Name, Image, and Likeness (NIL) Compliance Alert for Higher Education: Deal Rejections Mount as State Resistance Grows

Recent developments present urgent compliance questions for colleges and universities navigating the evolving Name, Image and Likeness (NIL) landscape for collegiate athletes.

Nebraska football players have initiated an unprecedented arbitration challenge to the College Sports Commission’s (CSC) rejection of certain NIL deals. The CSC was established to enforce new and revised NCAA bylaws that resulted from the settlement In re: College Athlete NIL Litigation, Case No. 4:20-cv-03190-CW (the House Settlement), including oversight of third-party NIL deal reporting and compliance. In this capacity, the CSC reviews NIL agreements, with authority to reject deals it determines fail to meet applicable requirements, such as the existence of a valid business purpose. This arbitration challenge will test the limits of this CSC enforcement authority against state-law protections.

Meanwhile, the CSC’s centralized deal-review platform, NIL Go, is experiencing significant processing delays driven by a surge in high-dollar deals from school-affiliated and school-adjacent entities. At the Republican Attorney General Association's Winter National Meeting in March 2026, NIL-related issues took center stage, with AGs and panelists expressing concern over flaws in the current implementation of the system. Participants noted abuse of the system amongst agents, exploitation of student athletes, and the overall weakening of college athletics. The meeting reflected a growing state-level interest in the CSC’s regulatory framework.

This alert examines the key compliance flashpoints arising from these developments and offers practical guidance for institutional leadership, general counsel, and compliance teams.

School-Affiliated and School-Adjacent Entities Face CSC Scrutiny

Approved in June 2025, the House Settlement paved the way for the CSC and a revenue-sharing framework designed to compensate Division I athletes. Under the House Settlement, participating institutions may compensate athletes under a revenue-share model, which is capped at $20.5 million for the 2025-26 academic year. Student-athletes may also receive compensation through third-party NIL agreements, which, at or above a $600 threshold, must be reported to and reviewed by the CSC through the “NIL Go” platform to confirm that the NIL agreements comply with the rules, serve a valid business purpose, and represent actual fair market value of the deal. 

School-affiliated or school-adjacent entities — including multimedia rights (MMR) partners and apparel partners — have increasingly presented athletes with high-dollar third-party NIL offers, sometimes labeled as “agency” or “services” agreements, where the paying entity expects to identify sponsors/activations later. The volume of these deals has contributed to significant delays in the CSC review process.

The CSC’s January 9 Guidance

On January 9, 2026, the CSC circulated a rules reminder stating it had information suggesting football student-athletes were being presented with third‑party NIL deals that likely do not comply with House Settlement, and warning against “making promises … now and figuring out how to honor those promises later.”

The CSC’s concern is that some of these arrangements function as inducements to transfer or remain, or as warehousing of NIL rights, rather than bona fide marketing agreements with defined deliverables.

The CSC emphasized several practical points that matter directly to institutional compliance:

• Reporting clock. Third-party NIL contracts/payment terms valued at $600+ must be reported to NIL Go within five days of execution (with limited timing exceptions in some onboarding scenarios).
• MMR/apparel/partner deals are still “NIL contracts.” The CSC cautioned that labeling a contract as an “agency” or “services” agreement does not change the analysis if the arrangement is paying for NIL rights.
• Associated-entity deals require “direct activation.” The CSC stated that NIL payments by associated entities (including many MMR and other partners) must include reasonable specificity around NIL activation — e.g., what rights are being used, athlete obligations, timing, and ultimate use — and indicated that deals lacking this specificity are likely to fail.

The CSC has reported rejecting hundreds of deals for reasons including lack of a valid business purpose, warehousing, and compensation not commensurate with similarly situated individuals.

CSC Investigative Power

The CSC has positioned itself as the designated enforcement entity for the House Settlement framework, including oversight of NIL reporting and compliance. Along with the January 9 guidance, public reporting has described inquiries into whether institutions failed to report one or more third‑party NIL deals.

A key issue is the extent to which the CSC can compel cooperation (and impose meaningful sanctions) absent broader contractual buy-in. In an effort to further centralize enforcement, the CSC has circulated a draft of the agreement. Schools would be bound by the terms of the agreement, which provides the following:

• The CSC and its designees have authority to investigate possible violations by the institution, its representatives, student-athletes, and associated entities.
• If notified of an impending investigation, the institution must “cooperate fully and promptly,” including preserving documents, responding to information requests, making individuals available for interviews, and — under the draft — potentially making certain devices available for forensic inspection (subject to stated processes/objections).
• The institution must use best efforts to ensure third parties tied to institutional NIL relationships cooperate, and it may be expected to structure agreements so the CSC can enforce cooperation obligations as a third-party beneficiary.

State Attorneys General Resisting the University Participation Agreement

Multiple state attorneys general have publicly criticized the Participation Agreement as an overreach conflicting with state governance and NIL frameworks. Texas Attorney General Ken Paxton urged certain Texas universities not to sign, asserting the agreement grants the CSC authority to threaten penalties — including loss of conference revenue and postseason ineligibility — tied to litigation activity by schools or state officials. Tennessee Attorney General Jonathan Skrmetti referenced a multistate coalition objecting to provisions that could penalize schools if anyone sues or investigates CSC-related rules. Broader concerns regarding the NIL landscape were a focal point at the Republican Attorney General Association's Winter National Meeting in March 2026.

Compliance Considerations

As states get further involved with NIL, CSC rules and participation terms may intersect with state NIL laws that limit institutional or association restrictions on athlete NIL activity. The Nebraska arbitration challenge — in which football players are contesting CSC deal rejections under a state law prohibiting penalties for NIL participation — illustrates the potential conflict between CSC enforcement and state-law protections.

Even absent a fully executed Participation Agreement, institutions should expect practical pressure to respond to CSC inquiries. Competitive dynamics, athlete eligibility concerns, and conference governance realities may effectively compel engagement, and institutions should proactively address document preservation and third-party data access challenges before inquiries arrive.

For institutions, untimely or failed reporting can trigger cascading risks: athlete eligibility uncertainty that disrupts team operations, relationship strain with donors and partners, and potential disputes over economic fallout when promised arrangements cannot be performed.

Deals involving MMR, apparel, and other associated partners should be treated as compliance-sensitive. The CSC is explicitly targeting reporting deadlines and warning against “promise now/report later” approaches, particularly where the inducement effect is apparent. Institutions should also anticipate ongoing investigative contact, as the CSC has indicated that investigations into unreported deals are advancing and additional rules reminders are forthcoming.

What Higher Education Institutions Should Do Now

1) Review affiliate/partner arrangements used in athlete compensation.

• Inventory deals and templates involving MMR partners, apparel partners, marketing agencies, licensing arms, collectives, and other “associated” entities.
• Stress-test whether agreements include specific NIL activation (e.g., deliverables, timing, and the ultimate NIL user/sponsor) versus broad rights acquisition or “to be determined” activations.

2) Assess NIL reporting practices.

• Confirm the institution can consistently meet the five-business-day reporting expectation for covered third-party deals.

3) Evaluate the institution’s stance on the CSC participation agreement.

• Identify provisions that may raise issues under institutional governance norms or state law.
• Develop an escalation plan for responding to CSC inquiries if the institution elects not to sign (or delays signature), including document preservation protocols and third-party coordination.

4) Monitor additional CSC guidance and enforcement communications.

• The CSC has indicated more rules reminders are coming; assign ownership for monitoring and rapid internal distribution (athletics, compliance, GC, procurement/partnerships).

If your institution has questions about CSC compliance, the participation agreement, or NIL deal structuring, please contact one of the lawyers below or your regular Crowell contact.