SBJ College: IRS ready to come for NIL collectives?

Most of the time, college sports departments don’t care about the IRS releasing a letter outlining priorities for the coming year. But this is one of those years.

A letter from the IRS on Monday specifically mentioned smarter enforcement around NIL collectives as a priority for the 2025 fiscal year: Among the priorities was for agency employees to “collaborate across [the] IRS on highly complex and or emerging issues including, but not limited to, examinations of tax-exempt hospitals, tax-exempt collectives utilizing NIL, and elective payment for certain clean energy credits.”

The note isn’t so much a warning as it is a continuation of ongoing discussions around NIL collectives. The IRS  issued guidance in spring 2023 suggesting such entities ought not claim 501c(3) status given they provide private benefits outside tax-exempt purposes. Monday’s mention in the letter was another logical step.

“The biggest concern is, do they truly operate under a charitable purpose or in the public interest,” explained Katie Davis, a licensed CPA and partner at the Florida-based tax firm James Moore & Co. “… The concern was the fact that there were donors that were contributing a lot of money and taking a tax write-off as a charitable contribution just to pay athletes. That really is the crux of the issue and what got them on the radar.”

What the IRS might actually do with NIL collectives is a matter of conjecture, though it’s worth noting the incoming Trump administration is likely to curtail the already limited resources with which the IRS currently works. 

Davis also pointed out the IRS, in practice, works backward. Basically, the door is open for possible audits even if/when schools wind down their tax-exempt organizations or if schools bring payment of players in-house in the wake of a  potential settlement in the House, Hubbard and Carter antitrust cases.

“The IRS takes a while to catch up,” Davis said. “Even though some of these collectives might start winding down, or things might be shifting away from the collective over to the university, that doesn't still forgive the collective for what maybe they've done in the past. They can still be audited. ... What the penalty would be if something found was wrong, if they're already winding down, it's probably not a big deal, because they're already winding down, but there could still be something that can come from that.”

Overtime has made its name in basketball, but college football is increasingly racking up the views.

The company launched a trio of athlete talk shows this fall with Colorado stars Shedeur Sanders and Travis Hunter, along with LSU basketball standout Flau’jae Johnson. So far, they’ve tallied over 200 million views via earned media, the company said.

“The last two years that Shedeur Sanders played in high school, we had a docuseries that followed Shedeur and Deion and that team, so we've been really well positioned in the football space,” explained Marc Kohn, Overtime’s president/content and media. “Shedeur and Travis embody the brand of Overtime, so it was really a pretty easy decision on, ‘Who are you going to target to do an athlete talk show in the college football space?’”

The fact that Overtime’s shows featuring Hunter and Sanders are succeeding shouldn’t come as a surprise. Each has well over a 1.5 million followers on Instagram, and their play on the field has made Colorado must-watch TV.

What the shows demonstrate further, though, is Overtime’s increasing efforts to diversify its content from the basketball-highlight culture it was built on to purveying storytelling and interviews across 75 different social channels.

“It's access that you can't get anywhere,” Kohn said. “And they're both real people. They’re open. They're honest. That authenticity that you get from both of them on a weekly basis really resonates.”

With Sanders and Hunter likely off to the NFL, barring something unforeseen in the coming months, what will Overtime do with the talk show platform it’s created? Considering the massive social impact the company has found in just two months of content, don’t be surprised if another college football star is filling up your feed next fall.

“It is certainly something that we've had a lot of inbound asks to partner on a bunch of these shows,” Kohn said. “We know that we have unlocked a category that we believe can be really massive for us, and so whether that is doubling our slate in the next 12 months, not so sure that is the number, but it's probably pretty close.”

• SBJ's list of Power Players: Women's Sports is out this week, and from the college space are A-10 Commissioner Bernadette McGlade, Oklahoma softball coach Patt Gasso and Texas Executive Senior Associate AD, Chief of Staff and Senior Woman Administrator Chris Plonsky.

• Allstate has spent decades advertising in the college space, and its Good Hands nets are a staple of those efforts at 97 schools, 26 bowl games, seven neutral-site contests and three conference title games ( SEC, Big 12 and Mountain West). Now, though, Allstate is expanding its college sports presence.

• The Rose Bowl and Rose Bowl Legacy Foundation unveiled a capital campaign to support a roughly $80 million renovation of the 102-year-old stadium that will help prepare the venue for a spate of major upcoming events, reports my colleague Bret McCormick.

• The ACC expanded its partnership with the consulting firm Elevate, and the revamped strategy between the conference and firm is expected to center on group sales for ticketed ACC championships such as football, men's and women's basketball, baseball and gymnastics.

• For the first time since launching in 1982, Ronald McDonald House Charities of Central Indiana will now have TVs in every bedroom thanks to a generous donation from DirecTV. The company also will be hosting some families as their guests at the Big Ten Championship Game and Fan Fest this Saturday in Indianapolis.