Collectives vs. the NIL Clearinghouse

Last Updated on July 23, 2025

Update as of July 23, 2025:

Yahoo Sports is reporting that the House attorneys and NCAA/Power Conferences have reached an agreement that collectives will be treated the same as other businesses and won’t be held up by the “valid business purpose” requirement. However, Pat Forde reported the CSC says it’s not official yet.

Update from Yahoo Sports as of July 11, 2025:

Jeffrey Kessler and Steve Berman, co-lead counsel on the plaintiff’s side in the House case sent a two-page letter to the NCAA that said in part:

“There is nothing in the Settlement Agreement to permit (NCAA and conference) or the CSC, acting on their behalf, to decide that it would not be a valid business purpose for a school’s collective to engage in for-profit promotions of goods or services using paid-for student-athlete NIL,” the letter reads. “To the extent the NIL payment is for the promotion of a valid business purpose, it is irrelevant whether that payment comes from a NIL collective or any other third party.”

A CSC spokesperson provided a statement to Yahoo Sports later in the day:

“The guidance issued by the College Sports Commission yesterday is entirely consistent with the House settlement and the rules that have been agreed upon with class counsel. The defendants have been in close coordination with class counsel on the key provisions in the memo and will continue to work with them to resolve any concerns they may have.”

Original Story:

I started hearing a rumor yesterday that the clearinghouse wasn’t going to approve any deals with collectives that involved promoting the collective, so I reached out to a few friends. None of them had any deals declined, but they also didn’t have any approved.

Then this morning, the College Sports Commission sent a memo to schools and posted clarification for collectives on its website. Here’s a summary of the important parts:

• An entity whose business purpose is providing benefits to athletes (like a collective) does not satisfy the “valid business purpose” requirement.
• Even having an event open to the public and charging admission (like a golf tournament) doesn’t work if the business’s sole purpose is to pay athletes.
• Even selling merchandise to the public doesn’t satisfy the requirement if the merchandise is being sold to raise money to pay athletes.
• What would satisfy the requirement is if the business has a broader purpose outside of paying athletes (such as a golf course or apparel company); this is true even if the collective is the one paying the money to the athletes, as long as the source of the funds was from the entity with a valid business purpose (allowing collectives to act as marketing agencies)

If you want to read their full text on this, see here.

I did get a message from one agent today who said they had a collective deal cleared that involved promoting the collective just after the clearinghouse opened, but that seems to be an anomaly based on the discourse over on X today.