Dan Murphy
CloseDan Murphy
ESPN Staff Writer Covers the Big Ten Joined ESPN.com in 2014 Graduate of the University of Notre Dame
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Max Olson
CloseMax Olson
ESPN Staff Writer Covers the Big 12 Joined ESPN in 2012 Graduate of the University of Nebraska
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Multiple Authors
Mar 24, 2026, 07:50 AM ET
Less than a year after implementing a multibillion-dollar settlement designed to bring stability to college sports, the richest teams in football are blowing past the spending cap their schools agreed to follow, testing the strength of the thin tethers that keep all 138 Football Bowl Subdivision programs competing under the same tent.
The deal, known as the House settlement, established a set of rules for paying players that was intended to prevent the top programs from spending at a pace that made it impossible for the 100-plus other schools to compete. But driven by a fear of falling behind their peers and a lack of faith that any rules can effectively be enforced in today’s college sports world, those top programs have aggressively pursued loopholes to build rosters that are often worth double the money schools are allowed to share directly with their players.
Now, those rules are facing their first real test. A group of 18 Nebraska football players, backed by their school, are challenging a recent decision by the College Sports Commission to deny millions of dollars in NIL contracts they signed this winter, multiple sources confirmed to ESPN.
CSC CEO Bryan Seeley said he could not comment on or confirm the details of any ongoing arbitration cases. Nebraska officials declined to comment, and the Husch Blackwell law firm hired to represent the players did not return multiple calls seeking comment.
Other brand-name programs could follow with similar challenges in the days or weeks ahead. The outcome of these cases might help restore order or it might serve as a breaking point for a big-tent system that is buckling under the weight of its disparity.
“This is a litmus test for the system,” one power conference athletic director told ESPN.
The commissioners of the Big Ten and the SEC — the NCAA’s two richest conferences — said they are committed to working through the current system’s challenges rather than explore the looming threat of forming a separate league, but they also acknowledged that they’re preparing for a future when each conference might have to make and enforce its own rules within that system.
“The Big Ten is committed to making the new structure work,” conference commissioner Tony Petitti told ESPN this week. “We need to be prepared, and there is increased conversation about a system that would lead to increased conference governance, as the current system faces continued legal challenges.”
“The reality is in the middle of change, it’s messy,” SEC commissioner Greg Sankey told ESPN. “The start’s great. Finish could be great. The middle is messy. So, we’re in the messy middle.”
The Nebraska case
The 18 Nebraska players have asked for an arbitration hearing to review a recent decision by the CSC to deny NIL deals they signed with Playfly Sports, a prominent athletic department marketing firm, according to sources who asked to remain anonymous. Yahoo Sports first reported news of the case earlier this month.
The CSC was launched last July to police how college athletes are paid. Athletes can make money in two ways: through direct payments from their school and via third-party endorsement deals. Both have limits. Each school can spend a little more than $20 million per year in direct payments to athletes. Third-party deals must be for a “valid business purpose,” such as endorsing a product, rather than a pay-for-play arrangement.
The CSC’s main function is to enforce those limits, vetting third-party deals through a system created by professional business services network Deloitte called NIL Go, which is designed to stop teams from using third-party deals as a way to circumvent the direct-payment salary cap.
Putting those rules to work in practice is proving to be a challenge, especially without a signed participant agreement among all schools that commits them to accepting the CSC’s authority. Seeley called the proposed participation agreement an important tool for his organization’s success, but nearly four months after schools were asked to sign the document, multiple groups are still debating the language in it. Without more authority, the NIL Go system designed to be a blockade of cap circumvention is functioning as little more than a speed bump right now.
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“We didn’t get a hard cap on the settlement,” a power conference athletic director said. “We got a soft cap, which means we got no cap.”
This winter, Nebraska (and many of its competitors) started to rely on business partners such as Playfly Sports to help pay athletes with NIL deals that don’t count toward the school’s spending cap. The university’s board approved an amendment to Nebraska’s contract with Playfly in December that would decrease the amount of money the company paid the school. In exchange, Playfly promised to invest more than $8 million to “support NIL activities” with Cornhuskers athletes by the end of June. In other words, millions of dollars that might have previously flowed through the athletic department were instead diverted to go directly from the school’s main marketing partner to its athletes via contracts that do not count toward the salary cap.
The CSC is required to apply extra scrutiny to deals in which athletes are being paid by an individual or a company closely associated with their school — a rule designed as an obstacle for booster collectives that served as the main source of payroll for teams prior to the House settlement. Seeley told reporters earlier this month that any group that is “working on behalf of the school to help retain and recruit student-athletes” should be considered an associated entity.
Sources indicate the arbitration hearing will likely hinge on an argument about whether Playfly qualifies as an “associated entity” or whether its established reputation as a marketing firm legitimizes the Nebraska contracts.
In January, the CSC said it had “serious concerns” about some of the contracts that marketing firms and apparel companies were offering to athletes. Seeley has said one common reason for a deal to be denied was a practice called “warehousing,” in which a company buys the rights to use an athlete’s NIL in the future but doesn’t provide specific tasks and deliverables the athlete must complete.
An unsigned sample of the agreement Playfly provided to Nebraska players requires the player to dedicate a certain number of hours of work and social media posts before the end of 2026 but does not include any specific events or products the athlete would be promoting, according to a copy of the contract obtained by ESPN.
A parent of one of the Nebraska players told ESPN he was concerned the deal looked “thin” on specific requirements when he first saw it. He said he felt the football team had “outsourced their critical thinking” to Playfly, which is testing the limits of the CSC’s rules.
Multiple school sources told ESPN they have been frustrated with a lack of guidance from the CSC about how to change rejected deals so they can meet the standard needed for approval.
If Nebraska succeeds in arbitration, many football staffs and athletic department officials around the country said they are likely to interpret the ruling as a sign that the fledgling CSC does not have the legal power it needs to enforce a cap. Athletic department officials believe any remaining hesitation about exploiting loopholes could quickly disappear.
If Nebraska loses the arbitration case, which is supposed to conclude in the next 45 days but could be extended, the state’s attorney general could potentially intercede. A state law in Nebraska prohibits the NCAA or the CSC from penalizing any college athlete because he or she “earns or intends to earn compensation” for the use of their NIL.
If the CSC succeeds in blocking the Nebraska deals, many teams that have used similar contracts to sign their players will be in a difficult position to fulfill the payments they promised while building their current rosters.
“The CSC is trying to show its teeth,” one Big Ten general manager said. “If they succeed, there’s going to be millions upon millions of dollars that aren’t delivered to players.”
As another power conference coach added, “If the CSC wins, all these people who spent $45 million are really in trouble. How are you going to find a way to get money through NIL Go? Because everyone is warehousing.”
Portal spending spree
Ohio State generated headlines for winning the 2024 College Football Playoff national championship with a team that cost $20 million. Now, the $20 million that was enough to pay for the best team in the country wouldn’t even be enough to field a competitive squad.
This year, several CFP contenders are expected to fund rosters in the range of $40 million to $50 million, industry sources told ESPN, after another offseason of record-setting spending.
During the latest coaching carousel, coaching agents said this was the key issue as they negotiated with athletic directors. They needed to know how much a school was prepared to invest in its football roster and how it intended to exceed the rev-share cap.
New LSU coach Lane Kiffin going on a portal spending spree in his first offseason in Baton Rouge helped contribute to college football’s most competitive programs surpassing $40 million for the 2026 season. But general managers believe the floor has been raised, as well. Multiple Big Ten GMs told ESPN they’re expecting every program in their conference to spend $25 million or more for this year.
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In the months before the new House settlement spending limits took effect, Power 4 programs signed players to “front-loaded” deals, which paid large sums from January through June, reducing the amount that officially went on the books and counted against the cap starting last July.
In that inflated market, quarterbacks and players at premium positions such as edge rusher and offensive tackle secured more $1 million deals than ever before. And now that players have agents working to maximize their value, the price to retain or add proven talent keeps rising at every position.
The pressure to keep up put front offices in a challenging position, especially without the option to front-load deals as they did for their 2025 rosters. Several GMs told ESPN in December they had donors ready to help fund their 2026 teams but were struggling to determine how to get that money through the NIL Go system.
Schools sought help from their multimedia rights partners such as Playfly and Learfield as well as apparel partners such as Adidas and Under Armour. They signed newcomers and returning players to contracts funded by a combination of direct payments from the school and third-party NIL money.
Now that the frenzied months of dealmaking are done, schools must figure out how, or if, they can make good on their third-party promises.
“Everyone operated under the premise that everyone knows the kids are going to get paid somehow,” a Big Ten GM said. “It’s not going to be good for college football if every team operating over the cap all of a sudden has a bunch of players who are pissed and don’t want to play this fall.”
‘Manufacturing’ a market
Some leaders in college sports view the House settlement as a stand-in for the types of collective bargaining agreements that can effectively impose salary caps in pro sports leagues. The money now available to football players at big-brand schools, however, falls dramatically short of the percentage of revenue that pro athletes negotiate through their unions.
Nebraska’s football team generated $124.2 million in revenue a year ago, according to the athletic department’s most recent public accounting documents. Add up the compensation the players receive ($3.8 million in scholarships, $825,000 in academic stipends and an estimated $15 million in direct payments), include other benefits such as free meals ($4.2 million) and miscellaneous support, and the total reaches roughly $25 million. That’s a 20% share of the money the team makes. Professional athletes typically receive about 50% of the money their leagues generate.
It’s no surprise then that the market rate for a playoff-contending football roster is closer to $40 million than $20 million. Nor is it surprising with a spending cap set at roughly $20 million that schools almost immediately found loopholes to use third-party NIL deals to meet market demand.
“It’s a market in which schools are manufacturing NIL for their student-athletes,” Seeley told reporters earlier this month.
He said his team has been overwhelmed with deals in need of extra scrutiny since the transfer season in early January because the people who designed the vetting system assumed the vast majority of contracts being reviewed would be genuine endorsement deals that would take very little time to approve. Nearly four out of every five deals that Power 4 schools have submitted for review since January have been from groups looking to pad a team’s payroll rather than a traditional endorsement opportunity, according to data shared by the CSC earlier this month.
“I don’t think the system was designed with this amount of associated deals in mind,” Seeley said.
Put another way, the architects of the current system assumed the $20 million cap with annual 4% increases would largely satisfy the market demand for building a competitive roster. Why? Lawyers on both sides of the negotiation defended the cap at settlement hearings by saying the direct payments, when added to the other benefits such as tuition and stipends that athletes already receive, get very close to 50% of an average athletic department’s annual revenue.
Their math lumps all athletes on campus together rather than acknowledging that football players and most of their peers exist in a different market. The men’s tennis team at Nebraska, for example, generated $87,570 in 2025. Counting only their scholarships and academic stipends, the tennis team was already receiving about 400% of the revenue they created prior to the House settlement. Yet, tennis players and football players fall under the same category as far as the settlement is concerned.
More importantly, schools such as Nebraska bring in about twice as much annual revenue as the average FBS athletic program. That disparity makes it difficult to set spending rules that keep everyone happy. Set the cap too high and average schools lose any hope of competing. Set the cap too low and rich teams feel unfairly restrained from putting their deep pockets to work, which provides a clear incentive for them to search for loopholes to spend more.
A ‘messy’ crossroads
So, how does college sports get from what Sankey called the “messy middle” to a clean finish? Multiple coaches and athletic directors view the Nebraska case — and a potential flurry of additional arbitration requests that could be coming soon — as a crossroads for the enterprise’s future.
“In my opinion, if the CSC loses arbitration in Nebraska, then the whole system collapses,” one power conference coach said, stressing this was his sentiment. “I believe that. They have a state law that says the NCAA can’t punish them. Anyone who has that state law, that means there’s no more NIL Go there. They don’t have to follow the guidelines.”
Many coaches and GMs at top schools are rooting for the current system to fail. They see that failure as the quickest way to a more tenable system, which would eventually involve collective bargaining and, in theory, bring more stability to a marketplace currently unmoored by skyrocketing spending and perpetual free agency in the transfer portal.
“I think it’d finally be an acknowledgment from the decision-makers how messed up this all is, and they’d realize that the long-term fix is collective bargaining,” a GM at a power conference school said. “As much as the presidents don’t want students to be employees, you have 18-year-old kids who aren’t even playing making more money than brain surgeons.”
There are major legal and organizational hurdles that make collective bargaining a difficult solution. Some college sports leaders predict that a collective bargaining agreement would take years to integrate, and they point out that players would first need to organize themselves and make demands. The NCAA and commissioners’ preferred solution for stability — an antitrust exemption from Congress — also has shown little substantial progress despite years of effort on Capitol Hill.
The CSC’s crossroads eight months into its existence is a sped-up version of a long-standing problem in college sports. The collective group has seemingly always struggled to create an enforcement arm that is strong enough to keep individual schools from finding ways around the rules. The current attempts for schools to use their marketing partners and “warehousing” NIL rights are the latest iterations of a decades-long pattern of the industry clamoring for new rules and guardrails only to quickly find ways to exploit them.
“We all say one thing and actually do another,” a power conference athletic director said. “Or say one thing until it affects us. It makes it so damn hard, as we are seven or eight months in. In March of last year, as we were figuring this out, it was clear that warehousing was something you can’t do. Now, here we are, arbitrating a case to figure out whether you can warehouse or not.”
Without a clear path to a stable national set of rules, the SEC and the Big Ten might move to create some of their own standards — and give other leagues the option to follow suit. One athletic director pointed to eligibility, transfers and tampering as issues tied to the sport’s big picture that could be figured out on the conference level.
Sankey told ESPN at the SEC men’s basketball tournament earlier this month that “the frustration can’t persist.” And while no overt breakaway is coming, Sankey did mention the league crafting its own rules “if the NCAA is unable to find its way to a conclusion, which is something the league has done on some issues in the past.”
“We’ve had different rules before on eligibility, on transfers, on two-year college transfers,” Sankey said. “We may go back to more of that type of decision-making.”
Without any immediate decisions on the horizon, frustration and impatience with the industry’s latest attempt to govern itself are growing. As the men’s basketball portal opens on April 7, a familiar feeling of dread is building on campuses across the country.
“We’re about to have another portal, and it’s going to be the worst one ever,” the power conference athletic director said. “Each subsequent portal, every year, each one has been the worst one ever. We can’t keep having the worst one ever.”
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