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Collectives structure NIL contracts with protections for transfer portal

On3 imageby:Andy Wittry01/30/23


On the first day of December, The Grove Collective announced it re-signed Ole Miss running back Quinshon Judkins, the reigning SEC Freshman of the Year, through the 2023-24 season. The NIL collective‘s Twitter account posted a picture of Judkins wearing a shirt with The Grove Collective’s logo as he posed with a pen and a multi-page contract.

College football’s first-ever transfer portal window opened four days later. The announcement ensured Judkins will spend his sophomore season in Oxford, Mississippi.

The picture of Judkins getting ready to put pen to paper was an image typical of players in professional leagues, particularly for rookies and free-agent signings. It was one of the clearest examples to date of the role of collectives in the NIL landscape, especially regarding player retention in the highest revenue-producing sports like football and men’s basketball.

Subsequent announcements from The Grove Collective, including that wide receiver Jordan Watkins and offensive lineman Jeremy James had re-signed, came with graphics that said, “Staying in the Sip.”

The Volunteer Club, which Spyre Sports Group runs, has recently announced deals for event series that feature a number of Tennessee football players, including quarterback and reigning Orange Bowl MVP Joe Milton.

“That was announcing we had re-signed Joe,” Spyre Sports Group’s Hunter Baddour told On3’s Pete Nakos.

Valiant Management Group, which runs the Champions Circle collective, announced the creation of the “One More Year Fund” in an effort to retain key Michigan football players. The four players named upon the launch of the fund have since announced their return, headlined by running back Blake Corum, the seventh-place finisher in last season’s Heisman Trophy voting.

Welcome to the first college football offseason that features more than 200 collectives nationally, the debut of transfer portal windows and recent NCAA guidance that empowers schools and their employees to promote collectives.

Collectives structure NIL contracts with protections

Collectives can approach their agreements with athletes both in a proactive and reactive manner regarding the transfer portal. Recent announcements after the now-closed transfer portal window opened signaled agreements designed to retain key athletes.

The mostly private nature of contracts between athletes and third parties leads to potentially understandable confusion, if not conflict, for fans.

“There are states, for example Texas, that require disclosure of these contracts publicly, which to me as a lawyer is insane because it’s a private contract between private parties,” said Tim Brandle, the self-described “attorney du jour” and a founding board member of the Washington State-focused Cougar Collective. “So there’s this whole slew of things that the courts haven’t addressed yet because it’s totally not anybody else’s business because they’re not public employees. Washington doesn’t have that rule so we have fans who say, ‘What about this? Where’s his contract? What’s this contract? What’s in it?’

“I’m not telling you that. I’m not violating these players’ confidentiality. I’m not going to do that.”

In a Zoom interview, Brandle very generally described some of the provisions the Cougar Collective has used in its agreements.

Brandle said Cougar Collective makes an initial payment to players up front. The second payment is before fall camp.

“Basically avoiding transfer windows to make sure that these guys are going to be with us,” he said.

The contract term or payments structure of contracts between collectives and athletes can be structured in a way to protect the former from the offseason mobility of the latter.

A 30-day out ‘covers every conceivable situation’

Additionally, both parties — the collective and the athlete — might have the ability to cancel their agreement for any reason they’d like, soon after signing.

“Pretty much all of our contracts have blanket, 30-day, not-for-cause outs so we can cancel a contract pretty much unilaterally,” said Jason Belzer, the CEO and co-founder of the agency Student Athlete NIL that powers roughly 20 collectives. “Both sides of the party can do that within 30 days’ notice. … It covers every conceivable situation.”

Robyn Jones, the COO of the sports marketing agency Triumph NIL, said the agency has a clause in its agreements with Virginia Tech athletes that allows either party to terminate it with a 90-day notice. Brandle said Cougar Collective’s agreements have a 48-hour, mutual termination clause that allows either party to terminate the agreement with two days’ notice.

It also employs a responsible-citizen clause and a three-strike rule.

“We know they’re kids,” Brandle said. “It’s not like, ‘Oh, you didn’t do this social media post so this contract is void.’ That’s not what we’re here for. We’re here to teach them.”

After a hypothetical first strike, an athlete will have a conversation with a board member of the Cougar Collective, likely Brandle, who jokingly referred to himself as the bad cop to Development Director Zach Thornton‘s role as good cop.

After a second offense, the athlete will meet with a group of board members. A third offense would require a meeting with the entire board of directors, which will then hold a vote.

If an athlete transfers, ‘we have the right to cancel’

In one high-profile example of the role of collectives, Crimson and Cream, a collective that SANIL powers that supports Oklahoma athletes, recently offered an NIL agreement to all 115 players on the Sooners’ football roster. SANIL also powers collectives that support athletes at Creighton, Notre Dame, Penn State and Rutgers, among other schools.

Belzer said a few athletes who signed with a SANIL-backed collective decided to enter the transfer portal in mid-January, shortly after signing.

“We simply notified them that in the event that they transfer, you know, we have the right to cancel the contract,” Belzer said. “And that’s what it is, and they don’t really have grounds to sue us because they agreed to a contract that they can also unilaterally (cancel).

“And what we’ve actually found, to be honest with you, is that most student-athletes are pretty OK. Because if they’re going somewhere else, there’s probably a good reason for it. Maybe it’s money, maybe it’s something else.”

Corey Staniscia, who chairs the Fowler Ave Collective that supports USF athletes, tweeted earlier in January, “not one athlete last [season] received monthly reoccurring payments from FAC to protect FAC & our contributors from the upcoming transfer portal during a rough [season].”

Staniscia explained Fowler Ave Collective’s approach in a subsequent Zoom interview. The collective launched about three weeks before the start of the 2022 season and its initial funds were limited.

“Especially once we got the season going, we were going to potentially have a coaching change on our hands and with a coaching change also comes with players leaving,” Staniscia said. “The portal, for us, opened up back in October or November, whenever they had fired coach Jeff Scott. For us, our window had been open even sooner so we knew even ahead of time, ‘OK, hold on a second.’ We have to go into — I don’t want to say lockdown mode — but we have to go into protection mode now at this point with the dollars that we raised.”

With USF hiring a new coach in former Tennessee assistant Alex Golesh, and Fowler Ave Collective recruiting new donors, there’s a “new kind of energy, new kind of vibe,” Staniscia said. The collective is more open to longer-term agreements, including annual contracts.

While Staniscia said the contract terms of most of Fowler Avenue Collective’s agreements with athletes last year didn’t run through the end of the calendar year, the collective has signed annual agreements for 2023. He said Fowler Ave Collective wants player retention but the contract terms allow both parties to reevaluate their opportunities.

“I would never stop a young man or young woman from getting what I would call a significantly better deal or if they want to better their future at another institution for education or for athletics,” Staniscia said.

How clauses can protect NIL collectives and their donors

NCAA rules and various state laws don’t allow NIL deals to be used as a recruiting inducement or a pay-for-play agreement but a so-called area code clause can at least allow a collective to terminate a contract if an athlete transfers.

Jones, the COO of Triumph NIL, used the example of reigning ACC Player of the Year Liz Kitley‘s recent cooking class to describe the importance of geography and proximity for the agency’s business partners.

“We do take into consideration geographic area in the sense that — like for example with the cooking class we did a couple weeks ago — it wouldn’t really serve the local business well or the student-athlete to have the additional, unnecessary stress of trying to figure out how to show up during a season for a cooking class in the evening if all the sudden that student-athlete has moved and is two states away or across the country,” Jones said in a phone interview.

Triumph NIL has signed agreements to create partnerships for more than 50 Virginia Tech athletes, who represent a number of different athletic programs at the school.

“We do have a geographical clause in there that allows for us to exit the agreement or the student-athlete to exit the agreement because it’s not necessarily in the geographic area that’s targeted by that particular scope for that business,” she said.

The Twitter account for the Ohio State-focused collective The Foundation has tweeted, “All of our deals are subject to that student athlete living in Columbus, OH.”

Similar clauses, such as contractually agreed-upon public appearances or photoshoots, can serve a similar purpose. Those appearances or events are often specific to a location on or around a college campus.

Contracts could also require an athlete to provide deliverables in a specific county.

If an athlete transfers to another school across the country and is unable to attend an event, then the athlete is in breach of the contract. A collective could then choose to terminate the agreement.

“That’s one of the legs or one of the mechanisms that we are using that if, God forbid, that happens, we can have that conversation with the athlete,” Staniscia said. “You know, again, everything is up for discussion. To me, nothing in life is permanent so I’m always willing to have those conversations with people.”

This story was updated to clarify that Fowler Ave Collective has signed annual contracts for 2023.