Company powering Arkansas Edge could be 'operating in gray area'
Since the early beginnings of the NCAA and college sports, student-athletes have been strictly forbidden from receiving payment for their services.
From under-the-table cash payments in McDonald’s bags to Heisman Trophy winners being stripped of their awards, some of the biggest controversies in college athletics have involved pay-for-play scandals. Then came the era of Name, Image and Likeness, which has caused universities across the country to scramble to adapt.
In 2019, California became the first state to take steps toward supplemental compensation for college athletes with the Fair Pay to Play Act. After a series of legal challenges culminating in a Supreme Court case, the NCAA adopted an interim policy legalizing NIL. On July 1, 2021, college athletes across the country began signing endorsement deals.
Over the last three years, NIL has ballooned in both size and scope. According to the New York Times, over 100 NIL collectives have been identified across the country, including at least one for every major conference program in college football.
On Nov. 28, the University of Arkansas made a new venture into the world of NIL by announcing a partnership with Blueprint Sports to launch the Arkansas Edge collective. Following a similar model to other schools like Ole Miss and Missouri, the grassroots collective allows businesses, brands and community members to join the school’s NIL fundraising efforts.
Fans can make a one-time donation to the sport of their choosing or become members of the collective by purchasing a subscription in different tiers starting at $50/month. The student-athletes are then compensated in exchange for non-profit work or brand marketing.
RELATED: Latest intel after first month of Arkansas Edge NIL Collective
“NIL is integral to the success of our program and is reshaping the future of athletics at every major university nationwide,” athletic director Hunter Yurachek said in a press release. “Supporters, fans, and alumni who support Arkansas Edge are pledging to maximize opportunities for student-athletes to build their brands and engage with the community.”
Blueprint Sports, the UA's partner in this initiative, acts as a go-between to help organize and facilitate the collective.
“Our job is to come in and bring a professional solution to building out [NIL] opportunities,” said Rob Sine, the company’s CEO. “We provide the infrastructure…the contracts, the legal work, the backend operations.”
Previously, Arkansas operated through the "OneArkansas" NIL Collective, which worked primarily with non-profit organizations.
"Many collectives became 501(c)(3) organizations, meaning they were non-profit entities and that donations they received were tax deductible," a recent NIL article from RebelGrove.com stated. "On the surface, it's understandable how this designation made decent sense. These collectives were asking for donations and weren't technically designed to turn a profit.
"But the issue was what was being done with the money and the purpose of the donation. The justification of collectives having tax exempt status never passed the proverbial smell test... On June 9 2023, the IRS published a memo stating that donations to nonprofit collectives are not tax exempt because those donations are "not incidental both qualitatively and quantitatively to any exempt purpose.”
Sportico's Daniel Libit released an investigative article regarding Blueprint Sports on Friday, and it sounds like the organization is operating in some sort of gray area of what's legal and not legal.
In short, Blueprint Sports has a companion charity called the BPS Foundation, which serves as a "donor-advised fund for college sports boosters who want to contribute to for-profit NIL collectives." The donation goes to a non-profit, which is then responsible for paying the athletes partnered with a collective.
“We continue to believe that we are one of the good guys in the business and are doing this the right way and helping to make sure that there’s a sustainable future for it,” Sine told Sportico.
Sportico spoke with Phil Hackney, a nonprofit legal expert at the University of Pittsburgh School of Law who previously worked in the IRS’s Office of the Chief Counsel. Hackney basically questioned whether an organization like Blueprint Sports is doing enough philanthropic work to clear the tax-exempt bar.
"At the very least, it is operating in a gray area," Libit wrote in his story.
Another issue arrises with the fact that Sine told The New York Times that he was unable to talk about the BPS Foundation because it was run by others, but he had been listed as the group's president in documents filed with the Nevada Secretary of State, plus Sportico found out through documents that Sine was the person listed as primarily responsible for managing the foundation.
“I was referred to as the president, but this was in relation to my position in (Blueprint Sports and Entertainment),” Sine told Sportico. “It’s worth noting that I was never the president of the foundation in any organizational or operational resolutions or other documentation.”
According to Sportico, the BPS Foundation received $3.4 million in donations from May-December 2022 from just 15 contributors, according to its tax filings.
"In that same, seven-month period, it distributed $1.2 million, primarily through Blueprint, to fund NIL collective projects involving football players at Arizona and Montana State," Libit wrote. "Of its expenses, a little over $1 million was paid to athletes and $95,291 was spent on management fees, presumably to Blueprint."
According to a post from Blueprint Sports on Dec. 28, 2022, the company helped 500+ student athletes earn $2.3 million across 15 athletic programs in 2022.
Interestingly enough, the co-founder of Blueprint Sports — which is based out of Nevada — is Cisco Aguilar, the Nevada Secretary of State, whose office is in charge of registering both businesses and nonprofits in the state.
Blueprint Sports works with 24 different universities, including Arizona. Longtime Arizona booster Humberto Lopez made donations of $150,000 and $100,000 to the BPS Foundation in 2022, Sportico reported. But Lopez also donated $2,500 to Aguilar's campaign.
Similar to Arkansas Edge, Blueprint Sports does not have an executive director. While the collective is not supposed to be affiliated with the university, Sine told Sportico that the goal is or it to look and feel like an organization that could be ingested internally into an athletic department.
"With any startup, there’s always challenges and risks and potential pitfalls,” Sine told Sportico. “You then add in everything from the NCAA and federal legislation or what may or may not be happening with IRS, and all [else] that comes into this, and you could give people a lot of reason for pause. We believe that, at the end of the day, there’s always going to be a need for name, image likeness.”
Not a single member of the Blueprint Sports team (at least online) had any mention of having previous experience with NIL in the past. The closest they get is Chris Asa, who serves as "Vice President of Donor Relations - West," who has experience with generating revenue in smaller college athletic departments.
The purpose of this article is not to scare fans or say that Arkansas shouldn't be working with Blueprint Sports. HawgBeat is just sharing information regarding the third-party company that is powering the official NIL Collective for the Razorbacks.