NIL’s Third-Party Industry

The Wild West of College Sports

Author

Samuel Rogers
December 29, 2025

Billions in athlete payouts. Hundreds of third-party players. Zero unified regulation.
Welcome to the NIL economy — where chaos has a business model.

💵 The NIL Explosion

When the NCAA opened the door for college athletes to profit from their Name, Image, and Likeness (NIL) in July 2021, they didn’t just unleash opportunity — they accidentally created a parallel economy.

In three short years, a $1.6 billion market has emerged.
But here’s the kicker: over 80% of NIL money doesn’t come from brand deals.
It comes from third-party collectives — booster-funded organizations operating in a legal gray zone.

💬 “It’s not pay-for-play… but it’s not not pay-for-play.” — NIL Collective Executive, anonymous (Front Office Sports)

📉 The Third-Party Problem

Front Office Sports recently summed it up: “NIL has birthed a third-party cottage industry — and it’s a mess.”
They’re right.

The NIL ecosystem is now a chaotic web of middlemen — collectives, agencies, consultants, and nonprofits — all taking a cut.

Let’s break down the numbers:

Category

Estimated Share of NIL Dollars

Primary Funding Source

Oversight

Booster Collectives

78%

Donor / alumni pools

Minimal

Brand Endorsements

17%

Corporate marketing budgets

Moderate

Platform Marketplaces

5%

Digital NIL platforms

High

NCAA / School Governance

<1%

Institutional

Low-to-none

🏦 The “Nonprofit” Game

Many NIL collectives have registered as 501(c)(3) nonprofits, claiming to serve charitable purposes.
The IRS disagrees.

  • In 2024, the IRS warned that most NIL collectives “serve private interests” — i.e., athletes — and don’t qualifyfor tax-exempt status.

  • As of mid-2025, more than 60 NIL nonprofits are under active IRS review.

  • Potential clawbacks and fines could exceed $100 million.

Translation: the “nonprofit” NIL model may collapse before the decade ends.

⚖️ Regulatory Whiplash

With each state writing its own NIL rules, the landscape is fractured:

  • 37 states have NIL legislation — none consistent.

  • 19 explicitly allow boosters to fund athletes.

  • 6 ban direct payments but fail to define “direct.”

  • The NCAA’s “NIL Go” deal-approval system launched this year — and collectives are already ignoring it.

🔍 Front Office Sports reported that multiple collectives have begun “bypassing” NIL Go entirely, citing slow approvals and bureaucratic delays.

Regulation isn’t catching up. It’s being outrun.

📊 Winners & Losers

Winners:

  • Elite Programs: Alabama, Texas, Oregon, and Georgia dominate NIL value.

    • Average NIL pool per athlete: $55K+

    • Top-5 QB average NIL valuation: $2.8 M

  • Third-Party Operators: NIL agencies and consultants taking 10–20% commissions.

Losers:

  • Mid-Majors: Competing for talent without major collective backing.

  • Athletes without representation: Roughly 65% of NIL contracts lack professional legal or tax review.

  • Fans and donors: Increasingly funding “phantom endorsements” with minimal transparency.

🧩 The Coming Shakeout

Three converging trends point to a coming reset:

  1. Direct-pay era:
    Pending antitrust settlements will allow schools to pay athletes directly, under a $20 million annual cap.
    → Expect a 50% reduction in third-party collective activity.

  2. Federal standardization:
    Congressional NIL framework expected in 2026, consolidating rules and mandating deal disclosure.

  3. Market correction:
    As ROI data on NIL spending emerges, expect brand deals to consolidate around the top 5% of athletes who actually move product or engagement metrics.

🚀 Strategic Insight

The NIL gold rush mirrors every new market cycle: early chaos, easy money, inevitable consolidation.

The data says:

  • 90% of NIL money flows to 10% of athletes.

  • Over 200 collectives operate nationally, yet less than 15 manage >$10 million annually.

  • By 2027, at least half of current collectives will either merge, fold, or be absorbed by schools.

This isn’t just about sports — it’s about governance, incentives, and market correction.

NIL started as empowerment. It’s evolved into arbitrage.

💬 Blunt Take

College sports built an open market without rules — and now everyone’s surprised it looks like Wall Street.

The problem isn’t money.
It’s the absence of structure.
Until NIL becomes transparent, auditable, and regulated, chaos will remain the business model.

⚡ The Bottom Line

NIL created a new economy.
It just forgot to build a system to manage it.

Winners: early movers, elite programs, and organized collectives.
Losers: everyone without a lawyer.

The next phase of NIL won’t be about paying athletes — it’ll be about regulating the middlemen.

If you follow the business of sports, pay attention to NIL — it’s the single fastest-evolving economic engine in American athletics.
This market will define the next decade of college sports revenue, recruiting, and regulation.

Men lie. Women lie. The numbers never do.