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A new NIL loophole? Lawyers push to free media deals from college pay rules
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- A new NIL loophole? Lawyers push to free media deals from college pay rules
A legal filing by plaintiff lawyers in the House Settlement seeks to have name, image and likeness (NIL) deals between colleges athletes and media rights holders considered separate from what schools can directly pay players under the terms of the historic agreement approved last summer.
The legal maneuvering is the latest in the back-and-forth that first surfaced in March when 18 Nebraska football players saw the College Sports Commission reject more than $1 million in third-party NIL deals with PlayFly, the school's multimedia rights partner. The athletes retained the national law firm Husch-Blackwell in their pursuit of arbitration, according to multiple reports.
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After House plaintiff lawyers filed their motion Monday, April 20, in the United States District Court for Northern California that seeks to classify athletics programs' multimedia rights partners as not "Associated Entities or Individuals," the CSC responded with a letter and statement shared with USA TODAY Sports.
"The CSC's application of the rules on associated entities is straightforward and fact-based," Bryan Seeley, the College Sports Commission CEO, told USA TODAY Sports late Monday, April 20, via statement. "Those rules, which plaintiffs' counsel agreed to, clearly state that entities directed by schools to assist in recruiting are associated entities.
"Under the settlement, arbitration is the proper forum to challenge the CSC's application of these rules. This motion was filed to evade an imminent arbitration in which the CSC will prove, based on evidence, that a school's multimedia rights partner is an associated entity."
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This motion is the latest legal development in the courtroom of federal judge Claudia Wilken and is assigned to magistrate judge Nathanael M. Cousins, who per the legal documents is scheduled to address the matter in the U.S. District Court of Northern California on May 27, 2026, at 11 a.m. PT.
This filing contends that "NIL agreements involving Multimedia Rights companies are not subject to review by the Collegiate Sports Commission" with the plaintiffs' contention that MMRs are not associated entities of a respective college or university and its athletics programs.
If successful, the plaintiffs' motion would clear the path for entities like Alabama's Crimson Tide Sports Network and Michigan Sports Properties operated almost exclusively by companies such as Learfield and Playfly and additional multimedia rights-holders to broker direct deals with student-athletes that would not be subject to CSC's NIL GO clearinghouse.
A school's multimedia rights-holder, for example, could declare that postgame on-field interviews with student-athletes are worth payment of an amount set by the rights-holder and not subject to review by the CSC. In that scenario, such a structure could similarly work in other sports such as on-court interviews in basketball or an on-field interview with a player after a walk-off home run in a baseball or softball game.
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The CSC provided an additional letter to USA TODAY Sports from March 26 that pushed back against "widespread reports concerning CSC enforcement matters" and was signed by Seeley, as well as representatives of the – ACC, Big Ten, Big 12 and SEC.
The document noted that "70% of deals [brought to the NIL GO clearinghouse] had been resolved within seven days ... " and "50% had been resolved within 24 hours."
In highlighting Bylaw 22.1.3, the "Involvement of Associated Entities or Individuals in Student-Athlete Name, Image and Likeness Activities" in its letter, the CSC noted that "an associated entity or individual shall not enter into an agreement with or provide payment to a prospective student-athlete or student-athletes unless the agreement or payment terms, as determined by the name, image and likeness clearinghouse, are for a valid business purpose related to the promotion or endorsement of goods or services provided to the general public for profit, with compensation at rates commensurate with compensation paid to similarly situated individuals with comparable (NIL) value who are not prospective student-athletes or student-athletes of the institution."
Further, the letter said, in part, the following:
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Institutions with specific sponsorship or participation guarantees in third-party contracts are making arrangements with those third parties (e.g., MMR partners, apparel companies, or events they are participating in) to divert some or all of that guaranteed money into "NIL pools." These arrangements instruct the third party to take the school's guaranteed sponsorship dollars or participation rights fees and allocate them to particular student-athletes through manufactured third-party NIL deals (as directed by the member institution) as part of the recruitment and retention of those athletes.
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MMR partners or their campus-specific entities are providing offer letters alongside revenue-share offers from the institution to prospective and current student-athletes indicating the third-party NIL they will procure for those athletes and in some instances guaranteeing that amount or attempting to pay the athletes up front before such deals and sponsors are ever identified, never mind finalized.
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Other third parties are devising schemes at the direction of their institutional partners to collect donor money into a pool and use this money to pay student-athletes while offering the endorsement of the student-athletes "free" to business or charities in the local area.
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Athletes are reporting deals that suggest that they are receiving compensation to promote the institution's MMR partner itself or its affiliates rather than a third party sponsor the MMR arranges a deal with—without clarity as to the goods and services are that are being providing to the public for profit.
This particular case carries potentially far-reaching impact in the collegiate NIL space, particularly as it pertains to the schools' multimedia rights partners who oftentimes invest hundreds of millions of dollars into those properties. In 2025, the University of Tennessee announced an extension to its partnership with Learfield/The Vol Network while the University of Kentucky extended its arrangement with JMI that UK officials declared was worth "at least $465 million."
On April 14, 2026, Learfield announced it was being acquired by private-equity group TPG, which bills itself as "a leading, global alternative asset management fund." The SBJ reported that Learfield's sale to TPG carried a price tag of nearly $2 billion.
This article originally appeared on USA TODAY: NIL Lawsuit Targets Media Rights Deals in Latest House Settlement Clash
