Will potential conflicts of interest, or the lack thereof, impact the NCAA's choice for its third-party administrator for name, image and likeness?
One finalist, INFLCR, recently withdrew its bid due to potential conflicts of interest and those concerns maybe shouldn't be unique.
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In just six weeks, state laws will take effect that will allow college athletes in Alabama, Florida, Georgia, Mississippi and New Mexico to monetize their names, images and likenesses (NILs), the financial details of which will ultimately be disclosed to universities, in accordance with state laws, and also in accordance with to-be-determined NCAA legislation. If, when and how those financial details are made available to the public, they could answer long-awaited questions about the value of a college athlete’s NIL, which athletes will benefit the most and what percent of athletes will actually realize some level of earning potential.
What you need to know
The NCAA announced Wednesday that the Division I Council is “expected to act on legislative proposals regarding name, image and likeness during its June 22-23 meeting,” as well as that the DI Council offered “general support” for changing the effective date of its NIL proposals from Aug. 1, 2021 to July 1, 2021.
Last October, the NCAA announced that the Division I Legislative Solutions Group supports the use of a third-party administrator (TPA) to assist with the disclosure of NIL deals. One of the finalists, INFLCR, recently withdrew its bid to be the TPA due to potential conflicts of interest. Of the three companies that are reportedly among the remaining finalists, one is a registered nonprofit that has reportedly pitched itself as an independent entity, one says there wouldn’t be any conflict of interest if it’s named the TPA and one has a similar market share as INFLCR, which recently withdrew its bid due to the aforementioned concerns.
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Earlier in May, the content and compliance software platform INFLCR announced it was withdrawing its bid from the NCAA’s request for proposal (RFP) process to select a third-party administrator (TPA) to assist with the disclosure process for name, image and likeness (NIL) deals, citing potential conflicts of interest. INFLCR, as well as its parent company, Teamworks, has existing contracts with a significant market share of the NCAA’s member institutions, especially at the Division I level. Those institutions and their athletes will soon disclose the details of athletes’ NIL deals with the NCAA’s selected TPA.
When the NCAA Division I Council introduced NIL “concepts” last October, an NCAA press release stated, “The group continues to support use of a third-party administrator to assist with overseeing the disclosure process; monitoring and reporting name, image and likeness activities; and educating key stakeholders, including student-athletes, prospective student-athletes, boosters and professional service providers.”
In a previous newsletter, Out of Bounds produced a database that now includes more than 70 (and counting) public Division I institutions, 33 of which provided contracts that they have signed with companies that offer third-party, NIL-related services. Nearly half of the schools with these contracts – 16 of the 33 – have signed with INFLCR for roughly a combined $1.4 million, showing the size of the company’s market share, especially if you extrapolate this sample size across the Division I level.
“After a lengthy period of deliberation involving the INFLCR team, as well as legal and industry experts, the potential conflicts of interest are clear if a company who already serves a large percentage of the NCAA’s membership as a vendor were named as TPA,” INFLCR founder and CEO Jim Cavale said, in part, in a statement published on INFLCR’s website. “We believe that our commitment to serving our institutional customers is best served by avoiding the ethical pitfalls that would present themselves in the event that INFLCR was selected as TPA, and as such, we have decided to remove ourselves from consideration.
“We intend to continue focusing our efforts on delivering best-in-class technology solutions for our institutional partners in order to enable their student-athletes to transact compliantly in the new NIL era.”
Not only are there potential ethical questions about conflicts of interest for any companies that seek potential revenue streams from multiple sources and whose clientele includes NCAA member institutions, but there are arguably legal questions, too. For example, Florida Senate Bill No. 646, which Gov. Ron DeSantis signed and which takes effect July 1, states, in part, “an entity whose purpose includes supporting or benefitting the institution or its athletic programs … may not compensate or cause compensation to be directed to a current or prospective intercollegiate athlete for her or his name, image, or likeness.”
After delays in the NCAA’s announcement of its TPA, the four finalists were INFLCR, the NIL Education and Information Center, Inc., Collegiate Licensing Company (CLC), and Opendorse, according to Sportico. A CLC spokesperson confirmed to Out of Bounds that CLC is a finalist and that it’s still taking part in the NCAA’s RFP process.
Earlier in May, Sports Illustrated’s Ross Dellenger said of Opendorse: “many believe, is the favorite.”
In the snapshot of the more than 70 schools that are detailed in the database compiled by Out of Bounds, which was intended to be representative of schools and conferences across the Power 5, Group of Five and FCS levels, Opendorse has a similar market share (15 schools out of 33 that provided contracts) and a similar contractual revenue total from those schools (more than $1 million) as INFLCR, which just withdrew its bid due to potential conflicts of interest.
Meanwhile, CLC is the trademark licensing and marketing agency for hundreds of colleges and universities, as well as the licensing representative for the NCAA. A CLC spokesperson provided the following comment, when asked if the company has any concerns about potential conflicts of interest or if it has any plans to address potential concerns about conflicts of interest:
We have no concerns at all, and there is no conflict of interest with us serving as the NCAA’s TPA or our COMPASS NIL platform providing disclosure, education, and monitoring institutions. We are not a marketplace for student-athlete to do deals nor will we represent student-athletes. There are plenty of other companies out there looking to connect student-athletes to NIL deals, businesses, or to make money off building athlete brands. That’s not us. Our focus is serving as the unbiased infrastructure for disclosing and tracking deals, as well as providing education to student-athletes and other stakeholders on critical topics related to the legal, compliance, and best practices of NIL to help ensure student-athletes and institutions remain compliant and student athletes remain eligible, while maximizing their NIL opportunities. Additionally, our COMPASS NIL platform will be managed as a separate business unit complete with its own customer service reps and staff focused on serving the needs of the athletic departments and student-athletes in the NIL landscape that will use COMPASS.
In the emerging NIL industry – an umbrella that industry insiders believe includes roughly 150 companies (and counting), and which encompasses a host of subcategories, including services such as education, content sharing, branding, compliance and disclosure – there are a few avenues for companies to pursue potential revenue. Companies or consultants can sign contracts to provide third-party services to athletic departments or universities, as detailed in a previous newsletter; they could create a marketplace or otherwise help broker NIL deals between athletes and sponsors, then take a cut or receive a marketing fee. Then last fall, they had the option to make a pitch to the NCAA to become its TPA.
An NCAA spokesperson didn’t respond to a request for comment.
Sportico reported that TPA finalist NIL Education and Information Center, which has a listed address that’s just over a mile away from the NCAA’s headquarters in Indianapolis, pitched itself as an independent entity:
One of those options is a nonprofit created by former NCAA executive vice president Oliver Luck and longtime sports and media executive Bill Squadron. The NIL Education and Information Center, a 501c3 registered in Indiana last September, was pitched as a fully independent body that could work with the NCAA without any other direct business interests across college sports, according to people familiar with the bid, who were granted anonymity because the details aren’t public.
Squadron, the nonprofit’s co-incorporator who serves as the president of OurEnergyPolicy, didn’t respond to a request for comment made through OurEnergyPolicy.
If Opendorse is indeed the favorite to be named the NCAA’s TPA, as SI’s Dellenger reported that many believe, then that could potentially put some combination of Opendorse, NCAA member institutions that are its clients and institutions that aren’t its clients in a precarious position, if the company were to face the potential conflicts of interest that INFLCR wanted to avoid. A spokesperson for Opendorse didn’t respond to a request for comment.
Opendorse’s clients include, but aren’t limited to, Arizona State, Florida, Indiana, Kansas State, Louisville, LSU, Minnesota, Missouri, Nebraska and Oregon State.
A spokesperson for Nebraska’s athletic department, which has committed the highest publicly available dollar amount to any company that offers athlete branding and NIL services – roughly $263,000 in contracts with Opendorse, which is headquartered in Lincoln, Nebraska – told Out of Bounds the department doesn’t have any concerns about potential conflicts of interest at this point, but that the athletic department will continue to monitor NIL developments and adapt as needed.
“I do think the independence and neutrality of that entity is critically important to the perception of integrity with this model,” Big East Commissioner Val Ackerman told Sportico. “Assuming it moves forward, and there’s still some questions about it, in terms of what group might be selected to be involved, I think it has to be seen as separate and apart from anybody who’s looking to profit in this space.”
A University of Louisville purchasing department document, which was obtained by Out of Bounds through an open records request, sheds light on the value the university’s contractual relationship with Opendorse provides, as well as the potential benefits (and therefore potential conflicts) of the NCAA’s to-be-determined TPA potentially also having separate contracts with member institutions.
On a form completed last August, University of Louisville Associate Athletic Director, Finance Jeff Spoelker was asked to describe the features offered by Opendorse and why they were essential, as well as how long the evaluation process had taken.
Opendorse is an NCAA approved partner and leader in their field and has expanded their reach into the fast evolving name, image, likeness (NIL) discussion. NIL is evolving fast and several of the Power 5 schools have contracted with them to help manage this program and maximize the endorsement value of our student athletes. With passage of NIL legislation imminent, time is of the essence. We have been using Opendorse for a year now for social media/content share so the infrastructure is already built. To go with another vendor would lead to several months of delays and lead to use of two systems which would be very inefficient.
If Opendorse is selected as the TPA, and if its current app and software that’s available to clients were to be used for a potential association-wide disclosure role, then that could be an efficient outcome for schools that are currently contracted with Opendorse, but it could also raise questions about potential conflicts of interest.
Spoelker’s answer about the use of two systems being “very inefficient” also hints at a potential, cross-platform learning curve that could start in earnest July 1 for everyone involved in college athletics. Unless there’s perfect integration across multiple companies and their respective software, it seems likely that at least a segment of college athletes could have to use multiple apps or systems for their NIL education, content sharing, compliance and disclosure once they’re allowed to monetize their NIL rights. There will be the disclosure system that the association-wide TPA employs, plus any additional companies whose services individual schools have contracted, whether they pertain to social media and content sharing, or compliance and financial reporting.
But the use of multiple platforms for some college athletes may be what’s required to ensure an independent, objective disclosure process, or at least one that doesn’t have any potential optics that it’s anything but.
If the NCAA selects the NIL Education and Information Center, then conflicts of interest, or the lack thereof, could help explain how it reached that outcome. Not only do other reported finalists have existing relationships with NCAA member institutions (although CLC says there is no conflict of interest if it serves as the TPA), but the name of NIL Education and Information Center incorporator Oliver Luck frequently appeared in speculative media coverage about the Pac-12’s recently concluded search for a new commissioner. It’s a role that clearly could’ve conflicted with the role and responsibilities of the NCAA’s chosen TPA.
Luck, formerly the quarterback and athletic director at West Virginia and also the former commissioner of the XFL, has reportedly made plans to avoid potential future conflicts of interest if the NCAA selects NIL Education and Information Center as its TPA. Luck is reportedly an unpaid adviser to Altius Sports Partners, which is another third-party NIL provider that would support the NIL Education and Information Center if it’s selected as the TPA, according to Sportico, which also reported that Luck told the NCAA he would end his advisory role with Altius Sports Partners if his nonprofit is chosen.
Whether the Pac-12’s presidents and chancellors weren’t interested in Luck being the conference’s next commissioner or Luck wasn’t interested in the Pac-12 – or if the two sides simply just weren’t the right fit for each other – Luck registering the Indianapolis-based NIL Education and Information Center last September and the Pac-12 hiring George Kliavkoff this month as its next commissioner has allowed Luck’s independent nonprofit to emerge as a reported finalist for the NCAA’s TPA while avoiding potential conflicts of interest, and that could turn out to be the NIL Education and Information Center’s greatest asset in the NCAA’s selection process.
In case you missed the last newsletter
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“What is your take on the membership discussion of going down to a 12 team league vs discussing who the 14th member is,” Moccia wrote in an April email to Stephen F. Austin Director of Athletics Ryan Ivey and Grand Canyon Vice President of Athletics Jamie Boggs. “Also do we have a consensus that a 13 team league isn’t sustainable for the long haul from a scheduling perspective?”
“Yes,” Ivey responded, in part. “I think we can discuss membership and that we either need to get to 14 or go to 12, but…what does that conversation look like with Seattle in the room? I do believe we have concensus (sic) that 13 doesn’t work with divisions.”
Thank you for reading this edition of Out of Bounds with Andy Wittry. If you enjoyed it, please consider sharing it on social media or sending it to a friend or colleague. Questions, comments and feedback are welcome at andrew [dot] wittry [at] gmail [dot] com or on Twitter.