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NCAA & Name, Image, Likeness Updates & Anarchy in America! Oh My.

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NCAA & Name, Image, Likeness Updates & Anarchy in America! Oh My.

The last four years have been a watershed moment in amateur college sports. From the possibility of losing eligibility for pursuing endorsement offers in 2019 to signing multi-million dollar deals in 2022 this is a new era for student-athletes. Sports lawyers will learn about how we got here and how the intersection of NIL deals, the NCAA Transfer Portal & Boosters have changed the college sports landscape. And we know this much…where we are now and what is allowed or not allowed today will change rapidly and frequently. It will be critical for lawyers to stay up to date as the NCAA, federal legislators and states continue to jockey for position in controlling the direction of college sports.

Transcript

- [Brian Brunkow] All right, hey, everybody. Welcome to NCAA and name, image, likeness, otherwise known as Updates and Anarchy in America and that is no joke. I mean, if you've been watching, what's been happening with college athletics, name, image, likeness, the transfer portal, boosters and collectives and tons of cash. This has been a pretty exciting watershed past few years. I mean, you look at the NCAA back in 2019, if a kid was taking endorsement money, he or she loses their scholarship. But in 2022, they, it's full guns ahead. It's they can go out there and get all the money they want as long as it's fair market value for name, image, likeness. So things have changed quite a bit. So we're gonna do this update today on the NCAA and name, image, likeness. My name is Brian Brunkow. I'm a Seattle based, California and Washington attorney. Most of my background is in mortgage compliance. I also work, do seminars for high school coaches on student athlete development of coached high school football. I've written a couple of sports parenting books on student athlete development. I love sports, so this is something that is kind of a passion project for me. Compliance is not that interesting, but NCAA compliance, just because of the cash involved and some of the characters, it can be pretty fun to kind of keep track of what's going on. So hopefully you'll have a good time today. This is really designed for if you're involved in any kind of sports law, working with agents, working with athletes, maybe you're thinking about getting into athletic compliance at the high school or college level? Hopefully this will help you out a little bit. And then for those of you that are just filling up credits, hopefully this will be a good break from tax law and administrative law, it will be a little bit more fun I hope. Three things to really keep in mind as we get going here. This is such a dynamic area right now. There are changes literally every day. Things will go out of date pretty quickly as we go along just because there's such a fight right now between, you know, the NCAA, the state's federal proposals on how to handle all this stuff. So there's changes coming up all the time. So just kind of keep in mind. I've got some resources at the end and you've really gotta keep up to date with state, federal NCAA, as well as school and conference rules, 'cause stuff is changing daily. I can't stress that enough. So rapid changes. That's just part of the gig right now. Second thing to keep in mind, anytime you have rapid changes or anything new, the regulatory agencies are looking for violators, 'cause they wanna kinda set the buoys on what you can do and what you can't do. So anytime you have something new, the agencies are out there and they are looking for violations. So you don't wanna be the, you know, anytime something new, you don't wanna be the first person over the wall and you don't wanna be the last. So just kind of keep that mind, they are out there looking for violations. So stay out of the gray area. And lastly, leverage has shifted at the NCAA level. It used to be, you know, it's kind of coaches league. Big, big names in coaching. Totally shifted. At this point with name, image, likeness, and the transfer portal all the leverage has shifted to the athletes themselves and the boosters who have the cash. So kind of keep that in mind as we go along. So rapid changes. They're looking for violations. And leverage is really with the athletes and the boosters. So the roadmap for today, we're looking at the introduction, we'll look at name, image, likeness, where we're at now. We'll take a look at the boosters and collectives, and we'll talk about what a collective is. We'll discuss the one time transfer portal, which allows student athletes to move to a different school if they're unhappy for any reason. And they can do that and as long as they're eligible, they can compete immediately. They don't have to sit out a full year like they used to, which was just really unfair. And then we'll do around where we're at now, where things might go tomorrow and some predictions on what I think might be ahead for us. So let's do the introduction, and I love this quote from Regional High. It pretty much tells you about college athletics. You know, they're talking about the football player, and "Wow, does he really live here? I thought he just flew in for the games." And that's kind of where we're at today with student athletes, whether they're at the high school level or the college level. It's pretty dynamic and athletes are being recruited and courted by the people with cash. So it's kinda where we're where we're at, what we're doing. So let's look at the history of college sports. We'll kind of go through the history and kind of show you where we're at today. So the history of college sports and pay for play. So in 1904, and this is kind of funny, it kind of shows you that history repeats where we're at today. So in 1904, James Hogan, big football player at Yale, signed an endorsement deal with J T Wilcox cigarettes. Yeah, you probably wouldn't find that today. College players signing an endorsement deal with a cigarette company, but that's how they did it back in the day. 1939, University of Pittsburgh, they had a player's strike because the college players wanted higher pay. That's where things were at. 1948, college regulatory crew got tired of all the stuff, the money, backdoor dealings, cash under the table, endorsements, and they said, we're gonna stop all that. And they signed what they called the Sanity Code and they said student athletes could get scholarship money, but they could not be paid and they could not take endorsement cash. And it was kind of that way for decades and decades, up until 2019 out in California. Love we're in. California's always trying something new. So 2019, Gavin Newsom signed Senate-approved Senate Bill 206, and that was going to allow for the first time college student athletes in California to get paid for name, image, likeness, like any other YouTube and Instagram influencer. And they said, let's be calm about this. We're gonna implement this in 2023. So signed in 2019, take a breather, we'll start this up in 2023. And that started the floodgates. Florida said, forget it, California you're not doing that to us because we wanna recruit kids too, and if California's the only state that allows name, image, likeness, we're gonna lose all our recruits. So Florida stepped in and said, we're gonna one up ya. Go ahead California, do your deal in 2023, we are firing ahead in July, 2021. Other states started to follow. The NCAA said okay, we gotta get on top of this with something. So last year they signed what's called the Interim NIL Policy, and in 2022, they came out with an update regarding boosters and collectives who have completely, this is a new day and age. The boosters and collectives are in control with the cash 'cause they are getting NIL deals funded or facilitated for athletes. So we have a new policy, we'll take a look at that. But that's where we're at and we're back to kinda 1904 where kids can get endorsement deals, probably not with a cigarette company. That's probably not gonna be allowed, but things have changed. Some stats, lots of cash. 2016, NCAA signed an $8.8 billion deal for March Madness, 2017, 7.3 billion for football playoffs. Drexel university did a study and men's hoop players, average player, their fair market value for the school is around $265,000. But the salary for a student athlete is zero. They get your scholarship, but they cannot make salary. So it's pretty much a one sided deal. Let's say USC, you're all in scholarship, including tuition, a room and board, healthcare, all that is 150 K, which is nice. But if your fair market value is 265 K and you're getting capped at 150 K, probably not a great deal that a lot of us would sign on for. So we're gonna get some changes on that. Also, the student athlete schedule. Gotta keep in mind this is a full-time gig for these kids during the season. They have to go to class 15 hours a week. They've got study hall, roughly 30 hours a week, two hours per class. And then you're capped for athletics between practices and games at 20 hours a week. That's a 65 hour work week that does not include, you know, voluntary workouts. It does not include your travel schedule. If you're flying from LA down to Miami, that flight time doesn't count against the athletic cap. So you gotta keep your grades up. You gotta keep healthy. And this is a full-time job. So let's try to find ways to get some money to the kids, which is what we're gonna do with name, image, likeness. Get a YouTube channel, you know, get paid for it. They go to camps with their brand on it, get paid for that. Do some speeches out at used car lots and get paid for that too. So name, image, likeness, he we are. And kinda like Nick Saban and Jimbo Fisher, it's just, it's a battle between the powers that have the money. And Nick Saban said earlier this year, we were second in recruiting, Texas A and M was first. A and M bought every player on their team, made a deal for name, image, likeness. Jimbo Fisher, down at Texas A and M didn't really appreciate that. He said, "It's despicable that we have to sit here and defend people of this organization. You know, we got 17 year old kids and their families. Some people, talking about Saban, think they're God, well go dig into how God did his deal." So, not a lot of love loss between Jimbo Fisher down at Texas A and M and Nick Saban. And these two guys worked together for a long time as coaches. So, things are changing. The gloves are off. So this is kind of what it looks like in July of 2021, because the floodgates opened with the state saying, "Hey, screw you NCAA. We're moving forward. You guys are moving to the sidelines."" And the NCAA said, "Okay, we gotta get something in place that allows this to work temporarily." And so it's an interim policy. And so all the divisions signed off on this policy and they suspended the NCAA NIL rules, which did not allow student athletes to get paid for NIL. They said, "Yeah, you can do it, as long as you're following conditions and it applies to all sports." So right now we have this interim policy and it's gonna be with us for a while. And the NCAA said, we'll have this interim policy, a temporary policy until federal legislation is signed as an umbrella for the country or the NCAA adopts new rules. For the meantime at schools and conferences can adopt additional rules in addition to what the NCAA has set up, which is not much. The NCAA has basically told the state's and the schools to kick rocks and figure out all the problems on their own. So here's the policy for the NCAA as of July, 2021. Student athletes can pursue NIL opportunities consistent with state law. If you're a student athlete in a state with no NIL law, you can pursue NIL without violating NCAA rules, which means some states have signed NIL laws. Some have not, and as long as the student athlete is following the rules and regulations that exist within the state, could be conference and school only, or it could be state law and conference and school, as long as you're following those, you're fine, you're good to go. You can go out and get a NIL deal. Student athletes can use professional service advisors, which is agents to go get those NIL deals. So you can use an agent to solicit and negotiate NIL deals. If you're a student athlete, couldn't do that previously, you would lose your scholarship if you were doing that. And then also student athletes gotta report the NIL deal to the school consistent with the school conference and state law. The NCAA said, don't bother us, we're out. We tried. NCAA basically said you broke it you bought it. And it has turned into a pretty big mess at this point. The NCAA has said we're not gonna monitor state law. Colleges are the resource for state law questions on endorsements and tax issues and everything else that goes along with contracts. The NCAA will enforce improper inducements. So if a booster, or coaches or a school says come sign with us at USC or UCLA and we'll give you access to a bunch of NIL money. Can't do that kind of stuff. No inducements for recruiting and transfers. And you can't do pay for play deals. Those are really the two things that the NCAA is gonna be looking at. Illegal inducements and then pay for play. Pay for play is, a booster says here's a NIL deal. If you score 10 touchdowns, I will give you a million dollars. You can only pay the athletes based on their brand value. You cannot pay them to score touch downs or get a couple of hoops. You know, part of that is gambling and game fixing and things like that. So it shows we wanna make sure that the NIL deal is just based on their value as an athlete. All right, let's jump in here, Q&A on the interim NIL policy. So what is NIL activity? Pretty much any activity where the student athlete is using their brand for commercial promotion, promotional activity. So again, it's Instagram channel, could be going down to the used car lot to do a speech. It could be at student athlete who sets up a camp, branding it with their own name, image, likeness. That's pretty much what NIL is. What's NIL impact on prospect of student athletes, high school athletes? Really the same rules apply at the NCAA level for PSAs and SAs. You just can't be recruiting. You can't be using NIL for recruiting and you can't have it pay for play. Now, you have to consult state law because some states allow high school athletes to get paid for NIL and some do not. So again, the rules are all over the place between the states and you really gotta consult your state law. California allows high school athletes to get paid and a few others do as well, but it's not every state. So you gotta be really careful with that. But the NCAA says we don't care if you're a PSA, if you're an SA, go get your NIL money. Just follow state law and follow the rules of your school and your conference. Also, one more thing here, too. What is required for a NIL deal? This is also really important for the NCAA. There's gotta be a quid pro quo. You've gotta be doing actual work. You've gotta be showing up for the speech to get paid for that. The payment has to be based on fair market value. And there cannot, and I'll probably say this 20 times, there cannot be any inducements or pay for play. No inducements, go to school here, get a NIL deal. Transfer here, get a NIL deal. Can't do any of that kinda stuff. And then no pay for performance. You can't tell the goalie for the females soccer team block every shot and you will get $100. No pay for play. So can a PSA or SA sign NIL deals with boosters? Yes, they can. So we're thinking boosters, like, you know, Buddy Garrity from Friday Night Lights, that's kind of a booster, they financially support the athletic programs. This is where it's gonna get tough over the next few years 'cause boosters have a bunch of cash. You get some hedge fund people down in Stanford University with billions of dollars and a lot of time. They can set up a NIL deal with these athletes, as long as again, no inducements and no pay for play. Can international student athletes sign a NIL deal? Yes, they can, it is allowed, but this is a really fluid dynamic area, because if you are an international student athlete, you're on, you know, some kind of visa, which is above my pay grade, but there's different kind of visas out there. If the international student on scholarship gets a NIL deal that can impact their immigration status, and there's gonna be international taxes using all that kind of fun stuff that the kids gotta deal with. It's a fluid situation. It's a little bit unfair now. But technically, an international student athlete can sign a NIL deal, just like somebody from Cleveland, but they could lose their immigration status and get kicked out of the country for going down to Shaky's Pizza, doing a speech and getting 50 bucks. This is gonna change, but you gotta keep in mind, that's the kind of stuff that we're dealing with between all the rules and regulations with the states and the feds and the taxes. And it's just, it's a mess for now. So the NIL deal process, it's a very simple process for the college student athletes to get this done. And again, that's the NCAA saying, washing our hands. This is all you gotta do. It's up to you and the school and the state. So a company or a booster will present a name, image, likeness deal to a student athlete and or the athlete's athlete. The student athlete and the agent will evaluate it, make sure that there's no pay for play in the contract. Can't have any kind of inducement, gotta follow school rules, which probably say you can go out and get an endorsement deal, but probably not for a cigarette company, then you gotta follow state law, easy enough, sign the deal. And the student athlete has to report the NIL activity consistent with state law and school policy. So some schools might say, you gotta get it to us five days in advance. Some schools might say we need to know about it within 48 hours, and you have to do X, Y, Z before you get this done. So that's basically it for getting the Nil deal done itself. The NCAA is out, it's up to the student athlete and his or her representation, the school, the conference, and state law to figure out what is and is not allowed and what the reporting requirements are. So, this is kind of a mess that we talked about. This is kind of where things are at right now. California jumped in, in 2019. They said, we'll implement NIL in 2023. So if you're going Stanford, UCLA, USC, starting in '23, there we're gonna allow NIL. And again, Florida jumped in and said, no, we're not gonna allow that you're gonna steal all our athletes. We're jumping in 2021. NCAA said okay, gotta get this policy in place. And now what we're seeing, we talked about that process, but here's what we're seeing now. So one of the biggest states right now for college athletics is obviously Alabama with Nick Saban, and Alabama, they signed a NIL deal in the state of Alabama. But because of all these changes and the impact on recruiting Alabama signed their deal, the NIL deal, NIL law, and they repealed their NIL law within a year because it was too restrictive on what? Alabama's NIL law, which was to protect the student athletes and then everybody else, they said it's too restrictive on recruiting. So, they passed it and they put it in the trashcan within a year because it's too restrictive. And Alabama said to the schools, Alabama, Auburn, go ahead and do this on your own we're not gonna impose a NIL law on you. So that's where we're at. This is, as they say, follow the money. And that's pretty much where we're at with college athletics. Let's wrap up this part on where the NIL policy is for now. NCAA says peace out, we're left with state patchwork. Some states have NIL laws, some do not. Some states allow high school athletes to get paid for NIL some do not. For one example, you want to go to the California CIF section 212, and you'll read over what they allow for high school athletes. High school athletes can get paid for NIL but they can't be using high school logos, colors, and images and things like that. And there are federal proposals still sitting out there. Or I think the last time I checked there was around seven or eight federal proposals. Maybe there's around 27 at this point, but they're all stalled out because there's just bigger stuff to get done. And they're just putting it all on the states and the schools and the conferences at this point. So let's jump in and talk about boosters and collectives. We talked about the NCAA, got the interim rule in place. And of course, boosters, you've got a lot of smart millionaires and billionaires with a lot of cash, a lot of time, and they've got big egos, and they want their football program or basketball program to be at the top of ESPN. So they're gonna find ways to get involved and get these NIL deals to the kids. And so let's talk about that a little bit. And I like this quote, this is from John Schuh former coach, and he says, "The coaches are making millions of dollars and they're coaching players whose parents live below the poverty line." And that's kind of where we were at for decades and decades. You've got the coaches making bank. You've got the kids on scholarship. Yeah, that's great. But not a lot of spending money. If your family's destitute and you're on scholarship and you run out of food money on the dorm food card at the end of the month, what do you do? So this is gonna allow the kids to make money. But again, the downside is sort of the unintended consequences with the boosters and collectives, so let's jump into that. So what is a booster? Again, think about that Buddy Garrity from Friday Night Lights. They are promoting the athletic program, not necessarily the school, but they're promoting the Duke basketball program, the Alabama football program and they're putting time and money and effort into this to support the athletic program. That's what it is in a nutshell. So a collective. A collective is a new term in this field, and it's a third party organized under state law to pool funds and funnel NIL opportunities to student athletes at specific schools. So it's a group of boosters who to get together and they say how do we recruit, unofficially, all the top kids to our school and get money into their pockets so we can keep our football program going? That's pretty much what a collective is. So the impact. The NCAA came out with interim NIL guidance regarding boosters and collectives in May, 2022. And this is what the NCAA said to try to rein in the boosters and the collectives. They said, "If a collective qualifies as a booster there's gonna be strict NCAA rules regarding what they can and cannot do." And pretty much we know collectives for the most part are going to be considered boosters because they are promoting the athletic program. Collective is a booster, which means they have to follow the strict NCAA rules on boosters. Boosters are not allowed to be involved in recruiting athletes to the school. They can't be manipulating and trying to get kids to transfer into the school, and they cannot be involved in any sort of pay for play. So bottom line, boosters, very strict rules, as far as what you can and cannot do. Schools go on probation all the time because of the acts and behaviors of boosters. Collectives are considered boosters, which means they have to follow these strict rules. And this is what the NCAA came out with in this year, 'cause they had to start to rein in just how outta control some of these collective are getting. So this is the guidance that the NCAA provided in this new guidance in May of 2022. They said that recruiting conversations with boosters and collectives and PSAs per prospect, student athletes, high school athletes is not allowed 'cause collectives are boosters and boosters cannot be involved in recruiting PSAs. And that includes PSAs and friends and families who it might be the barber, might be the personal trainer, it could be the priest, boosters cannot be using their influence indirectly to work on family and the friends to get that kid to attend USC or Alabama or University of Miami, right? You gotta think the boosters are smart enough to know they are not gonna go directly to the PSA. The boosters use the third party to out another third party, a friend of the PSA, and they kinda work those channels and set up a lot of screens between them and the athlete and family. The NCAA wants to stop that but that's kind of the reality of what we're dealing with. They cannot be involved in recruiting or enrollment at a specific school. So the booster can say, yeah, we offer NIL deals, but it's not gonna be contingent on you attending Stanford. It's not gonna be contingent on you staying enrolled at Stanford for four years. You can offer a NIL deal to a student athlete based on their athletic ability, but you can't put those kind of contingencies on as far as forcing them to go to a specific school to get that deal. Now the booster can say, I only offer NIL deals to student athletes at a specific school, but they just can't make that a contingency of actually getting that NIL deal. Coaches. Coaches cannot play matchmaker between PSAs and the collectives. How many of us believe that's being abided by? Hopefully not too many? And the coaches cannot communicate with the PSAs for the collective. So coaches gotta stay out of the way. And again, we're trying to prevent coaches, and collectives and schools trying to find sneaky ways to get the kids to go to the school and using NIL to get that done. I mean there's some, one of the colleges down in Texas, it might be Texas A and M, it might be Texas Tech, I don't recall, but, they have it set up where these boosters and collectives are paying all of the offensive lineman 50,000 per year. And it might be Oklahoma, one of the big schools, but down south, they pay, and there's a booster collective organization and they pay the offensive lineman, 50,000 per year. And the linemen go out and give speeches and do that kind of stuff. So the boosters are paying the offensive lineman 50,000 per year when they're enrolled at the school, but they cannot go out there to these high school athletes and say, we're gonna get you the same deal. That is left unsaid, but we all kind of know what the deal is. If all the offensive lineman at Oklahoma are getting 50 K per year to go out and do some speeches, pretty much know if you're a high school student athlete, well, if I go to that school, I'm gonna get 50 K per year at the minimum. So that's how boosters and collectives are gonna work at their magic to get money into the pockets of the kids. And again, I think it's great that we're having these opportunities to get money to these kids 'cause a lot of them come from pretty tough backgrounds. We just gotta kinda rein in some of the behavior with the boosters and collectives, as far as them being smarter than the rules that are set up and finding ways around it. So more NIL guidance for PSAs and student athletes. They wanted to make sure, this gets a little bit convoluted here for NIL agreements. There cannot be a quid pro quo between the NIL deal and initial or continued enrollment. So no contingency between, only if you go to Notre Dame will you get this deal. But for the NIL agreement itself, yeah, there has to be an actual quid pro quo. You have to go down to the car lot and give this speech to get paid for delivering that speech. The payment is gonna be based on fair market value, and that as we know, is pretty subjective. I mean, what is the fair market value and how do you determine that? It's tough to say. Fair market value is pretty much what anybody wants to pay. And if you are a billionaire and you've got some time and money and you say, well, look, this kid's fair market value is $85,000 to come in and deliver a 20 minute speech and sign a few autographs. But, maybe that's what the fair market value is, who knows? But, there's going to be ways to find your way around the rules if you want to, and you can set up a one page rule, you can set up a 70,000 page IRS tax law, and there's gonna be smart people out there that will find the ways around it. But these are kind of the guidelines that they have in place. For the NIL agreement, can't be a contingency between you only get this NIL deal if you go to this school, or if you throw this many touchdowns. You can't do that kinda stuff. But there must be a quid pro quo between going out there, delivering the speech and getting paid. That payment's gotta be fair market value, and there cannot be any kinda pay for play on that. So here's some NIL guidance for NCAA legislation that you gotta keep in mind. And you know, again, if you're going into athletic compliance at the high school, college level, or if you're working with athletes, working with agents, you gotta know this kind of stuff. So, this one's a little bit sticky and schools are doing some dicey stuff. I would say it's kind of that they're being a little bit too involved with helping student athletes get these NIL deals. Now college athletic departments, they can always set up educational programs to help student athletes on their branding. They can set up, you know, public public speaking classes and things like that and educate them on contracts. They can set up that kind of stuff, but what they cannot do, is the athletic department should not be involved in trying to get deals for student athletes. And that's under bylaw 11.1.3. Now, some schools prior to the guidance that came out in May of '22, they may have gotten a little bit close with getting those deals done. And you gotta be really cautious with that. You know, now it's perfectly fine for a school to broadcast the type of NIL deals that kids are getting at their school. You can say hey, this is the kind of money that kids are making if they're going to our school, but you cannot use that as an inducement to get the kid, come to school. Show up at our campus and we'll get you a deal. You can't do that kind of stuff. You can just say hey, this is what is happening today. Can't guarantee it's gonna happen to you. But this is the kind of money that people are making. Good stuff. So, before the PSA signs a letter of intent to attend a school, the school is only allowed to publicly confirm that they are recruiting that athlete. What they cannot do is say, well, if she comes to our school and plays hoops, she's probably gonna make this money. We've got this NIL deal all set up for her and she's gonna have access to these hedge fund managers and these Hollywood agents and should, you can't do that stuff. If it's a PSA, you cannot be doing that. You can only say, yeah, we are recruiting this person, and just leave it at that. And again, it's just all these sort of, there's gonna be tons of gaps between the rules and in ways to play the games. Doesn't matter if it's one page rule, doesn't matter if it's a 70,000 page document, they'll find the way around these rules. So, do what we can. Boosters cannot engage in recruiting or solicitations with PSA in the family, we talked about that. Boosters and collectives cannot be doing that kind of stuff. You can have a NIL deal signed to the booster, but the booster can't say show up at Notre Dame and I'm gonna get you a $50,000 deal for giving speeches down at the car lot. And the schools, this is where they're on the hook. The schools will be responsible for any kind of impermissible recruiting by a booster or collective. And that's kind of the, that's kind of where the NCAA will punish the schools. And that's where they do have a little bit of control on keeping the stuff in line, is that when the boosters get out and step outta line, then the NCAA can still jump in, as weak and as, NCAA, doesn't really have a whole lot of authority anymore. But when you do have those kind of violations, boosters step outta line, doing inducements, doing pay for play, got that kind of stuff going on. NCAA, can't really punish the booster all that much, but the NCAA can put the school on double secret probation. And that's not where schools wanna be, because if you're on probation, guess what? If you're on probation and you can't go to the March Madness tournament, can't go to the college football playoffs. Student athletes are gonna say, "You know what? I'm not gonna go to that school. I'm not gonna go to USC if they're on probation, I'll just go to UCLA." All right. So let's jump in to the collective formation. And this is where it gets, this is where it gets kind of fun. Again, we talked about these are smart people with a lot of money and a lot of resources with people who can read the rules in the contracts and find a way around it. So, this is how you set up a collective if you're a booster. And again, a booster, they're supporters of the athletic program. You bring a bunch of boosters together and they start pooling money and trying to find ways to fund or facilitate NIL deals for student athletes. And this is one of the fun ways that they can set up their collective. They can set up a collective as a nonprofit charity. It's hard to believe, but they can do that. Whether the IRS accepts this is still kind of up in the air. We got, this is all very new. So we gotta see how this plays out. But this is one of the smart ways that they do is they set it up as a feelgood nonprofit. And a student athlete goes out and picks a charity of his or her choice, and it could be a legitimate charity. They'll say they wanna support Greenpeace or the Boys and Girls Club, whatever it is, it could be very legitimate charity. They go out and pick it, and the collective is gonna pay the student athlete to do services for that charity. So it's gonna be, you know, videos on YouTube. It's gonna be speeches. It's gonna be writing blog posts, and showing up at events. But the SA picks the charity Greenpeace, collective is gonna pay the student athlete for providing services to that charity. And then the donations can be tax deductible. So it works out as a pretty slick way to set up a means of funneling money to the student athletes. Now, again, it could be a legitimate charity, but you gotta wonder, is this a legitimate nonprofit 501 as they intended to be? Or is this being used as a feelgood, positive branding way, for the collectives to funnel money to the student athletes? So the second way to set it up is just a typical for-profit. And that's just, you know, it's gonna be subscription levels. It could be sponsorship donations and that they get, the collectives can set it up where they are doing NIL deals directly with the student athlete, or it could be the collective facilitating deals with other companies, just tons of different ways to get it set up. And it could be a subscription program where the student athlete has, they have a subscription model where it's you pay, the public pays 10 bucks a month, and they get one recorded interview with the student athlete per month. And if you jump up to the $50 subscription level, you can sit in on a live Zoom call once a month with the student athlete, but there's just whatever creative ways you can cut this up, they can set it up like that. But again, collectives, it can be a nonprofit, feelgood, warm and fuzzy, or it could be a for profit. So let's kinda wrap up what we have for boosters and collectives. Really key points to keep in mind, you know, the schools they're still on the hook for all the bad acts of boosters and collectives, 'cause the NCAA can't really go after the boosters and collectives very well, but they can damn well go after the schools put 'em on probation, which is not where they wanna be. 'Cause you're on probation. Can't go to March Madness. Student athlete is gonna pass on your school and go to the one down the road. So recruiting inducements can't do that. That is gonna be a huge violation and get you in trouble. Can't say show up at Notre Dame, get you NIL deal. Transfer to Notre Dame, get you NIL deal, got gotta avoid that stuff. Pay for play. You cannot tell Sally she's gonna get $1,000 for every block shot in the hoops tournament. Can't do that kinda stuff. It's gotta be fair market value. And it's gotta be based on just the brand image and brand value of the athlete. It cannot be based on performance. You cannot say you get $100 for blocking shots. Cannot say you get 100 bucks for the school team going to the playoffs. Can be based on individual performance or team performance. It's just based on the value of the athlete. Title IX. This one's kind of interesting. This is something that might come up because if you have big companies like Coca-Cola and let's say they used to fund the large billboard outside the football stadium and they say, you know what, why do we wanna spend money funneling it to the school for a standalone billboard? Why don't we just take our cash and send that directly to the top middle athletes on the basketball and the football team and they have access to millions of people on social media? Makes more sense. Do we want a billboard outside the stadium or do we wanna funnel that to the top male athletes with a lot of social media followers? So it's kinda gearing that way, funnel the money to the male athletes. And what does that do? Dries up funding for the school itself. And it's gonna dry up some of the funding for the non-revenue Olympic sports and some of the female sports. And you gotta, with Title IX, you've gotta keep the scholarships as equal as possible between the guys and the female. So what however many sports you have between the males and the females, you wanna keep the scholarship numbers fairly consistent between the two, and if all the money, the corporate money, starts being funneled to male athletes, instead of the school, it's gonna impact the ability to fund scholarships across the board for a swim program and the fencing program. And that's gonna have an impact down the road, hard to tell what that's gonna be like, but this is something to, to really keep in mind that it would be really hard and difficult to see these non-revenue sports be turned from NCAA sports into basically weekend rec leads for these kids. But, that might be the direction we're heading. NCAA. We talked about violators. When you have something new, the regulatory agencies are always looking for violators, and this is something new, and the NCAA is out there looking for violators and they are currently looking into collective programs that have sprung up for boosters at BYU, University of Oregon and Miami. So pretty, kinda a wide range of schools. You think of a very kind of a conservative school at BYU, and you think of a very edgy, progressive school at Oregon. And then you think of Miami and that's, Miami's got its own own reputation over the years as far as what they're about. And this is a pretty wide spectrum of schools. At BYU, I believe the issue of BYU is a collective set up a program where they were funding. NIL deals for walk-on players on the football program. So, Division 1, you can have 85 players on scholarship and I think another 20 walk-on players. And if you're a walk-on player, you're not a on scholarship, you got a fund education yourself. And so these very smart boosters said, "You know what? Let's make a collective. And for these walk-on students who are not on scholarship, we will create NIL sponsorship programs for them go out and give speeches, give camps, sign some autographs. And that would allow the walk-on students who are not on scholarship to bring in endorsement money, to help pay for their education. So it's a pretty smart way to do it, but again, that is gonna have impact on Title IX and some of the scholarship money. So it's just the NCAA is looking into these collectives and they're trying to rein them in as best as they can. So what have we talked about so far? We've looked at the landscape and history. We've looked at the NCAA interim policy. They just opened the floodgates in July of 2021. And then 10 months later in May of 2022, the NCAA came out with the guidance and said boosters and collectives, knock it off. We're looking at what you guys are doing. And that's where we're at right now, heading into the later parts of 2022. All right, so that's gonna wrap it up for boosters and collectives. I mean, they run the show. It's gonna be interesting to see how the NCAA handles them with their investigation. So we are on to the transfer portal, and gotta start the transfer portal with Mark Twain. He says, "Never let school get in the way of an education." And that's pretty much right. I mean, let's let these kids transfer and have that kind of free agency that the coaches have. They get stuck at a school, they're in a bad situation. If you're a student athlete that used to be, you're kind of locked in, you couldn't transfer around without getting punished. And with the transfer portal, it's a one time transfer exemption. It's going to allow the kids to at least get a second bite at the apple to try to find a good situation that fits for them. And why the heck not? if you're a coach, you coaches, they sign a contract with the school, making big promises about loyalty and long term development. And they get a better contract offer two weeks later and they go, they go, but the student athletes are stuck at the school and that's how it was for decades and decades. That will change. That has changed as of fall 2021. So this is kind rundown of what you have for the one time transfer exception. You no longer have to sit out a full academic year and this was implemented in the fall of 2021. So we've got this new watershed moment between the name, image, likeness ability to make money for endorsements. And now you've got the one time transfer. So it provides a lot of flexibility for the student athletes that it's gives 'em flexibility. And it's also incentive to remain in school, which is also kind of good. They can make endorsement money. And if they're in a really tough situation and homesick, academics are too tough, you're just not a good fit for them, they can transfer without getting punished. And it's pretty good because it's just such an unfair situation for the student athletes with how it was set up before with the scholarship money and not being able to have enough money at the end of the month for food and gas and not being able to move schools without getting punished. And if you're a trust fund kid, not a big deal, but if you come from a very impoverished background and you have this hanging over you, it's a really tough deal. So here's how the one time transfer works. It's gotta be, you know, it's a four year to four year school. Ddivision 1, division 2, four years. You've gotta be academically eligible at the prospective school you wanna transfer to, and you cannot have transferred prior. You don't get two, you don't get more than one transfer with the ability to start competing right away. If you try to transfer twice, on that second transfer, then you gotta sit out a full year. There also has to be full certification between the student athlete and the head coach at the new school that the kid's thinking about transferring to that says there was no direct or indirect communication prior to entering the transfer portal. So kid's thinking about transferring from USC to UCLA and the head coach is working channels indirectly to have communication that, "Yeah, we we'd like to see that happen." You cannot be doing that prior to the kid being entered into the transfer portal, which lists all the student athletes who are eligible to transfer schools. You gotta have that happen before there's that communication between the prospective head coach in this case, UCLA, who's, you work in channels to try to pull kids over from USC. The notice requirement. You gotta provide notice if you wanna get into the transfer portal for fall and winter, basketball and football, you've gotta notify your current school by May 1st. And if you play a spring sport, baseball, track and field, gotta notify your current school by July 1st, get into the portal, and at that point, you can start working channels to see what schools out there might be interested. Doing a little bit of Q&A in the transfer portal. What happens if a student athlete transferred prior to and wants to transfer again? You gotta sit out for the full academic year, kind of the old rules, unless the sport was discontinued. So you transferred once, you get the exception, now the school that you transferred to is discontinuing the sport due to finances or whatever. If they discontinue the sport, then you can transfer again and you don't get punished. How do you confirm academic eligibility? You gotta talk to your current compliance team at your school before you go into the transfer portal. And that's so important. If your grades are really shaky and you think I wanna, I'm gonna transfer from this, you know, lower to your academic school the o Stanford or Duke and good to go. You gotta make sure that you have the academics to get that done before you go into the portal, because you're gonna be disappointed. You go into the portal, you're gonna lose a lot of credibility with your current school 'cause you're just telling them you want out. And you may not be academically eligible at the school you wanna go to, it's gotta be gotta be pretty smart about how we handle that stuff. Is the student athlete in the transfer portal automatically eligible for the new school? And again, the answer is no. Entering the TP allows communication between the student athlete and the athletic programs at prospective schools. But it just means you're eligible to have those conversations. You gotta meet the academics still, and you gotta make sure all that stuff is looked at prior to jumping into that transfer portal. 'Cause again, humans are human. If you're at your current school and you're on scholarship and you're telling them I want out, that's gonna come back on you. So what happens if impermissible communication between the coaches and the boosters and the student athletes with the family? Schools are gonna get in trouble, the student athlete can have their eligibility impacted depending on how intentional that it is. You know, they usually try to give the kid the benefit of the doubt 'cause you've got all these older adults kinda manipulating the kid and the family, but you can lose your eligibility if you are jumping the gun and having those communications prior to entering the transfer portal. So you gotta be smart about that. Does the one time transfer apply to all sports? Yes it does. So it's not just big time hoops and football. Any sport that you play, any NCAA sport that you play, you can enter the one time transfer portal. Can the current school object to the transfer? No! You know, the NCAA, this is all kind of, it was kind of an unfair system. But when this first started getting rolled out, the current school could provide a written support requirements or they could say, we don't want this kid to transfer and they could kind of muck things up a little bit. But at this point, there's no objection allowed by the current school. They gotta cooperate with the kid, gotta cooperate with the transfer portal obligations, and the new school. They gotta all work together to make this happen. Is the kid eligible to transfer? What do the academics look like? Get 'em in the portal and they gotta cooperate on that. Does the one time transfer apply to student athletes transferring from two year schools? Nope. They have their own rules. We're talking about four to four. Transferring from USC to UCLA four to four. Does the one time transfer apply to postgrads? Yes it does, if athletically eligible. So you get a kid, she's really smart, she graduates in three years, she has one year of athletic eligibility remaining. She graduates in three years, one year athletic eligibility. She can transfer to a different school and start to compete immediately Who can have the student athlete in the transfer portal? This is not some unofficial thing where the student athlete and the family think, Al, let's get herself into this transfer portal. If the student athlete wants to get into the transfer portal, they gotta work with their current school's athletic compliance department, and there's gonna be somebody designated at that school. And that person will collect the information or work with the student athlete and that compliance person at the school enters the information into the transfer portal. When can communication start between the student athlete and the schools? Only after the student athlete information is entered into the transfer portal. If you jump the gun, coach can get in trouble. School can get in trouble. The student athlete can get in trouble. So if you're an attorney working with families and student athletes and things like that, you gotta make sure that they know this kind of stuff because the kids gotta his or her cell phone with them all the time, and between social media, cell phone, friends that play on other teams, there's gonna be back channels. And you gotta make sure that these kids are being smart with that. Get into the transfer portal before you start having conversations with those head coaches at different schools. So what is allowed before the student athlete enters the transfer portal? Gotta shop around, right? So we're going to allow the student athlete to have communication with the new school's financial aid and the admissions department. So that is non-athletic related. So the student athlete can always communicate with prospective schools, financial aid and admissions, perfectly fine. They can also, this is where it gets a little dicey, the student athlete can have communication with student athletes at those other schools. So kids going to USC thinking about going to UCLA, you can have contact with student athletes at UCLA. What you cannot do is have that contact directed at the direction of the coaches at UCL, at the new school Coaches gotta stay out of it, stay way out of this until the kid goes into the transfer portal, but we're gonna allow the student athlete some freedom to have discussions with admissions and student athletes at the prospective school, 'cause you wanna find out, hey, Is this gonna be a better situation for me? Here's my situation. What's like over there? Notice of transfer. I talked about this a little bit before. You gotta be really careful with stuff because kids can get blackballed if they go into the transfer portal. They didn't think it through, that they're having a really tough time, their coach. You know, they sign a letter of intent to play at USC, and two weeks after they sign the coach who they really like resigns to take another job. New coach comes in, go in a different direction. The kid's gonna not be kind of the star athlete. The kid wants to transfer. And the kid enters the transfer portal without thinking things through clearly. They get into the portal. They don't find that they have any kind of value at other schools so they can't transfer. So now the kid is stuck at USC. They wanted to go to UCLA. They're stuck at USC with a new coach who they don't like, and that's gonna impact their playing time more. Could impact the roster spot. And you know, at, at some of these schools, it could impact how much financial aid, athletic financial aid the school wants to provide the student athlete. Now with a new NIL and an endorsement deals, NIL does not impact the total package of eligibility. Doesn't matter if you get a million dollar contract, NIL does not impact that what's eligible, but the school can decide who gets what? So you gotta keep in mind, you can get blackballed if you enter the transfer portal and there's nobody out there that's interested in bringing you in and you're stuck at that school and they don't want you either. So this will be an example here in a transfer portal that might come up. Hopefully everybody remembers Johnny Utah from what's that Patrick Swayze "Point Break" movie. So Johnny Utah, Keanu Reeves, Johnny Utah attends Ohio State, plays quarterback, and as a freshman he practices with the team in the summer, but the team cuts him before the first game. No, can't have that to Johnny Utah. So he goes to Ohio State, practices, gets cut before the first game, never plays in the game. At the end of the academic year, Johnny wants to transfer to a D1 school out in SoCal and play some football. So he goes to of Ohio State as a freshman, practices, gets cut before the first game, wants to transfer at the end of the freshman year. Does Johnny need to comply with the transfer rules? Yes, because Johnny practiced with Ohio State, he was a member of the team, so he's gotta comply with the transfer portal rules and make his notice application known by May 1st with the compliance department otherwise he has missed the deadline and he may not be able to transfer it and compete immediately. What happens then? Johnny Utah might join the FBI and become part of a surf gang team that robs banks. And that's Point Break. You can't go wrong with that, that is a damn classic in my book. So let's do a little round up here. What's next? What what's coming up? If you can dodge a ball you can dodge a wrench. If you can dodge a wrench, you can dodge a ball, and that's Patches O'Hoolihan from the cinematic classic "Dodge Ball." All right. Rapid, volatile changes ahead. Things are gonna be shifting left and right. Again, I preface this at the beginning of the program, this stuff is changing daily, weekly, monthly. We've got the NCAA, we've got the states, we've got the feds. We have coaches, agents, boosters players, NIL, transfer portal, stuff is changing all the time. What we have in place today may not be in place two years from now. So just kinda keep that in mind. Gotta keep up to date. At the very least go to the NCAA updates. And I've got the link there. Make sure you have that and keep up to date on all the NCAA changes when it comes to NIL and the transfer portal. Also good to keep in mind, there's a good case, and I've got cited there, in re: college athlete, NIL litigation, rolls off the tongue. This is pretty exciting news, love it or hate it. But this is a case in California where they're trying to roll back pay for play restrictions and recruiting restrictions. So right now you can have NIL deals. Can't be based on pay for play, cannot be based on recruiting. And they're trying to roll that back and that is California. Predictions. We'll wrap this up here. There's gotta be a federal solution. It's just, it's too... It's too wild and it's too outta control right now. There's probably gonna be a federal solution, they've gotta rein things in for consistency. Keep in mind high school and NIL, that's gonna be the next level of competition between the states. If states allow high school athletes to get NIL deals, states do not. You can now have high school athletes shopping their wares, moving from state to state, to go to the place where they can get NIL deals. Ivy League can't get scholarships there, but with endorsement deals, we might see the Ivy League become more prominent in hoops. SEC, probably gonna see a slow decline with them because for every millionaire booster at Alabama, you've got 10 billionaire boosters at Stanford and USC. I think the winners here are gonna be some of the big schools in Cal, Florida, and Texas. USC, UCLA, Stanford, Texas, Austin. And then obviously these schools down in Florida will find a way to funnel cash to players. 'Cause that's what they do. But California and Florida and Texas, I think are gonna be the big winners. And we'll wrap this up, my contact information here on the back. I love the topic. So feel free to gimme a call, hit me up on the cell, email. I love talking about the stuff. So hopefully this helped out? So it's a dynamic area and things will be changing quite a bit as we go along. Thanks for your time. I appreciate it. And, hope everybody takes care.

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BB
Brian Brunkow
Attorney
Law Office of Brian Brunkow

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