New NIL clearinghouse aims to help athletes identify trustworthy business partners

On3 imageby:Eric Prisbell02/08/24

EricPrisbell

The other side of the Kirk Herbstreit/Raiola convo | We LAWYER UP to talk NCAA cases | Dear Andy

One month after the NCAA adopted a voluntary registration process for NIL service providers interested in working with student-athletes, an entirely separate comprehensive tool is launching that could enhance or even preempt the NCAA’s efforts.

Through its certification process, the Athlete National Sports Business Clearinghouse (ANSBC) aims to help athletes identify vetted and trustworthy business partners in the NIL space, everyone from businesses and agents to financial advisors and professional service providers.

The ANSBC is part of Advance, which bills itself as an unbiased industry leader in NIL consulting and education and has more than 40 institutional clients. And to spur adoption and strive to protect as many student-athletes as possible, Student Athlete NIL, which operates more than 45 collectives and works with thousands of athletes, will require agents and other third parties to register in the clearinghouse before engaging with them on behalf of any school SANIL works with.

“We all talk about how we want to protect these athletes,” Courtney Altemus, Advance co-founder and managing partner, told On3. “But there’s no functional and universal way to do it in the moment.”

ANSBC aims to change that with a service that it expects to provide athletes with business due diligence and risk mitigation and enable businesses and individuals to distinguish themselves from dishonest competitors.

How will a business or individual be vetted?

As Altemus notes, the NCAA is in a “tough spot” when it comes to trying to implement a registry or clearinghouse.

If the association enforces too much functionality beyond merely a registration tool, the association could potentially be viewed legally as trying to restrict student-athletes from opportunities in the NIL space. And the NCAA is already facing a mountain of legal challenges

Various iterations of an NIL clearinghouse of sorts have also been included in multiple federal reform bill proposals. But the NCAA thus far has failed to gain traction in its pursuit of a Congressional lifeline, and legal experts do not expect one on the short-term horizon.

According to its leaders, the ANSBC process will be comprehensive in vetting of businesses and individuals.

It will run a criminal background check, a sex offender registry check, a professional licensing check, social media checks, a negative news check and much more, including items it will screen for within each of those checks. The company said its automated tool uses AI to detect everything from fraud to reputational issues across more than 100,000 public databases.

It also will continue to monitor the company or individual for a year, running ongoing monitoring on every certified person and company in the database so any changes will be flagged in real time. The third-party entities or individuals pay for the service in order to become certified by the clearinghouse, a designation that will distinguish them from peers in the space.

No credibility or trustworthy score will be given to businesses or individuals – it’s essentially a pass-fail test.

“The goal is to run those reports, interpret them and decide, ‘Is this person or business certified or not certified?'” Altemus said. “Think of it as like TSA PreCheck. You pay so you can get through the [airport security] line faster. They’re paying so that at least there’s some level of diligence that athletes know that has been performed, and they will stand out relative to their peers and competitors who haven’t engaged in the process.”

A directory of certified businesses and individuals will be accessible through the ANSBC website. Additionally, as businesses and people are cleared, they will receive a certification credential. So over time, the expectation is, that athletes will know to look at the third parties and through their various platforms – their website, social platforms, LinkedIn, etc. – to look for that certification and seal of approval.

Why is NIL clearinghouse needed?

So, how do you incentivize people to use the clearinghouse tool?

Jason Belzer, co-founder and CEO of SANIL, said because his company works with numerous agents in the business, it will start mandating that if an agent is working with a student-athlete at one of SANIL’s universities and wants to negotiate a contract on their behalf, they will be required to be registered in the clearinghouse. 

“It will automatically force the vast majority of big agents and even the smaller ones to do it,” Belzer told On3. “And hopefully it will start creating a critical mass that will basically make it a requirement for everyone. Because if you’re not in, you’re not allowed to do it. We certainly as the primary collective operator can require it.”

Why is this needed? As Belzer noted, the Uniform Athlete Agents Act requires every agent to be registered in the state where they represent an athlete. But he ballparks that only 20-30% of the agents that SANIL deals with at any one of its institutions – they work in more than 25 different states – actually are registered in the state. So, he said, you have 70% of the people who are representing athletes from an agent perspective who are not registered under the law.

ANSBC hopes to play critical role in NIL’s future

As college sports moves toward a new financial model, the importance of athletes to identify vetted businesses, agents and financial advisors will only grow – which is why ANSBC believes it will play a critical role regardless of what model is ultimately adopted. 

“It seems pretty clear that we’re going to see some type of revenue-share model,” Altemus said, “Whether that turns into a situation where there is effectively a union – whatever party is going to be working on collective bargaining – we want to be the go-to tool for whatever organization is acting on behalf of the athlete. 

“As athletes are getting paid more, regardless of whether it’s straight revenues or NIL deals, you’re going to need more financial advisors. They are going to need access to other professionals. And this will be the tool to help them do that.”