NIL Collectives Take Tax Shelter Amid Storm of College Cash
Last spring, the IRS’s deputy associate chief counsel Lynne A. Camillo issued a memorandum addressing whether an NIL collective “furthers an exempt purpose under section 501(c)(3).” In other words: Do these entities that facilitate endorsement deals with college athletes participate in sufficiently charitable work so as to not pay taxes and receive tax-deductible contributions from donors?
Camillo’s conclusion was, more or less, no.
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While her memo amounted to legal advice, and was not precedential, it sent a shockwave through the nascent industry of collectives, many of which were applying to become or had already received recognition as 501(c)(3) charities. Immediately, a number of collectives ditched their nonprofit aspirations, for fear that potential donors would be scared off by the uncertainty.
That dynamic presented a golden opportunity for Blueprint Sports and Entertainment, a NIL collective operator with ties to tennis great Andre Agassi and a number of other intriguing connections in business, sports, philanthropy and politics. One of Blueprint’s co-founders, Cisco Aguilar, is also the Nevada Secretary of State, whose office is in charge of registering both businesses and nonprofits in the state.
Along with its chief rival, Student Athlete NIL (SANIL), Blueprint seeks to occupy a risky but financially promising niche within college athlete publicity rights.
One of Blueprint’s main selling points is “501(c)(3) fundraising.” Specifically, it has a companion charity, called the BPS Foundation, which allows Blueprint’s NIL collective clients to receive tax-deductible contributions.
In effect, the BPS Foundation serves as a donor-advised fund for college sports boosters who want to contribute to for-profit NIL collectives. Instead of making the contribution to the collective directly, they would instead donate to the nonprofit, which would then be responsible for paying athletes served by the 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,” Blueprint co-founder Rob Sine said in a recent Zoom interview with Sportico.
Others aren’t so sure. The BPS Foundation’s relationship to Blueprint’s for-profit company has raised immediate conflict-of-interest concerns.
“Setting it up in this way should raise concerns of the IRS memorandum at a higher level, if anything,” said 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.
According to the foundation’s IRS disclosures, it pays Blueprint a service fee of around 10% of any money that ultimately goes to athletes.
The BPS Foundation, which received its 501(c)(3) designation in July 2022, says it ensures that any money it conveys to athletes will go to compensate them for work they do serving other charities. For example, the organization’s 2022 tax return says that some of the $1 million in grants it paid out that year went to compensate over 100 University of Arizona football players for doing promotional appearances with local police and fire departments in Tucson.
Hackney, however, questions whether this form of philanthropic surrogacy is sufficient for it to clear the tax-exempt bar. At the very least, it is operating in a gray area.
There are currently over 225 NIL collectives dedicated to Division I schools, with the broad majority of them handling the operation on their own. But around 60 of these D-I collectives have partnered with either Blueprint or SANIL to help with the complicated back-end accounting and NCAA compliance work. (A third company, FirstTeam Sports, serves as an operator for a handful of other collectives.)
Blueprint’s client roster now includes 24 collectives, 14 of which use its full-service package that includes having Blueprint employees staff its key positions. This boots-on-the-ground model is adopted from the partnerships forged between athletic departments and multimedia rights holders like Learfield and IMG, where Sine once worked as a top executive.
In agreeing to speak with Sportico, Sine acknowledged his wariness, and that he preferred for his company to operate behind the scenes.
“It appears oftentimes that there’s a lot of opportunities for people to find a crack or a flaw and then just to tear the whole thing down,” Sine said. “And so we’re focused on doing things the right way, adhering to the laws, being supportive of student-athletes, doing all the stuff that we should be doing, and that was really the reason that we got into this.”
In an interview with The New York Times last year, Sine claimed he could not speak about the BPS Foundation because it was being run by others. The paper, however, noted that Sine had been listed as the nonprofit’s “president” in documents filed with the Nevada Secretary of State.
Pressed more recently about this by Sportico, Sine downplayed his role as more of a technicality.
“There’s a shared-services agreement between the BPS Foundation and Blueprint Sports,” Sine said. “So I was listed as president on the shared service agreement that was approved by the board. I was not running the BPS foundation.”
However, in its IRS application for tax-exempt status, a copy of which was provided to Sportico, the foundation specifically identified Sine as the “person primarily responsible for managing the foundation.”
Sine suggested this “discrepancy” owed to a paperwork error.
“I was referred to as the president, but this was in relation to my position in (Blueprint Sports and Entertainment),” Sine said. “It’s worth noting that I was never the president of the foundation in any organizational or operational resolutions or other documentation.”
EXECUTIVE SECRETARY
Sine’s relationship to the company and the nonprofit isn’t the only situation to raise conflict-of-interest questions.
Though Aguilar officially relinquished any operational control of Blueprint upon being sworn in as Nevada Secretary of State in last January, he has retained his ownership stake.
“The management board and Rob as CEO manage the company,” Aguilar said. “Rob makes all operational decisions.”
During the 2022 legislative session, Sine and Aguilar were informally involved in a task force commissioned by another Nevada legislator, state Rep. Cameron C.H. Miller, to provide guidance for the state’s NIL statutes.
Then, three weeks after Aguilar took office, a Nevada state Senate bill was introduced that would have granted him almost unilateral authority to enforce NIL within the state, including a mandate to conduct confidential investigations, hold hearings over violations, issue cease-and-desist orders, and impose sanctions and fines.
The legislation, SB 70, ultimately did not receive a hearing, and Aguilar told Sportico he had no personal involvement in its drafting or introduction. Aguilar added that during the 2023 legislative session, Blueprint was represented by a public affairs agency, the Ferraro Group, in its dealings with SB 70.
But Sine says most of his and Aguilar’s recommendations were not incorporated into SB 70.
“In fact, SB 70 was a surprise to us, because we had never seen or discussed most of the language,” Sine said.
Before turning to politics, Aguilar worked as general counsel for the Andre Agassi Foundation for Education. That charity, which holds over $100 million in net assets, became the initial investor in Blueprint and holds a $500,000 stake in the company, according to the foundation’s recent tax filings.
Sine and Aguilar say their only direct dealings were with Steve Miller, CEO of the Agassi Foundation for Education, and not Agassi himself. (Miller did not respond to an interview request.)
Shawn Cable, the Agassi Foundation’s CFO, told Sportico that the decision to seed Blueprint was done both as an investment strategy as well as to further its mission. The organization previously made six-figure contributions to the athletic departments at both UNLV and Nevada.
Cable, for his part, also serves as CFO for Blueprint and the BPS Foundation, in addition to his role with the Agassi Foundation. The BPS Foundation’s most recent tax filings show that Cable was paid $10,000 in 2022.
“As you can imagine, with very limited resources, I was a fantastic option to continue working with them, because I didn’t cost anything in terms of compensation or ownership to Blueprint,” Cable said. However, he added, Cable foresees his role greatly diminishing in the near future.
For now, the BPS Foundation appears to pass muster with tax authorities.
“As long as the IRS allows it, and the law continues to approve it, this is an extremely good way to ensure that the narrative around NIL is also about [athletes] giving back and being involved in the community,” Sine said. “The 501(c)(3) [status] of the BPS Foundation is a big catalyst and helping to make sure that happens right now.”
Between May and December 2022, the BPS Foundation received $3.4 million in donations 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. Of its expenses, a little over $1 million was paid to athletes and $95,291 was spent on management fees, presumably to Blueprint.
This was just a small precursor for the activity that has followed.
Cable described the BPS Foundation’s 2022 partial-year return as a mere “novella” compared to the “five-book novel series” that will be unveiled in its as yet unfiled 2023 return.
Nevertheless, Sine insists that Blueprint can flourish even if the IRS were later to revoke the BPS Foundation’s tax-exempt status.
“It wouldn’t be a death blow,” Sine said.
SANIL CEO Jason Belzer suggests that Blueprint, his competitor, with its relationship to the BPS Foundation, is playing with fire.
“As we understand today, they are operating within the law, and kudos for them,” Belzer said in an interview. “That is a business decision they made, and if they are making a profit, that is great. But we don’t view that as a long-term sustainable business opportunity, and if we feel something is not ethically aligned with our long-term business strategy, we are not going to engage in that business today or tomorrow.”
FRIENDS WITH BENEFITS
The person ultimately responsible for maintaining the BPS Foundation’s probity is its board chair, Alex de Castroverde, a Las Vegas personal injury attorney who has known Aguilar since 2014 and considers him a “close friend.”
“When Cisco asked if I was willing to be on the Board of BPS Foundation, I readily said yes,” de Castroverde told Sportico in an email statement.
Until December 2022, Aguilar worked as “of counsel” in de Castroverde’s law firm. The firm donated $3,500 in cash to Aguilar’s secretary of state campaign as well as $11,400 of in-kind contributions, according to public records.
Blueprint, meanwhile, was one of Aguilar’s single biggest political donors, having made a maximum contribution of $10,000 in December 2021. (While companies are prohibited from donating to candidates for federal office, they are allowed to do so in Nevada statewide races.)
Sine said it was ultimately his decision to make the contribution to Aguilar’s campaign on behalf of their company.
“I was extremely honored to earn the support of Rob and the Blueprint team by deciding to invest in the campaign,” Aguilar said.
Sine’s relationship with Aguilar dates back to 2012. Sine was then working as VP of ticket sales for the Pac-12 Conference, which was contemplating moving its men’s and women’s basketball tournaments to Las Vegas. The league’s former commissioner Larry Scott, a one-time pro tennis player, suggested the Pac-12 should develop a relationship with Aguilar’s boss, Agassi.
From then on, Sine says, he and Aguilar effectively became the two-man “working group” tasked with bringing the Pac-12 tourney to Sin City.
Three years later, Sine left the Pac-12 for IMG, where he led the media rights company’s ticketing division until 2018. A few months before IMG merged with its longtime rival, Learfield, Sine took the job as chief revenue officer for AXS, the ticketing outlet owned by Anschutz Entertainment Group.
Sine and Aguilar co-founded Blueprint in May 2020, upon Sine’s resignation from AXS. Sine credits Aguilar for conceiving of the idea that they get into the college athlete endorsement business.
Aguilar, a University of Arizona undergrad and law school alumnus, previously served as chairman of the Nevada State Athletic Commission. In 2017, Aguilar was selected to participate in a fellowship program working for Adidas’ brand sustainability program in Germany. Around that same time, Aguilar joined the board of trustees for the University of Arizona Foundation.
Initially, Blueprint’s plan was to create an app-based, mobile NIL marketplace for college athletes—not unlike Opendorse and INFCLR.
“The difference was that we would hire salespeople around the country to focus on those regional student-athletes, to be able to really drive business,” said Sine.
By the summer of 2021, just as its app was ready to be rolled out, Blueprint promptly changed course. That May, Aguilar formally announced his plan to run for office, leading to him being “phased out” of Blueprint’s operations, Sine says.
A few months later, Blueprint was approached by UNLV boosters, led by local casino executive Bill Paulos, who were interested in starting a new NIL collective that would support Rebels men’s basketball players through a car-allowance program. The boosters asked if Blueprint could help facilitate the operation, figuring out everything from how to engage the athletes to writing the NIL contracts.
“So, the light bulb went off,” Sine said. “We pivoted, shut down the app, decided not to be a mobile marketplace and went full bore into powering collectives across the country.”
After landing the “Friends of UNLV” Collective as its first client, Blueprint continued to press its connections out west.
In early 2022, the company signed an agreement to operate a collective dedicated to Arizona men’s basketball players, which was backed by longtime Wildcats booster—and University of Arizona Foundation trustee—Humberto Lopez. The BPS Foundation’s 2022 tax return shows Lopez made donations of $150,000 and $100,000 to the nonprofit in the second half of that year. (Campaign finance records show that Lopez also donated $2,500 to Aguilar’s election.)
In June 2022, Blueprint signed on to operate the University of Nevada-dedicated outfit, “Friends of the Wolf Pack,” whose backers included Ferraro Group owner Greg Ferraro.
Ferraro, who says he has had only limited involvement with that collective, has provided consulting services to Blueprint on a pro bono basis, including representing the company during the 2023 legislative session. His laundry list of lobbying clients include Apple; the Nevada State Athletic Commission, which Aguilar once chaired; and the Las Vegas Raiders, whose vice president of government relations, Piper Overstreet-White, previously served on the BPS Foundation’s board.
LION’S SHARE
If Aguilar’s Arizona and UNLV connections got Blueprint off the ground, the company gained altitude thanks to Sine’s alma mater: Penn State.
In September 2022, Blueprint founded its own NIL collective, Lions Legacy Club, in June 2022, which was focused on signing deals with Penn State football players. Lions Legacy was the third PSU collective to launch within nine months, joining Success with Honor—which was chaired by private equity investor and former PSU wrestler Ira Lubert—and the We Are NIL collective, founded by Pennsylvania attorney Michael Krentzman.
Success with Honor, which had received support from a who’s who roster of Penn Staters, had contracted with SANIL to handle its day-to-day operations. The advent of Lions Legacy put SANIL and Blueprint in direct competition on the same campus.
In the ensuing months, the Penn State collectives would be a continual source of drama and discontent, which came to a head after the departure of men’s basketball coach Micah Shrewsberry.
After leading his team to the NCAA Tournament’s Round of 32 last March, Shrewsberry was lured away by Notre Dame. Leading up to his departure, he had complained about his program’s lack of NIL funding support. A few days after Shrewsberry’s announcement, Penn State trustee Jay Paterno, a co-founder of Success with Honor, took to X to defend the collective’s performance, insisting it had “met every basketball NIL request.”
Former Penn State football player Michael Mauti, the co-founder of Lions Legacy Club, responded to Paterno by accusing him and his “cronies” for undermining the athletic department.
“We need all hands on deck, not a few guys brokering behind closed doors using words without deeds,” Mauti told Paterno, the son of Penn State’s legendary-turned-infamous former football coach. “Your input on this matter is toxic, and your relevancy has expired in this era of collegiate athletics.”
A couple of weeks later, another Penn State trustee, former Nittany Lions football player Brandon Short, publicly accused other trustees associated with Success with Honor of intentionally ignoring Penn State’s current football coach, James Franklin. Though Short didn’t name names, it was widely presumed that a target of his criticism was Paterno, who denied he had given Franklin the cold shoulder.
In June, at the urging of the school, the two collectives agreed to join forces under a new entity called Happy Valley United, which would be controlled by a board of directors with representatives from both Success with Honor and Lions Legacy Club.
As part of the consolidation, it was agreed that Blueprint would take over as the lone operator of the new super collective, thus enabling the entity to offer tax deductions for Penn State supporters through the BPS Foundation.
“Happy Valley United is a crystal-clear signal that the competition is not within Penn State, but our competition is around the country,” Sine said in a statement accompanying the merger announcement. As an intermediary step, Blueprint took over Success with Honor’s work from SANIL, one of the rare instances in which a collective has ditched one of the operators for the other. (A copy of Success with Honor’s 2022 tax return reported it took in $1 million in contributions that year.)
“It is all a game of politics and chess,” said SANIL’s Belzer. “They said we need to put in as much money as possible as quickly as possible and want to pursue this nonprofit model, and we want to bring in people that are Penn State people.”
For Sine, Happy Valley United marked a “significant” turning point for Blueprint’s business and an archetype for its path to growth.
“It’s been a really good chance for us to learn how to operate the super collective, how to understand the politics, and have empathy for athletic departments,” Sine said.
In September, Blueprint signed on to become the operator of the One Maryland Collective, which formed from the merging of three separate NIL collectives supporting the Big Ten school.
INSIDE JOB
The BPS Foundation plans to hire its first executive director in the first quarter of this year, says Cable. Blueprint Sports and Entertainment, meanwhile, plans to expand its previous relationship with Basepath, the NIL operations software platform, to now include its entire portfolio.
At its current trajectory, Sine says Blueprint could be a profitable venture by serving as the full-service operator for 30 to 60 collectives. The high end of that range would comprise almost the entirety of collectives for Power Five schools, suggesting a zero-sum game of survival between it and SANIL, which currently counts 44 collective clients, most of which are tied to mid-major FBS programs.
“In a business like this, where there is a lot of money and people floating around, private equity firms are going to say, ‘What is the real sustainable business model?’” said SANIL’s Belzer. “That is what is going to win. And we are making a bet on one place, and Blueprint Sports is making a bet on another, and the independent collectives will most likely disappear.”
Meanwhile, both companies are confronting the prospect that, upon updated NIL guidance by the NCAA, college athletic departments will be inclined to take over more and more of the work being done by collectives.
If that’s the case, “there is going to be a huge push for athletics to have control of this,” said Doug Fillis, an NIL consultant who works directly with universities. “I used to work in athletic departments. We would never have external stakeholders so involved in how athletic departments run inside the institution.”
Sine says he is continuing to make sure Blueprint is “built to look and feel like an organization that could be ingested internally into an athletic department.”
Then again, this change could also usher in the involvement of multimedia rights holders like Learfield, which currently holds about 75 sponsorship agreements with collectives, but has so far taken a backseat on NIL.
“With any startup, there’s always challenges and risks and potential pitfalls,” Sine said. “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.”
The going need for Blueprint is yet to be determined.
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