An arbitration decision delivered on Monday sent a strong signal that Name, Image, and Likeness (NIL) deals lacking clear market justification will not be approved. On May 11, a neutral third-party arbitrator ruled that the College Sports Commission (CSC) had correctly applied the rules and parameters of the House settlement to proposed NIL agreements involving University of Nebraska athletes and the school’s multimedia rights partner, PlayFly.
The 18 Nebraska athletes had enlisted the legal expertise of national firm Husch Blackwell in an effort to secure NIL proposals valued at millions of dollars, according to multiple reports and sources familiar with the case. The arbitrator’s ruling is described as a “final, binding decision” with no avenue for appeal. However, the athletes may submit revised third-party NIL deals that adhere to the rules for the CSC’s review.
In a late-afternoon announcement, the CSC disclosed the arbitrator’s judgment. “We are pleased with the arbitrator’s decision to affirm the CSC’s fact-based application of the rules,” said CSC CEO Bryan Seeley in a statement obtained by USA TODAY Sports. “This process shows the system is working as intended: a decision we made was challenged and a neutral arbitrator assessed the facts to inform a final decision. We hope and expect that the student-athletes will submit new deals that comply with the rules, so we can promptly review them.”
While the overall outcome represents a win for the CSC, the arbitrator did not rule on the specific rates of payment for the Nebraska athletes. The lack of concrete NIL plans prevented the arbitrator from determining whether the proposed rates aligned with fair-market value. The CSC noted that the arbitrator found the proposed deals between PlayFly and Nebraska lacked a “valid business purpose” and constituted a “violation of the rule against warehousing NIL rights.” PlayFly was identified as an “associated entity” for Nebraska, a case closely watched by other institutions and their multimedia rights partners, including JMI Sports and Learfield.
Furthermore, the proposed deals funded by PlayFly were deemed not to satisfy the Valid Business Purpose rule because they did not involve goods or services offered to the general public for profit. The arbitrator also pointed out that the “warehousing” of student-athletes’ NIL rights—rather than direct activation—essentially stored their images for potential future use without a defined plan for actual application.
Both the NCAA and the CSC had responded to the initial filing on May 4 in the United States District Court of Northern California. In that response, the NCAA’s attorneys argued that “the parties also agreed that it would undermine the transformative Benefits Pool structure established by the Settlement, and the competitive balance it sought to create if student-athletes could receive payments by the affiliated parties that are characterized as NIL but, in reality, are just pay-for-play compensation from a third party.”
In a legal declaration filed the same day, Seeley also addressed the intertwined nature of multimedia rights partners and athletics departments. “Institutions have made arrangements with institution-affiliated third parties (including but not limited to MMRs and apparel companies) to divert money into ‘NIL pools,’” Seeley wrote, “wherein the third party reallocates corporate sponsorship dollars, which otherwise would be paid to the institution, to fund these student-athlete NIL deals without a valid business purpose.”