What Exactly is a 3rd Party Administrator?
In the ever changing landscape of name, image and likeness (NIL), it is tough for University Athletic departments to get their arms around what their strategy should be for NIL. Athletic Departments, in many cases, are already understaffed and underfunded for the programs under their control. Continually evolving legislation and NCAA guidelines make any move seem perilous, and money flowing into collectives and out of development funds has caused massive confusion for everyone involved.
One thing is certain though, NIL is here to stay. Pandora’s box has been opened. Whether you love it or hate it, Universities must have a successful NIL program to build or maintain a successful athletic program.
The next logical questions are:
How do you start an NIL program?
How do you go about creating a successful program, if you have limited funding, time and NIL expertise?
What defines a successful program?
Maybe you’re lucky enough to already have an INFLCR or Opendorse marketplace at your school. Those are good tools, but also bring additional questions:
How many student-athletes are getting deals?
How are you ensuring that those deals are getting distributed equitably amongst players?
How are you ensuring that your players are doing the right thing with those deals and that money?
The last thing you need is a player going to jail because they failed to pay their taxes… So now what? What if we told you that it was possible to “have your cake and eat it too”?
Go to the Standard Playbook
It might shock you to know that you already have the answers. As a matter of fact, your school has already been doing this for decades. Third party administrators (TPA) are already managing your school’s logos, and media rights. These TPA’s take care of all of the university's needs when it comes to those areas. Whether it’s managing logos for t-shirt sales or brokering multimillion dollar TV and streaming, TPAs take care of everything.
NIL is Intellectual property
If you take a deep look at NIL, it’s actually just an intellectual property (IP) problem, just like your university logos and other trademarks. The only difference is that the rights holders are your student-athletes. This means a few more stakeholders, but it’s essentially the same problem, so why not use the same solution – utilizing a TPA?
NIL Third Party Administrators
This brings us back to the question, what is an NIL TPA and what do they do? In essence, an NIL TPA is your one-stop solution for everything NIL. They bring a large body of capabilities and expertise to the table to help build, implement then operate an NIL program for your university. This allows you to have a full-service NIL capability for your Athletic department without having to build one from scratch or hire internal resources to manage. This can be a massive win for universities that either haven’t yet built anything inside the NIL ecosystem or have started but don’t have the internal manpower, resources or expertise to continue to support it.
NIL TPA Capabilities
Just like CLC or Learfield are not a one-size solution, your NIL TPA should not be either. It's important to outline some of the key capabilities that an NIL TPA will bring to the table.
NIL Compliance and System of Record
One of the most important components of any NIL program is compliance. As rules, regulations and laws shift, Universities will need to make sure they are well positioned to defend themselves in the event that a student-athlete or athletic program gets tangled in a complex NIL legal dispute. Having a comprehensive NIL "system of record" ready for an inquiry or audit will be a cornerstone of successful and resilient NIL programs.
Note: While many NIL marketplaces pitch their clients their "compliance" components, as a buyer, you should always understand how that tool interacts with the larger market. Typically, only deals originating from the marketplace are captured by the tool, and the process of manually adding a deal (if possible at all) is often such a cumbersome process that it is often simply not done. Additionally, while many, if not all, of those tools allow student-athletes to manually add those deals, we see proactive compliance with that practice being near 0%
Donor /Collective Coordination
One of the most surprising revelations of the NIL era has been the rise of the NIL Collective. This new organization has massively impacted the way the NIL game is played. That being said, much of the “Wild West” mentality and problems have come from collective operators “going rouge” which has caused a massive amount of problems for Universities and students-athletes. Not every University may need a collective. In fact, a well-established TPA may even prevent that need from arising due to the fact that TPAs can work directly with donors (with guidance from the University) to provide NIL opportunities and capabilities that would otherwise fall to a collective.
In fact, there are many cases where there are existing collectives, yet there is a need to start a new collective. Your TPA can directly interface with these collectives to help ensure all of the NIL best practices are being followed and all of their activities are within the state, federal and NCAA guidelines.
Player Education and Engagement
The center of any successful NIL program will be a set of strategies and tools to help continuously educate and engage student-athletes in the NIL ecosystem. Standing up an educational program that is not just “checking a box” is step one. Having a once per year seminar is great, but that’s just a starting point. A TPA will work with you to create an engaging and effective educational program that continuously works to make sure your student-athletes are up to speed on the latest and greatest trends in the NIL space.
Deal Analysis and Negotiation
A TPA is able to represent the student in issues pertaining to deal negotiation with brands. This allows us to give fair and unbiased feedback to the student-athlete when looking at their contracts so they can make the most well-informed decision possible. This, combined with the fact that you can do direct deal sourcing and negotiation with brands, allows you to not only help manage the NIL program but also bring brands in to do NIL deals with your students-athletes.
A robust NIL program will consist of tons of people, processes and systems. You’ve got Opendorse, great, who’s monitoring the incoming deals? You’ve got INFLCR, cool, who's approving businesses in your local exchange? You have some educational materials, even better, who's making sure all of your student-athletes are leveraging and understanding those materials even if they miss the initial training or join mid-year? Likely, one of the most important capabilities for an NIL TPA, will be the overall operational management of the program. With hundreds of student-athletes, dozens of sports, administrators, local businesses, donors and collectives, there are a lot of moving pieces. Your TPA can take control of all of these NIL activities and manage them effectively without putting that burden on the Athletic Department.
As this article has laid out, there are lots of things to consider when building an NIL program for your University. It can feel overwhelming at the start. We are all slowly coming to terms with the fact that NIL is here to stay, and we will all need an NIL capability for our Athletics department. Whether you're ready to begin your journey, or are already down that path and not sure where to go next, Athlete Licensing Company is here to help. We can help you map out a strategy based on your program’s needs and stage then help make sure you have the resources to execute.
If you’d like to learn more about ALC’s Third Party Administration program please feel free to reach out here and we can set up an initial FREE consultation.
ALC is a tech-enabled NIL/IP rights management company that connects student-athletes, universities, collectives, brands and agents. The company puts student-athletes at the center of the ecosystem by providing an app, Club NILlionaire, which enables them to optimize and manage their NIL opportunities. The company’s GameDayNIL platform is a software-as-a-service offering that allows for efficient, transparent sponsorship facilitation, payment enablement and reporting, and compliance oversight. ALC boasts a wealth of experience in intellectual property management and brings significant expertise in NCAA, state and school compliance requirements.