Be Careful What You Win: The CSC Lawsuit's Hidden Risk
Why It Matters
Last month, it was reported that USC and Stanford athletes are suing the College Sports Commission, alleging the CSC's compensation restrictions constitute illegal price fixing. If they win, the gatekeepers disappear. On the surface, that sounds positive for student-athletes and the free market.
But is it? What regulatory framework fills that void—and could it accidentally lower the ceiling for college athlete compensation?
The Mechanism
Right now, the CSC approves or denies NIL deals based on two fuzzy tests: valid business purpose and reasonable compensation range.
Fuzzy isn't always bad. Fuzzy can be advantageous. A deal that doesn't fit neatly can be negotiated, reframed, pushed back on—but it doesn't automatically get benchmarked against a formal legal comparables system. And in that gray zone, compensation has grown to $3.5B currently, on pace for $5.1B by 2030—second only to the NFL (according to Opendorse.)
The lawsuit argues the CSC is illegally suppressing compensation by restricting deals through the NIL Go clearinghouse. The legal argument sounds clean: remove the gatekeeper, let the market decide.
But won't something replace it?
The Hidden Reclassification Risk
Here's the trap. When a court or regulator classifies college athletes for tax and legal purposes, the baseline comparison matters enormously.
Currently, courts treat college athletes under "professional athlete" comparables. That's where the $5.1B trajectory (that Opendorse cites) lives.
But federal tax code has another classification: "other spectator sports"—a bucket that includes amateur athletes, Olympic competitors, semi-pro leagues, and college sports as traditionally defined (no pay).
If reclassified, college athletes could be benchmarked against Olympic athlete compensation (significantly lower) and semi-pro comparables (much lower), not NFL/NBA standards.
In our NIL Forum Office Hours this month, one of our members (a tax expert) put it plainly: "If athletes get lumped into 'other spectator sports' instead of professional athlete benchmarks, they've just created a fair market value ceiling that's a tenth of where the market currently is."
Same athlete. Same university. Same market demand. But suddenly classified as amateur, so fair market value collapses.
The lawsuit could win tomorrow. A court could dismantle the CSC in six months. But the replacement framework—whether it's a new regulatory body, legislation, or default legal classification—won't be written by athletes. It will be written by lawyers, lawmakers, and tax code authorities.
The Bottom Line
The CSC is imperfect. Its standards are opaque. But it's more permissive than the legal framework that could replace it.
Before the lawsuit concludes, someone should model what happens if the CSC loses.
Because once the void appears, you don't get to negotiate what fills it.
About
The NIL Forum is the advantage for people making NIL decisions — providing monthly live speakers, proprietary data, and networking. NIL Forum Founder Bill Carter has advised brands on Name, Image, Likeness for 25 years — first in pro sports, now at the college level. He was the Co-Founder of the Gen Z sports agency Fuse, which he sold in 2019. In 2020, he founded Student-Athlete Insights and consults on NIL strategy with Fortune 500 companies and 30+ DI universities.