I noticed many mentions of the dark side of the new NIL reality. I had mentioned this previously but thought it might be of enough interest to merit a thread. Here in SEC land, some schools have inventive NIL structures. They have pooled some investors/ supporters for the collective. When the collective learns of a target their school really wants, the collective creates a new LLC. This new company gets a tax ID #, business license and develops a website. The recruit is signed by this new LLC to promote the company, which, In most cases, conducts no actual business. The businesses are usually described as consulting operations, that serve various industries. The kid is paid once/ month as long as he remains on scholarship. If the recruit is perceived as a flop, the business closes and the kid‘s deal dies. He has a legal position but only as an unsecured creditor and the LLC’s have no tangible assets to pursue. This technique is typically used for recruits. The current, established players are mostly signed by real companies. Most schools do have an NIL base for all scholarship players. This is also used to go beyond the 85 player limit. The former “preferred walk on” type deals are now basically full scholarships, as the recruit is given enough NIL money to cover everything. Knoxville, Baton Rouge and Gainsville no longer fret over the 85 limit.
It’s a Brave New World and it all happened in an instant.
