College Sports Commission distributes new rules memo as basketball transfer portal window opens

After the transfer portal window opened for both men’s and women’s basketball this week, the College Sports Commission distributed a new reminder to schools about the rules in place. The CSC issued a similar memo during the football transfer window in January.

Tuesday’s memo also included updates and more information regarding “third-party NIL deals and institutional revenue share” now that players are free to enter the portal. That includes the NIL Go clearinghouse to vet deals worth $600 or more, and the CSC reminded schools that deals must be submitted within five business days of execution or agreement on terms.

SUBSCRIBE to the On3 NIL and Sports Business Newsletter

But the CSC also noted cases in which athletes did not participate in the “obligations” of deals that were signed and cleared. The commission said it plans to reach out to schools and athletes “in the coming weeks” about those deals.

Additionally, the College Sports Commission board of managers approved changes to its enforcement policy. Deals worth between $600 and $2,500 will not be subject to a range-of-compensation review unless an athlete reaches a total of $15,000 in deals signed in a year.

“Last month, the Board of Managers of the CSC approved a new enforcement policy whereby the CSC will not subject deals valued between $600-$2,500 to range-of-compensation review unless and until a student-athlete has reached a total of $15,000 in Associated deals in an academic year,” the memo read. “This policy will allow the CSC to focus its resources in NIL Go on higher-dollar deals.

“The CSC will evaluate the effect of the new policy in the coming months to determine whether further adjustments are needed. With the support of the Board, the CSC is also now providing more transparency regarding the range-of-compensation when deals are “not cleared” because they exceed that range.”

CSC addresses ‘warehousing’

In Tuesday’s memo, the College Sports Commission also addressed its rules about “warehousing” – the act of an entity purchasing an athlete’s NIL rights for future endorsement and commercial opportunities. That issue is at the center of a notable case involving Nebraska athletes and the school’s media rights partner PlayFly, which Ross Dellenger previously noted. The CSC said Tuesday that NIL deals must include a direct activation.

“As a reminder, an NIL agreement or payment with an Associated Entity or Individual must include direct activation of the student-athlete’s NIL rights,” the memo read. “In other words, the acquisition of such rights without reasonable specificity of the NIL activation (e.g., description of the specific group licensing categories, the student-athlete’s obligations related to the activation, timing and ultimate use of the student-athlete’s NIL) may not satisfy the requirements for payments by Associated Entities or Individuals. Contracts in which MMRs or other partners pay student-athletes for their NIL with no information about who will ultimately use that NIL will likely run afoul of this rule.”

With regard to multi-media rights partners and other third parties, the CSC said if they are not part of the “payment execution” of an NIL deal, they are not a “facilitator.” Therefore, they do not need to be identified in the submission process to NIL Go.

According to the CSC’s latest deal flow report last month, $166.5 million worth of deals have been approved on NIL Go since last summer, and 711 deals with a total value of $29.3 million have been reviewed and not cleared. In addition, 10 deals in arbitration previously reported as of Dec. 31 were all withdrawn by the athletes.