The CSC beat Nebraska in arbitration, but it shouldn't provoke the state's attorney general

AMELIA ISLAND, Fla. — College Sports Commission CEO Bryan Seeley has one of the most difficult jobs in college sports because his entire operation could be upended at any moment. That’s probably why Seeley was measured and conciliatory on Monday after the biggest public victory of his organization’s young life. 

In football parlance, the head of college sports’ new NIL enforcement arm handed the ball to the nearest official instead of spiking it and dancing. The event? An arbitrator ruled in favor of the CSC in a case brought by Nebraska regarding about a combined $7.5 million worth of NIL deals spread across 18 Cornhuskers football players. Seeley knows Monday’s win doesn’t mean the poor-man’s salary cap his organization was created to enforce is going to last.

In fact, Monday’s win could quickly turn into a loss if Nebraska’s attorney general decides to get involved. That’s probably why Seeley was playing nice Monday. “These student athletes didn’t do anything wrong,” Seeley said after meeting with ACC coaches and athletic directors at the league’s spring meetings. “Nebraska didn’t do anything wrong. They put in deals that they, at least, I think, in good faith, believe complied with the rules. We decided they didn’t, and the arbitrator made a decision that we were correct in our in our determination.”

At the moment, Nebraska officials are planning to resubmit the deals with the hope their players will get paid. The shortest version of this story is that if the players get the money they were promised, then further action probably isn’t required and the CSC chugs along until the next challenge, which could come in federal court soon. If the Nebraska players’ deals are ultimately denied or if they miss even an expected penny, then Nebraska Attorney General Mike Hilgers could attack the CSC in state court and light the fuse to blow up a system that was probably doomed to fail from its inception.

As part of the House v. NCAA settlement approved last year, schools are allowed to pay a fixed amount ($21.3 million for this school year) to their athletes. Players can make money beyond the amount from the schools, but all additional deals for athlete pay must be approved by the CSC or the athlete’s eligibility will be in jeopardy. These deals are required by the CSC to be with specific partners for specific deliverables. The idea is to keep schools from going above the revenue-share cap to pay players for their ability as athletes, even though practically every school does this. The CSC is tasked with determining whether a deal is “real NIL” or pay-for-play*. 

*Though your favorite AD probably uses this term as a pejorative, do not read it as one here. We have no issues with pay-for-cook, pay-for-sing, pay-for-teach or pay-for-treating illnesses. There is nothing morally wrong with paying someone for being good at sports.

The underlying issue is the settlement is not legal precedent and what the CSC is doing probably violates the Sherman Antitrust Act and every state antitrust law. It isn’t legal in this country for competitors to collude to price fix a labor market. That’s precisely what the schools are doing by joining forces to create a revenue share cap. Absent an antitrust exemption granted by Congress or a collective bargaining agreement that contains a cap, the schools probably can’t legally set a limit on what players can be paid. 

Power conference schools can’t sue the CSC because they are parties to the settlement. Ditto for the players, who had to opt in to get their money. Those parties must settle disputes through arbitration. House plaintiffs attorneys can challenge the CSC, and they currently are doing that in federal court. 

But state AGs — if properly provoked — might be able to blow up the CSC faster. The AGs aren’t parties to the settlement. And when the terms of the settlement were announced, it was easy to determine which schools the CSC would be most unwise to challenge: Nebraska, Tennessee, LSU, Missouri and West Virginia.

All of these schools are the dominant programs in states with governors and AGs who aren’t shy to engage when they know nearly 100 percent of the electorate will be on their side. There is no political downside for Nebraska’s AG to fight for the paychecks of Nebraska football players. Just as there was no political downside for West Virginia’s AG to recruit fellow AGs to challenge NCAA transfer rules (the AGs won) or Tennessee’s AG to recruit other states to challenge the NCAA’s NIL rules (the AGs won). 

Plus, officials at the schools that created the rules are themselves the ones trying to find ways around the rules. The denied deals in the Nebraska case involve Playfly, a multimedia rights company that works with dozens of schools. In the days before athletes could get paid, these MMR companies — Learfield is the other big one — would pay schools a fixed amount and then make sponsorship deals on the schools’ behalf. Since players were allowed to get paid starting in 2021, MMR companies have evolved. Now, part of their role is as a passthrough for NIL deals so schools can get money to players through third parties. Nebraska isn’t alone by any stretch. But the Cornhuskers didn’t feel they were getting much guidance from the CSC. Weirdly, the arbitration hearing may have provided the roadmap Nebraska officials sought in order to structure their deals in ways the CSC would approve.

The denied deals involved a practice called “warehousing” NIL rights. Playfly was identified as an “associated entity,” which meant it couldn’t just buy a player’s NIL rights lock, stock and barrel. An MMR company facilitating a deal for, say, a series of autograph signings to promote a local company can pass the CSC’s sniff test. 

At the moment, Nebraska officials aren’t ready to go to war with the CSC. Seeley, meanwhile, seemed like someone who wants to avoid a war with Nebraska at all costs. So perhaps the resubmitted deals pass muster.

“This arbitration was not about whether these student athletes can get paid,” Seeley said Monday. “It was about whether they can get paid in this particular way. I believe there are deals in the pipeline for these student athletes, with actual sponsors attached to them, that we can approve. I believe that will happen. I don’t believe litigation is necessary for these student athletes to get money for their NIL.”

This sounds as if Seeley wants Nebraska to do a little more paperwork. Maybe the $1 million worth of deals can be split into 50 $20,000 deals spread among 18 players and assigned to specific sponsors with specific deliverables, and perhaps they go through. 

If that happens, the CSC probably gets to live a little longer.

That won’t allow the CSC to actually limit what schools pay players — because, again, that’s illegal — but it will allow the schools to keep pretending they are.