Major Changes: NCAA’s Introduction of NIL Activities 

The prohibition of pay-for-play in college athletics has long been a key component in preserving amateurism in college sports, an arena that generates millions of dollars in revenue for many institutions. Prior to 2021, the National Collegiate Athletics Association (NCAA)’s attempt to preserve amateur status maintained that college athletes were to receive no monetary compensation for their participation in college sports. This stance was the center of controversy for many years, and supporters of student-athletes strongly opposed what they believed to be an unfair servitude within the collegiate athletic system. In July of 2021, the NCAA adopted its Interim NIL Policy, which ushered in a new frontier for college athletics. Under this policy, college athletes were suddenly able to receive payment for their name, image, and likeness (NIL). The policy consists of three main parts: first, athletes in states without NIL laws can elect to engage in NIL activities without their eligibility being impacted; second, athletes in states with NIL laws can engage in NIL activities without their eligibility being impacted as long as the state law is valid and enforceable; and finally, athletes are permitted to use professional services providers for NIL activations.

This interim policy, in addition to both statewide and individual college regulations, has opened the floodgates for many legal questions regarding the extent to which the NCAA can control NIL activities. Since the establishment of the policy, the NCAA has been swamped with lawsuits regarding antitrust violation allegations. With each new strike against the NCAA, the extent of its regulations and its grip on pay-for-play prohibition seem to weaken. A recent court ruling in Tennessee delivered another damaging blow to the NCAA’s restrictions on NIL activities, further threatening to bring major changes to the state of college athletics. Based on the NCAA’s history of regulatory battles, this change opens the door to a new challenge, one that has universities lining up at the courts. Consequently, the judiciary will likely side with the institutions that are fighting to preserve competition within this space.

Tennessee v. National Collegiate Athletic Association: NCAA’s Continuous Antitrust Law Battle 

In Tennessee v. NCAA (2024), Plaintiffs State of Tennessee and the Commonwealth of Virginia, on behalf of their student-athletes, argued that the NCAA’s restrictions on NIL discussions during the recruitment process violated antitrust laws. To prevent the NCAA from enforcing its NIL-recruiting ban, the Plaintiffs requested a temporary restraining order (TRO), then preliminary injunction, then permanent injunction “barring the NCAA from enforcing its NIL-recruiting ban or taking any other action to prevent prospective college athletes and transfer candidates from engaging in meaningful NIL discussions prior to enrollment, including under the NCAA’s Rule of Restitution.” District Judge Clifton Corker considered four factors necessary for injunctive relief: “(1) whether the [movant] has shown a strong likelihood of success on the merits; (2) whether the [movant] will suffer irreparable harm if the injunction is not issued; (3) whether the issuance of the injunction would cause substantial harm to others; and (4) whether the public interest would be served by issuance of the injunction.” On February 6, 2024, District Judge Clifton Corker denied the motion for a TRO, declaring that the states failed to prove that irreparable harm to college athletes would occur without the issuance of a TRO. However, on February 23, 2024, after more briefing was presented, the court granted a preliminary injunction that enjoined the NCAA from enforcing its Interim NIL Policy, its Bylaws, and any other restrictions that prohibit student-athletes from negotiating NIL compensation. Judge Corker held that “Plaintiffs have met their burden to show that the NIL-recruiting ban has a substantial anticompetitive effect.” Additionally, Corker agreed that “the NIL-recruiting ban irreparably harms student-athletes by stripping them of their negotiating leverage and blinding them to their true NIL value.” The court also held that any potential harm caused to others would not outweigh the irreparable harm student-athletes would face in the absence of an injunction and that said injunction would serve the public interest by preventing anticompetitive behavior. Although this preliminary injunction is only a temporary action until the establishment of a final decision, this suspension of NCAA restrictions on NIL activities severely weakened the NCAA’s enforcement powers. 

NCAA’s History of Courtroom Battles: Preserving the Right to Regulate

This current, temporary loss for the NCAA is not its first loss. Well before the era of NIL activities in college sports, the NCAA attempted to evade certain federal regulations. In the 1999 case NCAA v. Smith, the U.S. Supreme Court held that dues from members that receive federal funds do not suffice to subject the NCAA to suit under Title IX, a federal civil rights law that prohibits sex-based discrimination in any education program or activity that receives federal funding. A later encounter with the U.S. Supreme Court, however, did not end successfully for the NCAA. In 2021, NCAA v. Alston ended in a unanimous Court decision upholding a district court ruling that NCAA rules limiting education-related benefits violated antitrust laws. The Court held that NCAA rules limiting education-related benefits were subject to rule of reason analysis. The rule of reason analysis is a “three-step, burden-shifting framework” where “the plaintiff has the initial burden to prove that the challenged restraint has a substantial anticompetitive effect.” Should the plaintiff meet that burden, the burden then “shifts to the defendant to show a procompetitive rationale for the restraint.” If the defendant can make that showing, “the burden shifts back to the plaintiff to demonstrate that the procompetitive efficiencies could be reasonably achieved through less anticompetitive means.” Although this ruling only pertained to education-related benefits, it still changed the course for the NCAA’s restrictions on the compensation and benefits that student-athletes may receive. In his concurring opinion, Justice Brett Kavanaugh referenced the impact of this case on future antitrust suits, stating that “After today’s decision, the NCAA’s remaining compensation rules should receive ordinary ‘rule of reason’ scrutiny under the antitrust laws.” The NCAA has since been unable to escape antitrust scrutiny because of its inability to provide a “legally valid procompetitive justification for its remaining compensation rules.” Now that NIL activities are permissible, the NCAA is struggling even more to provide procompetitive justifications for its restrictions. With NCAA v. Alston triggering fundamental change for the NCAA, there is more reason to think that the judiciary will side with college athletes in Tennessee v. NCAA.    

Future of College Athletics in the NIL Era: Implications of Tennessee v. NCAA

This series of unfavorable rulings for the NCAA raises questions about what the future of college sports will look like. Adding NIL deals to the list of criteria that may influence a student-athlete’s college decision introduces new areas for competition between institutions and conferences. The benefits that colleges receive from the recruitment, and ultimately admission, of college athletes could lead to competition wars that would place heavy consideration on the monetary promises these institutions will present to these athletes. With unprecedented levels of negotiating power, student-athletes may be moving closer to putting an end to the NCAA’s prohibition on pay-for-play in college athletics. 

A future involving student-athletes receiving monetary compensation seems even more plausible since Dartmouth basketball players recently voted to unionize after the National Labor Relations Board (NLRB) declared them employees. While the implications of this decision are unclear, this will undoubtedly impact the direction in which college athletics are headed. Considering the fact that their recent attempts to evade antitrust law have all ended unfavorably in court, it is inevitable that the NCAA will try to counteract this by potentially seeking antitrust exemption through Congress. 

However, continuing to ignore these laws could have negative consequences for athletes. A ban on NIL discussions during recruiting restricts competition between schools and removes athletes’ access to a free market. Preventing student-athletes from knowing their NIL value and removing their negotiation power causes harm. The negative effects of student-athletes not being able to have negotiating leverage outweigh potential benefits. The NCAA argues that its NIL-recruiting ban preserves amateurism in college sports and encourages the balance of academics and athletics, but there are other rules and regulations in place that require student-athletes to value their education. For example, there are NCAA credit hour and GPA requirements that all student-athletes must follow in order to maintain eligibility. Much is still uncertain. However, if a full ruling in Tennessee is in favor of the plaintiff — which recent case history seems to support — navigating the legalities of preserving collegiate amateurism in a multibillion dollar industry will become even more complicated.