NIL Royalties 101

The Role of NIL Collectives

The landmark July 2021 Supreme Court decision Alston vs. NCAA created the legal basis for college athletes to receive compensation in the form of Name, Image, and Likeness (“NIL”) endorsements. But, other than in a few states, NCAA rules continue to prohibit member schools from directly compensating athletes in any form.

NIL “collectives” were formed to assist athletes in earning NIL endorsement money without involving schools in direct compensation. NIL Collectives are typically formed by alumni of a particular school or team at a school.

These alumni-run organizations raise money from other alumni as well as from brands that want to use athlete NILs to promote their products. Anecdotally, approximately 80% of the money that collectives raise comes from alumni and other donors, while the remaining 20% comes from brands. This disparity may be a reflection of the limited capabilities of the collectives to pursue larger opportunities. Most collectives are thinly- staffed and rely on volunteer alumni. As a result, some collectives hire vendors to help them manage the process of raising money and distributing it to athletes in exchange for NIL endorsements.

The rapid rise of collectives has been impressive. In the less than three years since the Supreme Court ruling, nearly all of the major sports teams at large and mid-major schools have active collectives. According to Opendorse, collectives raised and distributed nearly $1 billion in NIL endorsement money in 2023.

Recent court case law and settlements as well as NCAA rule changes have allowed schools to get more involved in the process of assisting athletes in earning NIL endorsement money from third parties. If this trend continues, we may see collectives being absorbed into athletic departments or at least a more direct relationship between them.