Film Room: College Sports Commission and SCORE Act updates

College Sports Commission Update

On July 10, Ross Dellenger of Yahoo! Sports published a memo sent by the College Sports Commission (CSC) to the membership. The memo noted that the NIL Go platform is up and running and that the CSC has cleared over 1,500 submitted deals. The memo also noted that several deals “cannot be cleared as submitted” and added guidance regarding the CSC’s interpretation of what constitutes a “valid business purpose.” 

The guidance takes a restrictive view of collectives, noting that “[a]n entity with a business purpose of providing payments or benefits to student-athletes or institutions, rather than providing goods or services to the general public for profit, does not satisfy the valid business purpose requirement.” In other words, any deal in which a collective pays a student-athlete in exchange for services provided to a collective (as we know them) would lack a valid business purpose. (Deals that a collective brokers between a student-athlete and a third party whose purpose is to provide goods and services could satisfy this requirement.) 

As noted by On3’s Pete Nakos, collectives have a different view. Importantly, class counsel for plaintiffs in House apparently shares that view. On July 11, Dellenger reported that class counsel wrote to other parties in House, describing the CSC’s “guidance as ‘not consistent’ and ‘undermining’ settlement terms.” According to Dellenger, class counsel “urge[d] the CSC to retract the July CSC Memorandum and clarify that the valid business purpose requirement applies to NIL collectives in the same manner as any other entity.”

The ultimate position taken on collectives will have a major impact on shaping the next era of college athletics. Regardless of where things land precisely, this much is clear: As we’ve noted in prior editions of Film Room, the best, most reliable way to navigate the new framework is to facilitate novel third-party sponsorship and NIL deals that deliver objective value to student-athletes while inviting limited CSC scrutiny. 

SCORE Act Update 

On July 10, the SCORE Act was introduced in the US House of Representatives. Here’s a link to the text of the bill.  

According to a press release from the House Committee on Energy and Commerce, the SCORE Act would create a federal standard that addresses the “chaotic patchwork of state laws, legal uncertainty, and growing threats to traditional sports programs” by “[r]eaffirming the student-first model; [d]efending Olympic sports; [s]hielding athletes from being exploited by bad actors; [e]stablishing clear regulatory authority and enforcement mechanisms; and [i]mproving transparency and accountability to better protect athletes and universities.” 

Notably, the bill enjoys bipartisan support. Not surprisingly, it has some critics, including in Congress. On July 14, Steve Berkowitz of USA Today reported on a letter from Sen. Maria Cantwell that noted concerns. Just yesterday, on July 15, the SCORE Act passed the Commerce, Manufacturing and Trade House Subcommittee.

As the SCORE Act is subject to markup and change, we’ll hold off on breaking down its potential impact on college athletics, which could be substantial. We’ll keep you posted on the bill’s progress as it moves forward.