CSC Tightens NIL Rules“Valid Business Purpose” Now Required

If you work in college sports, you’ve probably noticed that the era of “just write the check and hope nobody asks questions” in NIL is officially over.
With the rise of the College Sports Commission (CSC) and its new enforcement muscle, one phrase now dominates every NIL conversation:
“valid business purpose.” If a deal doesn’t have it, that deal probably isn’t going to fly.

The latest CSC guidance tightens how NIL agreements are evaluated, especially when boosters, collectives, and other “associated entities” are involved.
On paper, this is all about stopping disguised pay-for-play. In practice, it means everyoneathletes, collectives, brands, and schoolshas to think and act
more like a real business and less like a bagman with a LinkedIn.

Quick Refresher: NIL, the House Settlement, and the CSC

Since 2021, college athletes have been allowed to profit from their name, image, and likeness (NIL). That change triggered a rush of deals,
and NIL collectives quickly became the main vehicles for funneling money to players. Some were legit marketing engines; others looked suspiciously like
“sign here and enjoy your stipend” operations.

After a wave of antitrust lawsuits, the House v. NCAA settlement reshaped the system again. Under that settlement:

• Schools can now pay athletes directly, up to a revenue-sharing cap per year.
• Third-party NIL deals (especially from collectives and boosters) are still allowedbut only under stricter guardrails.
• The College Sports Commission (CSC) was created as an independent enforcement body to vet deals and enforce the new standards.

The CSC uses a clearinghouse process (often branded as systems like “NIL Go”) to review deals above certain thresholds and to confirm that each one
meets key requirements. At the center of that review is a deceptively simple question:
“What’s the actual business reason for this payment?”

What Does “Valid Business Purpose” Actually Mean?

In the NIL context, a valid business purpose generally means:

• The deal promotes or endorses real goods or services that are available to the general public for profit.
• The company (or collective acting like a company) is doing something a normal business does: selling products, offering services, building a brand.
• The compensation is roughly fair market value for the athlete’s actual promotional work, compared with similar influencers or endorsers
  who aren’t college athletes.

In other words, the CSC is trying to distinguish between:

• Real marketing deals (for example, a regional restaurant chain paying a star guard to appear in commercials and promote a new menu item
  on social media), and
• Disguised recruiting payments (for example, a collective paying that same guard a six-figure “appearance fee” to show up at
  a booster event that exists purely to raise money to pay more athletes).

Under the tightened CSC rules, if the main “product” is basically paying athletes, the deal is on thin ice. If the main product is
something the public can buymerchandise, tickets, memberships, servicesand the athlete is helping sell it, the deal is much more likely to be cleared.

Examples of NIL Deals That Likely Pass the “Valid Business Purpose” Test

The CSC hasn’t given an exhaustive list of what’s allowed, but its guidance, public commentary, and early enforcement activity give us some clear patterns.
Here are examples of deals that typically fit the new standard:

1. Traditional Endorsement Deals with Real Brands

Think of classic sports marketingjust with college athletes instead of pros:

• A sneaker company pays a star forward to appear in digital ads and post about a new shoe line.
• A local grocery chain uses a women’s volleyball player in a regional ad campaign promoting healthy snacks.
• An online training platform partners with a track athlete to demonstrate drills and drive paid subscriptions.

In all of these, the “business purpose” is obvious: sell more stuff. The company has a product, the athlete has an audience, and the relationship
looks like a normal advertising deal.

2. Collectives That Actually Sell Something

Under the tighter rules, collectives are not automatically disqualified, but they do need to function more like real businesses:

• A collective runs a subscription-based fan platform with behind-the-scenes video content, live Q&A sessions, and member-only events.
  Athletes are paid to create content and show up for scheduled live streams.
• A collective sells licensed merchandisejerseys, hoodies, signed itemsand pays athletes based on sales tied to their image or personal brand.
• A collective organizes branded youth clinics, charges registration fees, and compensates athletes for coaching and appearances.

Here, the collective still supports the program, but it’s offering tangible services or products to paying customers, not just redistributing donor cash
as “appearance fees” for vague activities.

3. Social Media Influencer Partnerships

Many NIL deals now look like typical influencer marketing:

• A nutrition brand pays a cross-country runner to post about a recovery drink on Instagram and TikTok with trackable promo codes.
• A regional car dealership gives a quarterback a short-term lease in exchange for posting about the dealership and shooting a few commercials.

As long as the campaign targets real customers, the deliverables are documented, and the pay rate is comparable to what a similar influencer would get,
the “valid business purpose” requirement is usually satisfied.

Deals That Are Now Much More Likely to Be Rejected

The CSC’s tightened NIL rules are particularly tough on arrangements that look like pure recruiting or retention payments. Red flags include:

1. Fundraising-Only Events for Collectives

Imagine a collective hosting a gala where the “product” is basically donations. The collective invites several athletes, charges big-ticket prices,
and pays each athlete a large fee just to attend and mingle with donors.

Under the CSC standard, that kind of deal is problematic because:

• The primary goal is to raise more money for the collective itself, not to sell goods or services to the public.
• The collective isn’t clearly operating as a traditional business; it’s more like a fundraising arm with extra steps.

If the only “customer” is the donor base and the only “product” is “access to athletes,” the CSC is far more likely to say the deal fails
the valid business purpose test.

2. “Show Up and Get Paid” Appearance Deals

Another category under heavy scrutiny: thinly described “appearance” contracts where the athlete:

• Doesn’t promote or endorse a specific product or service, and
• Gets paid simply to be in the room for a collective or booster event.

If the contract doesn’t clearly require promotional workposts, ads, Q&As, content creation, coaching, or something tied to a real offeringit risks
being viewed as a pay-for-play mechanism masquerading as NIL.

3. Suspiciously High Compensation with Vague Deliverables

Even when there is a nominal product or service, the CSC now expects schools, collectives, and companies to justify the dollar amount.
If a bench player with a small following is paid like a major professional star for a couple of social media posts, the clearinghouse will want answers.

That’s where the fair market value concept intersects with the valid business purpose requirement: it’s not enough for the deal to
technically involve an ad campaign. The price has to make sense in the real world.

How the New Rules Change the Game for Key Players

For Student-Athletes

The good news: athletes can still earn meaningful NIL income. The bad news: they can’t just sign anything that lands in their DMs.

Under the tightened CSC standard, athletes should:

• Expect more structured contracts with clearly defined deliverablesposts, appearances, content quotas, or campaigns.
• Keep detailed records of what they actually did for each deal (screenshots, content files, event schedules).
• Understand that deals tied only to choosing or staying at a school are flashing red lights.

For high-profile players, these rules can actually be a blessing in disguise. The more NIL looks like real marketing work,
the more experience they build for life after collegewhether that’s pro sports, business, or both.

For Collectives

Collectives are under the brightest spotlight. Some early CSC guidance suggested collectives might never meet the valid business purpose standard.
Subsequent updates walked that back, but only on the condition that collectives behave like normal commercial entities.

Practically, that means:

• Designing offerings (content, events, merchandise, memberships) that real customers knowingly buy.
• Documenting how athlete involvement drives that offeringwho appears, what they do, how often they participate.
• Being prepared to justify pricing with basic market logic: “Here’s what we sell; here’s how the athlete’s brand helps us sell it.”

Collectives that cling to the old “we just raise money and pay players” model will face repeated rejections, frustrated athletes,
and potentially very awkward follow-up questions from regulators and courts.

For Schools and Compliance Offices

Schools now walk a tightrope: they aren’t supposed to run NIL deals themselves (that’s what third parties are for), but they also can’t ignore
CSC rules and hope everything works out.

Most compliance departments are responding by:

• Creating checklists and intake forms that ask, up front, “What’s the business? What’s the product? What’s the athlete’s role?”
• Working closely with collectives to educate donors and board members about what “valid business purpose” really means.
• Building internal tracking systems for contracts, deliverables, and reportingbecause deals above certain thresholds must be reported and
  may be reviewed in detail.

The CSC has also signaled that it’s willing to act on tips and reporting tools, so schools that ignore obvious problems risk finding out
about their issues from headlines instead of internal audits.

Practical Compliance Tips to Survive the New NIL Era

If you’re an athletic department, collective, or brand trying to stay on the right side of the CSC, here are some practical moves:

1. Start Every Deal with the Customer, Not the Athlete

Before you ever talk about compensation, ask:
“Who is the customer and what are we selling them?”
If you can’t answer that clearly, you probably don’t have a valid business purpose yet.

2. Put Deliverables in Writingand Make Them Real

Contracts should spell out:

• How many posts, appearances, or pieces of content the athlete will provide.
• Where and how those deliverables will be used to promote goods or services.
• Any performance metrics or timelines that matter to the campaign.

Vague phrases like “general promotion” or “brand support” won’t impress a clearinghouse reviewer.

3. Benchmark Compensation Against Actual Influencer Markets

You don’t need a Wall Street valuation model, but you do need some logic. Look at:

• Follower counts and engagement rates.
• Comparable influencer or local celebrity deals in your region or niche.
• How much time and effort the athlete will realistically invest.

If you can’t explain to a skeptical outsider why the price is fair, assume the CSC will be just as skeptical.

4. Separate Recruiting from NIL, Completely

This is the tempting partbut also the most dangerous. NIL deals should not:

• Be contingent on signing with a particular school.
• Promise renewals solely for staying on a roster regardless of marketing performance.
• Be negotiated primarily by individuals whose only role is recruiting athletes to that school.

The more NIL conversations sound like contract negotiations for on-field performance, the more likely they are to trigger enforcement.

Why the “Valid Business Purpose” Rule Isn’t Going Away

Some stakeholders hope the valid business purpose requirement will quietly weaken over time. That’s unlikely. The standard solves two problems at once:

• It helps courts and regulators feel more comfortable that NIL money is tied to actual commercial activity, not simply disguised salaries.
• It gives the CSC, conferences, and schools a relatively clear test they can apply across thousands of deals without rewriting the rulebook every month.

Over time, we can expect more case studies, more examples, and perhaps some tweaksbut the core idea is almost certainly here to stay:
if you’re paying a college athlete, you’d better be doing it for a reason that makes sense to a normal business.

Experiences from the Field: Living with the New CSC NIL Rules

To understand how these tightened rules play out in real life, it helps to look at how different stakeholders are adapting.
Here are some composite, experience-based scenarios drawn from how schools, collectives, and athletes are adjusting to the “valid business purpose” era.

A Mid-Major School Learns to Say “Show Me the Business Plan”

At a mid-major university with a passionate basketball fan base, the main collective originally ran on a simple model: raise donations, pay players,
and call the payments “appearances.” Everyone knew it wasn’t sustainable, but it workeduntil the first wave of CSC guidance landed.

When several of the collective’s contracts were flagged for lacking a clear business purpose, the compliance office had an uncomfortable conversation
with the board. Instead of shrugging and blaming “red tape,” the school’s athletic director insisted on a reboot:

• The collective built a subscription-based fan platform with behind-the-scenes video and player-hosted live streams.
• Players received detailed content calendars and clear expectationshow often to record, when to go live, what topics to cover.
• Donors who previously wrote checks with no strings attached were now encouraged to become paying subscribers or event attendees.

The transition was rough. Some donors grumbled that it felt “too corporate.” But when the next batch of contracts cleared quickly,
and revenue stabilized around a real product, everyone relaxed a bit. The message was clear: if you want NIL to last, it has to look like a business,
not a loophole.

An Athlete’s “Dream Deal” That Didn’t Survive Review

A star freshman in women’s soccer thought she’d hit the jackpot when a local collective offered her a sizable “appearance fee” to attend a single
fundraising dinner. The deliverables section of the contract was one vague line: “Player will attend event and interact with guests.”

On paper, it looked harmless. In practice, it raised every possible red flag:

• There was no advertised product or service besides access to athletes.
• The event’s only purpose was to raise more donations for the collective.
• The compensation was out of proportion to the time required.

When the deal hit the clearinghouse, it stalled. Compliance staff worked with the athlete and the collective to restructure it:

• The event was rebranded as a sponsored clinic with paid registration for local youth players.
• The athlete’s role expanded to include demonstration drills, a Q&A session, and post-event social media promotion for the sponsor.
• The fee was adjusted to match similar clinic rates in the region.

The athlete still got paid, but now the contract had a real business backbone. She later joked that it was the first time she’d ever read
a contract line by linesomething that will probably help her long after her college career ends.

How Compliance Staff Are Reframing NIL Conversations

Compliance officers used to be cast as the “no” people. With the CSC’s tightened NIL rules, some departments have flipped their approach:
instead of waiting to reject bad deals, they’re actively consulting on how to design good ones.

One compliance director describes her new script like this:

• Step 1: Ask the payor, “If this athlete disappeared tomorrow, what product would you still be selling?” If the answer is “none,” that’s a problem.
• Step 2: Ask, “How would you explain this compensation to someone who doesn’t care who wins Saturday’s game?” That forces the conversation into business terms.
• Step 3: Help both sides document deliverables and timelines before a single dollar changes hands.

It’s more work, but it’s also more sustainable. Instead of shutting down NIL energy, this approach channels it into deals that can both withstand
CSC scrutiny and genuinely build the athlete’s personal brand.

Why These Experiences Matter Going Forward

The common thread in all of these stories is simple: once you accept that “valid business purpose” isn’t a technicality but the core of NIL,
your strategy changes. Collectives rethink their models. Athletes become more selective and more professional. Schools invest in education instead of
damage control.

The CSC’s tightened rules can feel restrictive in the short term, especially for those used to the anything-goes early NIL era. But for programs willing
to adapt, they also create a clearer, more stable path: treat NIL as real business, and it can flourish; treat it as a workaround for old recruiting habits,
and it will keep hitting the regulatory wall.