Isn't that the joke? You're right, you can't 'work' on a student visa, so whether the schools or NCAA want to call NIL 'employment' or not, INS has no such scruple!
But OTOH, if they are getting paid I see no reason a school shouldn't be able to apply for an H1B for an athlete instead of a student visa. I don't think there is any rule that you can't also go to class while your working under an H1B. Maybe that will be the next shoe to drop!