How much should an endorsement deal be worth?
Some of the wonkiest bookkeeping figures to come from the second category of number crunching, and that involves third-party NIL deals. The CSC hired Deloitte to run a so-called clearinghouse called ”NIL Go,” which will be in charge of evaluating third-party deals worth $600 or more.
Because these deals aren’t allowed to pay players simply for playing – that’s still technically forbidden in college sports — but instead for some service they provide (an endorsement, a social media shoutout and so forth), every deal needs to be evaluated to show it is worth a fair price for what the player is doing.
In a sobering revelation, Deloitte shared with sports leaders earlier this month that around 70% of third-party deals given to players since NIL became allowable in 2021 would have been denied by the new clearinghouse.
All these valuations, of course, are subject to interpretation. It’s much easier to set the price of a stock, or a bicycle, than the value of an athlete’s endorsement deal. This is where things figure to get dicey. Though the committee has an appeals process, then an arbitration process, ultimately, some of these cases are destined to be challenged in court.
”You’re just waiting to see, what is a ‘valid business purpose’ (for an NIL deal), and what are the guidelines around that?” said Rob Lang, a business litigation partner at Thompson Coburn who deals with sports cases. ”You can see all the lawyer fights coming out of that.”