College Sports Commission wins key ruling in winning oversight of certain multimedia rights deals

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SAN JOSE, Calif. (AP) — A federal magistrate ruled Thursday that multimedia rights companies that represent athletic departments can continue to be subject to the same rules governing millions in third party name-image-likeness payments to players that are reshaping college sports.

Northern District of California Magistrate Judge Nathanael Cousins, who was appointed to hear disputes related to the landmark House settlement, denied a request to rule that MMRs and third-party brand sponsors should not fall under the same reviews by the College Sports Commission as do collective and booster deals.

“This ruling affirms that the CSC has been correctly applying the language of the settlement as written," commission CEO Bryan Seeley said in a statement. "Our enforcement of the rules has been, and will continue to be, fact-based and consistent with the settlement that plaintiffs’ lawyers negotiated and was agreed to by all parties.”

Cousins heard arguments on the request on June 10. Plaintiffs' attorney Steve Berman told Sportico an appeal was planned to U.S. District Judge Claudia Wilken, who oversaw the House settlement.

Many schools have arrangements with MMRs to act as the marketing arms for their athletic departments and arrange third-party NIL deals with athletes.

Plaintiffs attorney Jeffrey Kessler argued that boosters and booster collectives, which have in some cases been replaced by MMRs as the key NIL negotiators, should be deemed associated entities but not the MMRs themselves. The magistrate disagreed, siding with the NCAA and power conferences named as defendants.

“The court will not categorically declare MMRs as not associated entities. First, it is possible that some MMRs do fall within the term,” Cousins wrote. “Second, there is no support in the record for plaintiffs’ proposition that all MMRs are not associated entities. ... it would be too speculative and overbroad to conclude MMRs are not associated entities.”

The CSC was formed to analyze NIL contracts to make sure they conform with the guidelines set up by the House settlement. The ruling affirms that certain deals by MMRs and third-party brand sponsors — Disney and Nike were possible examples mentioned during House hearings — remain subject to commission review. Without CSC scrutiny, it could have set a course for more spending.

The topic has been closely watched for months. In May, an arbitrator ruled in favor of the commission in a case brought on behalf of Nebraska football players that was viewed as a key test for the new entity.

The arbitrator affirmed the commission’s decision to reject third-party NIL agreements between Nebraska’s multimedia rights partner, Playfly, and the players. At issue was whether Nebraska’s MMR partner would be considered an “associated entity.”

The CSC said the arbitrator rejected the deals because they lacked what the CSC calls a “valid business purpose” in that they did not include goods or services offered to the general public for profit and because Playfly violated a rule against “warehousing” NIL rights, in essence paying for the rights to use for some purpose later instead of employing them right away.

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