One common misunderstanding is that a collective is part of a university. While collectives are usually very closely associated with universities, they are not actually a part of the university. Instead, a collective is a third party. The reason for this is that NCAA rules prohibit universities from directly paying student-athletes for NIL. Thus, the third-party collective pays the student-athletes, allowing the university to keep its hands clean.
There is another strategic advantage to keeping the collective separate from the university: recruiting. Technically, nobody is supposed to use NIL payments to recruit players. While this might sound good in theory, the reality is that NIL deals are a big factor that student-athletes consider when choosing which school to attend. Universities and collectives know this, so it could be advantageous for universities and collectives to push the limits of communicating potential NIL deal terms to prospective athletes. To the extent NIL discussions do take place before a student-athlete has decided which university to play for, universities might take some comfort in those discussions being driven by the third-party collective. If anything, it can keep key individuals (think coaches) out of potentially questionable conversations about NIL deal terms.
The prohibition on recruiting student-athletes with NIL money puts collectives and universities in a tough spot. On the one hand, they need to be careful to comply with NCAA rules. On the other hand, they need to compete with other collectives and universities that are trying to attract the same players. There are many different approaches to navigating the ambiguities in this space, but every university and collective has the same goal: figure out how to attract and retain top talent in this new NIL era.
