wasn’t sure whether schools could be sanctioned retroactively for contact between boosters and recruits over the past 10 months, but he said that penalties for future rule-breaking could range from offending boosters being disassociated from their schools to lack of institutional control and everything in between.

Four members of the NIL subcommittee said they expect the Board of Directors to be the entity that decides whether or not the enforcement staff looks into deals that have been signed in the past 10 months prior to an athlete’s enrollment.

Multiple sources said that NCAA vice president of enforcement Jon Duncan had previously told administrators that he was waiting for clearer direction from membership before chasing down athletes, schools and boosters to establish proof that violations were being made. This frustrated some high-ranking officials, who had expected the NCAA’s enforcement staff to jump into the fray far earlier, as boosters contacting recruits has been an NCAA rules violation since long before NIL went into effect. The new NIL guidance should serve as a green light to begin enforcing rules prohibiting booster involvement in recruiting.

“We forecasted pretty much everything that’s happened, except for collectives,” said Ackerman, a member of the current NIL subcommittee who co-chaired with Smith the earlier working group that drafted the eventually scrapped NIL legislation. “We didn’t envision packs of donors banding together to create pools of money they would spend, in some cases, indiscriminately. That isn’t something we predicted.

“This is an effort to clarify that a collective run by a donor falls within the meaning of a booster.”

Miami mega-booster John Ruiz, who last month openly advertised that his business LifeWallet had made an $800,000 NIL deal for a men’s basketball transfer, says all his deals have been approved by Miami’s compliance department and would withstand any challenge from the NCAA. He also believes trying to retroactively sanction a school over discussions between a business like his and a potential signee would be “the equivalent of not posting a speed limit on a road and then ticketing a driver for speeding.”

“The biggest issue is that the schools should be able to participate (in NIL),” said Ruiz. “How can you be punished as a member school for the actions of those you can’t really control?”

Ruiz, whose deals require Miami athletes to participate in promotional activities for LifeWallet, has suggested repeatedly that collectives are at greater risk of NCAA scrutiny. Several of the collectives’ NIL contracts The Athletic previously reviewed lacked specific stipulations as to what services the athlete must provide in exchange for their payments.

But they also have no specific language requiring the athlete to attend a certain school.

A source at one school’s collective said the NCAA’s stance shouldn’t affect their group because their donors have no direct contact with recruits before they arrive on campus. Potential dollar figures may be communicated through intermediaries. Caspino said he deals primarily with lawyers for the collectives, which are formed either as for-profit LLCs or non-profit 501(c)(3)’s.

Conversely, Spyre Sports, a Tennessee-specific collective whose co-founders are former agents, does not hide the fact the collective visit with recruits during the process, which would seemingly be in direct violation of the NCAA’s booster rules.

And yet, even a seemingly open-and-shut infractions case over recruiting inducements could run headfirst into broader legal challenges. Antitrust attorneys would undoubtedly cast potential sanctions over booster payments as an attempt to restrict athletes’ NIL compensation.

“That’s exactly what they’re doing if they go after (boosters),” said Russell Smith. “They’re limiting compensation, which at the core of all this: The NCAA is no longer allowed to limit kids’ compensation.”

Whatever the guidelines, it’s hard to imagine the NCAA will attempt to terminate agreements already reached between collectives and athletes. In the past, an athlete that accepted money from a booster would be rendered ineligible. The NCAA would likely draw sharp criticism for such a thing post-Alston.

Instead, investigators would likely interview the athletes to ascertain whether they had contact with boosters prior to enrolling. If so, the school and those boosters could theoretically be punished.

“Since the beginning of time it’s been important to the NCAA that boosters not be involved in the recruiting process, and for 10 months that was ignored,” said an NIL industry source. “It will likely not be ignored any further. But someone will need to be made an example of.”

The Athletic‘s David Ubben, Manny Navarro and Andy Staples contributed reporting. 

(Photo: Justin Tafoya / NCAA Photos via Getty Images)


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