Newsletter, Image, Likeness Vol. 96: Should Athletes Be Giving Away A Portion Of Their House Settlement Funds To An NIL Claims Service?
Darren Heitner
Founder of HEITNERLEGAL — Sports, Entertainment, Trademarks, Copyrights, Business, Litigation, Arbitration
The Weekly Longer NIL Thought.
On September 5, 2024, there was a hearing before Judge Wilken concerning the potential preliminary approval of a settlement in the House/Hubbard/Carter v. NCAA cases. The result of that hearing is that there is still no settlement and there will never be one unless the parties can resolve what Judge Wilken believes to be a major issue -- third-party NIL restrictions intended to inhibit dealmaking between NIL collectives and athletes.
Jeffrey Kessler, counsel for the plaintiffs in the actions, told Judge Wilken that he does not expect such third-party payments from NIL collectives to be reduced as a result of the settlement and that, if anything, he believes they will increase. However, the NCAA's legal counsel said his client will not settle the case unless those NIL collective restrictions remain in place.
You can go back to Vol. 80 (May 17, 2024), where I commented that I didn't see how it was possible and found it unlikely that a federal judge, knowing there are many people following the matter, would rubberstamp what cannot be enforced, which is prohibiting booster pay if it is not based on "true NIL." Another issue I pointed out in Vol. 80, which Judge Wilken also noted concern about, is attaching individual athletes who aren't parties to the settlement in an attempt to prohibit them from suing the NCAA in the future. Finally, Judge Wilken expressed concerns about replacing one cap with another (on the amount of revenue sharing), which I discussed at length in Vol. 91 , where I further fleshed out the above issues.
Anyhow, the plaintiffs and NCAA may work things out with a revised settlement agreement that doesn't restrict NIL collective deals and persuade Judge Wilken that a cap is reasonable under the circumstances. This would avoid trial and push toward a system that pays athletes for back damages.
And that leads me to this week's real longer thought.
I reviewed a document this week from a group that claims to be an NIL claims service that was pitching an athlete to serve as his counsel.
Specifically, this group solicited the athlete to serve as some form of counsel regarding his possible claims under the House/Carter/Hubbard v. NCAA proposed settlement.
The pitch is that this group will represent the athlete (and other athletes) in exchange for a 15% commission if the athlete's "final compensation" from the House v. NCAA settlement (if approved) is more than 15% of the athlete's "original NCAA offered amount."
The following is provided as an example: "Athlete is offered $100,000 from the NCAA originally and [company] negotiates the total offer and claim value up to $200,000 then athlete will owe [company] $30,000 aka 15%."
We know there is $2.776 billion slated in back damages. This group seems confident that it can negotiate better compensation for individual athletes who may be entitled to a piece of the pie.
Maybe that is true, but it still doesn't sit right with me. I'm not arguing that this group is doing anything illegal, but it's not as though it is procuring a new opportunity for the athlete and substantially negotiating the terms of a contract thereafter. That would be a traditional agent type of role and often justifies taking a 15% commission. And when the athlete has found the deal (i.e. with an NIL collective) and the agent negotiates an increase in compensation thereafter, it could also be justified on the net increase in consideration.
But when it comes to a predetermined amount of money on a settlement? It just seems that an athlete would be in a much better position to hire legal counsel who is skilled at such a negotiation and will only bill for his/her time. That should fall well short of the 15% commission that is being requested here and one would hope that the lawyer wouldn't be charging the athlete if he/she is unsuccessful in increasing the originally offered amount of money.
Plaintiff Lawyer Jeffrey Kessler Comments On Potential Issue With An NIL Clearinghouse.
“The NCAA has indicated that it may change its enforcement bureaucracy or may even outsource it,” Kessler said . “Frankly, we don’t care if they do that or don’t do that. That’s up to them.”
“We’ll see what the NCAA tries to impose,” Kessler added. “The NIL [collectives] have not agreed to anything. If the NCAA tries to punish a student or school, if they try to take action against an NIL [collective], I think they’ll probably see that NIL organization in court.”
These comments came before the preliminary approval hearing on September 5, 2024.
Mike Gundy Hints That He's Willing To Initiate Legal Action Over NCAA Denying QR Codes On Player Helmets.
He apparently said he intends to fight the NCAA on its position and that he would seek legal recourse if necessary.
“If you read the rule like I did, it’s judgmental,” Gundy said. “Anything judgmental doesn’t hold up in the court of law. But I don’t want to put something on their helmet and then punish (the players).
JLab Audio Company Signs NIL Deals With 11 Athletes.
The deal was facilitated by Excel Sports Management and the athletes who will promote JLab are:
领英推荐
Top 2025 Wide Receiver Signs With Rosenhaus Sports.
Canes Connection Is Rightfully Getting Its Praise.
The NIL collective co-founded by Zach Burr has done a great job helping push the Miami Hurricanes back to a powerful program.
"It's been a three-year process of Mario's sweat and blood and everything else to try to rebuild this roster," said Zach Burr, co-founder of the NIL collective. "For us to be able to play a small part in helping him to do that days like [Saturday] validate all the hard work."
Dennis Dodd reported that the collective intends to raise $10 million annually.
Full disclosure: HEITNER LEGAL provides legal assistance to Canes Connection.
UCF Collective Jumps On Opportunity To Poke Fun At UF While Earning Some Cash.
This is related to Florida head coach Billy Napier's comments about people in rural Central Florida tweeting from their basements.
Ole Miss QB Jaxson Dart Signs $100+ NIL Deal With C Spire.
“I’ve had the right people in my corner who helped guide me through and make sure that I saw things for what they were instead of what was shown online,” said Dart. “By partnering with C Spire, I want to be able to help other people embrace that and grow each and every day.”
Dart is represented by ESM.
Auburn Coach Hugh Freeze Highlights Some Of The Good Coming Out Of NIL.
He said, "Many [Auburn players] decided to give portions of their NIL along with Jill and I to meet the needs of 13 families in the state of Alabama to help keep their children out of the foster care system."
Pat McAfee Promises $1 Million To West Virginia's Collective.
Final Thoughts.
That is it for Vol. 96 of Newsletter, Image, Likeness. Thanks to the more than 9,065 people who have subscribed to this newsletter thus far, and please feel free to share this free resource with others on LinkedIn or elsewhere.
Outside of LinkedIn, you can follow me on Twitter and Instagram . And if you ever require legal assistance, check out Heitner Legal .
Business / Civil Litigation Attorney, Consultant, and Entrepreneur
2 个月Really not surprised by this. Excellent job as usual, Darren.
Co-Founder/ COO Long-Term Profitability at the Intersection of Sports, Business, Executive Leadership, and Finance. $75MM+ Sponsorship Revenue.
2 个月Darren Heitner, Richard G. Johnson, I enjoy the dialog. The legal side to the evolution of college athletics has so many rabbit holes. The legal side is great material. For those of us not regularly in a courtroom, it keeps us informed enough to think we're in the courtroom regularly. ?? ?? . I appreciate you sharing the knowledge. Cheers and Thank you.
Masters in Sports Leadership
2 个月Great article
Plaintiff's Lawyer & Sports Agent Malpractice ? Legal Ethics & Professional Responsibility Issues ? College Athlete Rights Advocate
2 个月Well, at least she didn’t approve the fake settlement … And at least she noted that class counsel was not so hot, while it sounds like the NCAA’s counsel is ready to take his marbles and go home. It doesn’t sound like she focused on many of the issues I had or the ones Maddie Salamone has previously outlined. Whether she gets that she’s being asked to impose a labor agreement on the class, as well as regulate college sports, I think that she heard it, but that this elephant of a proposal is so brazen, so off the charts, that she just seems to be recoiling from the whole thing. Even now, it’s hard for me to explain in how many dimensions this fake settlement goes off the rails. It does sound like she realizes that the classes are misdefined, but what she’ll do about that, who knows. My first guess is that she’ll lift the stay and rule on summary judgment. My closing thought is that class counsel should be ashamed of themselves, their overreaching, their piggishness, their collusion with the defendants, their conceit, etc., just contemptible in my view. Whether she’ll reexamine class counsel’s obvious conflicts once the stay is lifted, who knows, but this is the opposite of good lawyering.
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2 个月Great story