Studying the NIL Collective Space

Just over two years ago, in July 2021, the NIL era began in the collegiate licensing sector, enabling students to generate revenue from licensing deals and other commercial activities tied to their names, images, and likenesses. Immediately after that, the first NIL collectives were formed.

These are organizations that are independent from but affiliated with a specific university. They raise funds from alumni, corporations, local businesses, fans, and others and use the money to pay their rosters of student-athletes a retainer-like fee for NIL activities such as signature products, endorsements, content production, social media promotion, and the like. Often founded by alumni, boosters, or local businesses, collectives frequently take the form of nonprofit organizations, but can also be structured as for-profits or non-profits with for-profit commercial arms.

The opportunities and resources collectives provide have become an important part of student-athletes’ decisions on which institutions to attend. As of June 2023, 80.6% of the $1 billion total in NIL spending nationwide in the past year flowed through such collectives, according to Opendorse, a leading marketer of NIL software. The company expects total NIL spending to grow by 17% in the coming year, to $1.17 billion, with an estimated 200 collectives, and counting, dominating the space. In addition to revenue opportunities, collectives’ stated mission includes providing students with education and experience in business, finance, and other post-collegiate skills.

As the 2023-2024 school year begins, here are some recent trends impacting NIL collectives and other stakeholders in the still emerging and evolving NIL space:

• Banding together. In July 2023, seven of the biggest collectives—affiliated with Florida State, Georgia, Michigan, Ole Miss, Penn State, Southern Cal, and Tennessee—formed The Collective Association. Goals include clarifying conflicts between state laws and NCAA rules, a growing issue in the NIL space; creating a registry for NIL agents that are vetted to work with collegiate athletes; tracking marketplace and compliance trends; and coming up with a sustainable TV revenue-sharing model that would enable athletes to remain independent (as opposed to employees of their university). The Collective Association added 10 new members in August.

• Mid-majors in the mix. In the first two years of NIL, most collectives have been tied to larger institutions with national sports followings. More recently, however, the “mid-majors”—smaller Division I schools that are not in the top seven athletic conferences—are benefiting from the launch of their own collectives. Recent examples include the Trojans Together Collective at Troy University, founded by local business owners; The Maroon Fund as the official NIL collective of Eastern Kentucky University; the exclusive Green and Gold Collective at North Dakota State University; the Broncos Will Reign Collective as the preferred NIL collective at Western Michigan University; the Montpelier Collective at James Madison University; and the Purple Dub Club at Weber State. Meanwhile, bigger schools also continue to see the formation of new collectives; House of Victory launched at USC in April, bringing the total number of collectives at that university to five.

• Collective consolidation. Athletic departments are strengthening their relationships with their university’s strongest collectives by naming a single group as their official or preferred option. University of Michigan Athletics recently paired with Champions Circle as its first official NIL partnership, while University of Minnesota Athletics named Dinkytown Athletes, launched in 2022, as its official collective. In many cases, such moves result in disbandments or mergers of the remaining non-official options. After ICON became the sole preferred collective for the University of Illinois Urbana-Champaign, a second organization, Illini Guardians, said it would disband. Five separate NIL entities at the University of Texas merged into the Texas One Fund, while Penn State’s two main NIL collectives, Success With Honor and Lions Legacy Club, merged to form Happy Valley United, the school’s sole official collective.

• In-house control. NCAA rules require collectives to be independent from the universities they serve, but states such as Texas, Arkansas, Oklahoma, and Colorado have passed laws allowing NIL activities to come under the wing of the school’s main fundraising arm. Advocates say this could prevent Title IX and recruiting violations and could facilitate eventual revenue-sharing models, among other benefits. The laws have led to closer ties between universities and collectives in those states, under protest from the NCAA. In one closely watched situation, Texas A&M University founded its own collective, the 12th Man+ Fund, in February to accept booster donations and funnel them to the athletes’ NIL activities, with donors receiving athletic department loyalty points and tax benefits in return. The trend toward in-house control may be short-lived, however, due to a recent IRS memo threatening to take away collegiate fundraising arms’ nonprofit status if NIL activities are part of their mission. Texas A&M’s 12th Man+ Fund shuttered in August due to the IRS’s stance.

• Expansion in athletes and sports represented. Much of the attention tends to focus on the stars with the most earning potential, with a focus on men’s football and basketball. But NIL programs encompass a growing roster of sports and student-athletes. Brigham Young University’s official collective, The Royal Blue, launched a program that supports all 123 players on the 2023 BYU football team and ultimately hopes to bring teams in other sports into the program. 502 Circle, the NIL collective for the University of Louisville, signed team-wide deals with the women’s basketball and volleyball teams, with a total of 29 athletes involved and a six-figure monetary commitment. Hoosiers for Good at the University of Indiana, which focuses on charitable efforts, signed 31 athletes at the start of the 2023-2024 school year, its largest class ever, representing eight different sports.

Looking ahead, a lawsuit, Johnson vs. NCAA, could determine whether college athletes should be considered employees of their university under the Fair Labor Standards Act, something to which the collectives are opposed. The National Labor Relations Board is also about to consider the same topic in a hearing later this year. And the NCAA continues to lobby Congress for a federal NIL bill that would bring rules and regulations into alignment nationwide, evening a playing field that is currently unbalanced due to a patchwork of state laws.