Film Room: CSC guidance on investigations

CSC memo regarding investigations and related activity

In its August 20th memo, the CSC indicated that its DOI is initiating and advancing investigations. Specifically, the memo stated that “[t]he DOI is actively conducting multiple, longer-term investigations into potential cap evasion and NIL-related violations by institutions, student-athletes, and certain third-parties.”

The memo noted that, in the course of its investigations, the DOI requests documents and conducts interviews, including to “collect background information related to witnesses’ former institutions, declined recruitment offers, and NIL-related business proposals.”

The memo closed with a call for cooperation, referring to the CSC’s cooperation policy and NCAA bylaws.

Broader regulatory picture

In a recent article published in Reuters Legal, we examined how rules regarding third-party NIL are being implemented. In it, we provide a snapshot of the most critical third-party NIL rules, how they’ve been applied and recent government activity that may impact their future application.

We also offered several recommendations for how sponsors, student-athletes and schools can best align their approach with existing regulations. Here’s a snippet from the article regarding those considerations: 

• cultivate deals with non-Associated Entities. The fastest path to deal approval is for third-party NIL deals to not involve Associated Entities. Even long-time sponsors of schools (think Fortune 500 companies) may not trigger Associated Entity status. Such sponsors are regulatory and competitive assets, and schools and other market makers should exercise caution when structuring these deals so as not to unnecessarily involve an Associated Entity as a facilitator and unwittingly position a deal for a higher standard of review 
• structure Associated Entity deals with care. A takeaway from both the Nebraska arbitration and the Special Master’s ruling on the recent House motion is that specific facts matter. That should be a good thing for third-party deal counterparties, student-athletes and the schools they attend, as they have access to relevant facts that can support approval. For deals involving Associated Entities, specify the work to be performed by the student-athlete and be prepared to support the consideration to the student-athlete with business rationale and data. Answer obvious questions on value in the agreement to help regulators see what you see
• train up and protect student-athletes. Instruct student-athletes on third-party NIL requirements and enhance student-athlete compliance by making disclosure of third-party NIL deals to the institution a requirement in institutional NIL agreements

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.