A federal judge issued an injunction on the NCAA in its battle with Tennessee and Virginia, halting the NCAA’s jurisdiction over NIL and collectives in February. Following this decision, NCAA President Charlie Baker confirmed on Friday, March 1, “there will be no penalty for the conduct that occurs consistent with the injunction while the injunction is in place.” The decision temporarily banned the NCAA’s prohibition of schools or third parties offering NIL payments to college athletes as a recruitment incentive, a rule that has faced scrutiny in recent years.
With the injunction barring the NCAA from enforcing NIL regulations, college recruits and transfers are allowed the freedom to negotiate and sign NIL deals before enrolling at a university without fear of facing penalties from the association. This shift exemplifies a departure from the longstanding model of amateurism that has governed college sports.
Basepath’s Predictions for What’s Next
“If it wasn’t true already, given the recent announcements – collectives are now, undeniably, the most influential recruiting entity in all of college athletics,” said Basepath Founder and CEO Thomas Thomas Jr.
Thomas said a trend he has recently seen in collective operations is athletic departments exploring moving their employees to their collective, allowing the employees to recruit freely. Unlike university employees, collective employees can offer NIL opportunities to student-athletes.
With the new ability to negotiate NIL deals before athletes commit to a school, NIL collectives are likely to become more active in the recruiting process. They can work closely with athletes and their families to secure deals and endorsements early on, potentially influencing athletes’ decisions on where to attend college.
If this landmark case led to athletes being declared university employees, schools would have millions of dollars of new expenses to cover, and most schools are not in a position to do so. It’s important for universities to work with their collective in order to maximize opportunities for student-athletes.
The Snowball Effect
When one domino falls, the rest get knocked over. The same could happen with this injunction, leading to changes in other areas of the NIL landscape down the line.
Schools will need to adapt their recruitment strategies to accommodate the shift. It is likely they will begin to invest more resources into supporting athletes’ NIL ventures and enforce compliance with stronger regulations.
Universities in states with laws that bar pay-for-play NIL deals may face pressure to advocate for changes to these laws to remain competitive in recruiting top talent.
Broadcast NIL (BNIL) deals from media companies could become closer to the forefront for universities to explore to generate revenue. The NCAA might consider reassessing its amateurism model in light of the ongoing antitrust litigation. The inclusion of media companies offering players NIL deals as a share of broadcast revenue may prompt the NCAA to explore new partnerships and revenue-sharing models to adapt to this shift.
The NCAA will likely intensify its efforts to lobby Congress for a federal law that would supersede the current patchwork of state NIL regulations and potentially provide more uniformity and clarity.
Ultimately, the outcomes of these legal battles and the actions taken by key players in the collegiate sports industry will not only determine the fate of the NCAA’s regulations but also set the course for a more equitable and sustainable future for college athletes nationwide.
Background
In January, Tennessee and Virginia jointly filed an antitrust lawsuit against the NCAA, alleging that the organization’s regulations concerning the commercial use of athletes’ NIL violate the Sherman Antitrust Act. The lawsuit asserts that the NCAA’s restrictions unfairly limit the ability of student-athletes to benefit from their own NIL. This legal action is part of a broader trend, with the NCAA currently facing a total of six antitrust lawsuits on similar grounds. These lawsuits collectively challenge the NCAA’s control over the commercial opportunities available to student-athletes and seek to reshape the landscape of collegiate athletics by advocating for greater autonomy and financial rights for athletes.
The judge in this case has issued an injunction, which means that the NCAA is currently prohibited from enforcing its rules regarding NIL while the legal proceedings are ongoing. It’s a temporary measure until a final decision is reached by the court regarding the legality and fairness of the NCAA’s NIL rules under antitrust laws.
The legal action taken by the attorney generals in Tennessee and Virginia underscores the growing pushback against the NCAA’s control over athlete compensation and its enforcement of amateurism rules. The decision to challenge these regulations comes in the wake of the NCAA’s investigation into the University of Tennessee for alleged violations of NIL rules.