By Alana Ford Watson, Santa Clara University Law School 3L
This essay explores the National Collegiate Athletic Association’s (NCAA) shifting responsibility in regulating student-athletes’ Name, Image, and Likeness (NIL) rights amid a rapidly expanding, multi-billion-dollar NIL industry following NCAA v. Alston. As legal and financial pressures mount, this essay questions whether the NCAA must reevaluate its regulatory framework to remain aligned with its stated charitable mission and comply with the requirements of its 501(c)(3) nonprofit status. By analyzing key legal decisions, nonprofit tax regulations, and ethical implications, this essay considers what steps the Association must take to maintain compliance while codifying the parameters of the amateur landscape.
II. Historical and Legal Background
The NCAA, founded in 1906, operates as a 501(c)(3) nonprofit to promote amateur sports competition.[1] Despite this charitable claim, courts have increasingly challenged the NCAA’s restrictions on athlete compensation. In NCAA v. Board of Regents, the Supreme Court struck down the NCAA’s television broadcast limits, citing antitrust violations.[2] The decision notably preserved the Agency’s ban on student athlete compensation, as a method of preserving amateurism.
In NCAA v. Alston, the Court unanimously ruled that NCAA limits on education-related benefits violated the Sherman Act.[3] The Court’s reasoning, based on the antitrust rule of reason analysis, found that less restrictive means could achieve the NCAA’s goals and still avoid suppressing the competitive market.[4] Just days after the decision, the NCAA announced new NIL policies permitting athletes to profit, so long as pay is for actual work and not solely based on fame or athletic ability.[5]
III. Regulatory Weaknesses and NIL Market Exploitation
The vague language of NIL rules—terms like “going rate” and “athletic ability”—opened the door to exploitation. While most NIL deals average $1,000 to $10,000, outliers like Bronny James ($7.5M) and Olivia Dunne ($3.3M) skew the perception of amateurism.[6] These deals are often facilitated by NIL “collectives,” donor-backed entities created to fund athlete endorsements.[7]
Collectives—some registered as 501(c)(3) nonprofits—account for 80% of NIL payments.[8] These groups circumvent NCAA rules by funneling unregulated funds to athletes under the guise of charitable work, despite little oversight or transparency.[9]
IV. Tax-Exempt Challenges for NIL Collectives
In June 2023, the IRS issued guidance stating that most nonprofit NIL collectives fail to meet 501(c)(3) requirements, as they “more than incidentally” benefit private individuals—namely, student-athletes.[10] The IRS warned that retroactive revocation of tax-exempt status may occur if private benefit outweighs public benefit.[11]
Treasury regulations allow incidental private benefit if it is both qualitatively necessary and quantitatively insubstantial.[12] However, high-dollar NIL deals, like Utah’s Crimson Collective gifting $61,000 trucks to football players, undermine this balance.[13] While some collectives, such as Jackets for Atlanthropy, attempt to blend charity and compensation, they often fail to meet the “exclusively charitable” standard under tax law.[14]
V. NCAA’s Compliance with 501(c)(3) Status
Unlike these collectives, the NCAA maintains compliance due to its indirect relationship with student compensation. For example, though coaches like Nick Saban earn $32 million contracts, their salaries are school-based, not paid by the NCAA. Thus, the NCAA’s benefit to student-athletes is incidental to its stated purpose—advancing amateur athletic competition.[15]
VI. Nepotism, Sexism, and Inequitable NIL Distribution
Concerns of nepotism have surfaced, with figures like Deion Sanders, now Colorado’s head football coach, overseeing his son Shadeur, who holds an NIL valuation of $4.1 million.[16] Sanders ranks second only to Bronny James in NIL value, raising fairness questions given the timing and family connection.[17]
Gender disparities also persist. Male athletes secure twice as many NIL deals, despite female athletes producing four times more audience engagement.[18] Gymnast Olivia Dunne’s $6 million in deals and the Cavinder twins’ 15 brand deals reflect growing NIL power among women, but they remain exceptions, not the norm.[19]
VII. Solutions and Legislative Proposals
To strengthen its regulatory role, the NCAA should support comprehensive federal legislation. The bipartisan “College Athletics Corporation” proposal would create a national NIL standard, mandate transparency in endorsement deals, and ensure equitable treatment by gender and sport.[20] It includes financial literacy training, scholarship protections, and mandated disclosure of program finances. [21]
Similarly, the “Protecting Athletes, Schools, and Sports Act of 2023” seeks to regulate boosters and NIL agreements more closely.[22] Together, these initiatives signal an impending shift toward centralized oversight, and the NCAA would be wise to prepare.
VIII. Conclusion
The NCAA must evolve. Students like Dunne, James, Sanders, and the Cavinders exemplify the new era of college athletics—one driven by social media influence and branding. Without clearer regulations and monitoring systems, NIL partnerships will continue to exploit athletes and the system alike.
While implementing stricter guidelines, supporting national oversight efforts, and collecting comprehensive data on athlete compensation would increase the NCAA’s relevance and insure its compliance with 501(c)(3) status, negating to publish comprehensive regulations on NIL is perfectly permissible. Because the Association’s mission is to promote amateur athletics – which it does by coordinating and regulating game play – remaining silent on outside revenue streams does not hinder its mission.
Alana Ford Watson is a writer, an artist, and a future lawyer. Born and raised in Detroit, MI, her artistic endeavors have led her to Paris, Seoul, New York, and now to law school; all to fulfill her mission of helping artists’ retain and increase their assets. After graduation in 2025, she hopes to work in Copyright, AI, art and fashion.
[1] “NCAA History.” NCAA.Org,. Accessed 4 Dec. 2023, http://www.ncaa.org/sports/2021/5/4/history.aspx.
[2] National Collegiate Athletic Association v. Alston, 141 S.Ct. 2141, 2141.
[3] Id.
[4] Id at 2153.
[5] Legislative Services Database – LSDBI,. Accessed 4 Dec. 2023, http://web3.ncaa.org/lsdbi/search/bylawView?id=238.
[6] Christovich, Amanda. “Led by Collectives, Year 3 of NIL to Reach $1.17B Market.” Front Office Sports, 28 June 2023, frontofficesports.com/led-by-collectives-year-3-of-nil-to-reach-1-17b-market/.
[7] “Inside NIL Collectives: How Minnesota and Penn State Are Working With Student-Athletes” Accessed 10, Dec, 2022,
businessinsider.com/inside-nil-collectives-minnesota-penn-state-work-with-student-athletes-2023-9?r=student-athletes-lp.
[8] Whateley, Dan. “How Nil Deals and Brand Sponsorships Are Helping College Athletes Make Money.” Business Insider, Business Insider, Accessed 4 Dec. 2023, http://www.businessinsider.com/how-college-athletes-are-getting-paid-from-nil-endorsement-deals#:~:text=A%20few%20athletes%20bring%20in,according%20to%20NIL%20company%20Opendorse.
[9] Armato, Leonard. “Pay for Play Is Alive in College Sports and Free Agency Has Arrived.” Forbes, Forbes Magazine, 20 Dec. 2022, http://www.forbes.com/sites/leonardarmato/2022/12/16/pay-for-play-is-alive-in-college-sports-and-its-time-to-realize-that-free-agency-has-arrived/#:~:text=The%20result%20is%20.
[10] “IRS GLAM Asserts That Many Nonprofit Organizations That Develop NIL Collectives for Student Athletes Are Not Tax-Exempt. ” Ernst & Young Tax News, 2023, taxnews.ey.com/news/2023-1093-irs-glam-asserts-that-many-nonprofit-organizations-that-develop-nil-collectives-for-student-athletes-are-not-tax-exempt.
[11] Id.
[12] Id.
[13] Whateley, supra.
[14] “Charity-Minded NIL Collective Aiming to Support Georgia Tech Athletes.” The Atlanta Journal-Constitution, https://www.ajc.com/sports/georgia-tech/charity-minded-nil-collective-aiming-to-support-georgia-tech-athletes/ZSUFSON6RRCEJNFZYKGE5UKKME/.
[15] Ernst, supra.
[16] “Deion Sanders Thriving in the NIL Ecosystem.” SponsorUnited, https://www.sponsorunited.com/posts/deion-sanders-thriving-nil-ecosystem.
[17] Id.
[18] “Female Athletes Dominate NIL Engagement.” SponsorUnited, 20 Oct. 2022, www.sponsorunited.com/insights/female-athletes-dominate-nil-engagement.
[19] Id. See also, Miami Booster John Ruiz and the Cavinder Twins Impact NCAA Ruling on NIL Business. “Ross Delinger, Sports Illustrated, 24 February 2023, https://www.si.com/college/2023/02/24/miami-booster-john-ruiz-cavinder-twins-ncaa-ruling-nil-business.
[20] “Booker, Blumenthal, Moran Announce Bipartisan Discussion Draft of Legislation to Protect College Athletes’ Health, Education, & Economic Rights: U.S. Senator Cory Booker of New Jersey.” Home, 20 July 2023,
http://www.booker.senate.gov/news/press/booker-blumenthal-moran-announce-bipartisan-discussion-draft-of-legislation-to-protect-college-athletes-health-education-and-economic-rights.
[21] As Sen. Blumenthal said; “For far too long the NCAA and powerful special interests have held sway, putting athletes second to dollars. Athletes deserve national NIL standards, a Medical Trust Fund, scholarship safeguards, protection against mistreatment and abuse, and more. America’s athletes—all 500,000—deserve these basic rights.” Id.
[22] Chapoteau, Ryan C. “Draft Bill on Name, Image, and Likeness: Uniform Standard Contract, Medical Trust, NCAA Authority. ” Legal News & Business Law News, National Law Review, 25 Aug. 2023, http://www.natlawreview.com/article/draft-bill-name-image-and-likeness-uniform-standard-c
ontract-medical-trust-ncaa#.
