By Dominic Keilty
In the wake of recent court rulings against the NCAA, its role in the future governance of college sports is murkier than ever. In the absence of current legislative exemptions for the NCAA, the emerging labor market recognition of college athletes partly challenges the organization’s traditional role.
The NCAA’s 2021 decision to allow students to profit off their name, image and likeness (NIL) has created a market for college athlete deals worth an estimated $1 billion annually .(1) This system allows the free market to decide the value of a college athlete’s services, as companies and promotional collectives negotiate deals directly with athletes and their representation. States have different NIL laws that govern these agreements with athletes.(2)
This free market system allows for a quasi-efficient allocation of players to institutions with financial resources. Athletes now have a financial incentive to play at schools where they can maximize their NIL value. This can lead athletes to prefer schools with booster pools that have the resources to “buy” players with lucrative NIL deals.(3) A disparity has already begun to emerge, as the average value of an NIL deal for an athlete from a Power 5 conference school is $2,144, significantly more than the $558 average for athletes from the Power 5 conferences. non-Power 5 schools.(4) Even coaches at top sports programs have expressed concerns about some schools’ use of NIL agreements as a financial incentive to attract talent, as retired Alabama football coach Nick Saban had previously accused rival Texas A&M of exploiting the new rules to add players.(5)
This allocation of collegiate athletic talent to financial opportunities has been greatly facilitated by the NCAA’s loosening of restrictions on athlete transfers. While previous rules required athletes to redshirt for one year after transferring, an NCAA rule change in 2021 eliminated that requirement.(6) Prior to 2018, athletes also had to ask permission before communicating with external coaches and those coaches had to ask permission from the athlete’s school before recruiting them.(7) None of these restrictions are still in effect today, allowing athletes to move from one school to another with relative ease.
NIL deals have combined with the easing of transfer restrictions to create a market where athletes are constantly evaluating whether the value of their contributions matches their NIL compensation. In 2022, the agent of University of Miami basketball guard Isaiah Wong publicly announced that Wong would transfer schools or leave for the NBA draft if his NIL compensation was not increased.(8) Since Florida law does not allow schools to be involved in NIL deals, the communication was largely aimed at billionaire John Ruiz, the Miami developer who had provided the then-current NIL deal to Wong.(9) This phenomenon extends across all sports, as a Power 5 football coach recently noted that a player asked him for an additional $100,000 in exchange for his continued services.(ten)
Recent court rulings against the NCAA indicate that regulation of college athletic labor is shifting from its traditional source, the NCAA, to state legislatures.(11) Most recently, a U.S. district court judge granted a temporary injunction against the NCAA, preventing it from enforcing rules relating to negotiations between athletes prior to their enrollment at an NCAA facility and potential third-party sponsors of NILE.(12) Although only a temporary injunction, the judge noted that “distributing competition equally among member institutions by restricting trade is precisely the type of anticompetitive behavior that the Sherman Act seeks to prevent.” “.(13) Thus, in the absence of congressional intervention, repeated legal incursions on the NCAA’s power signal that its role as the primary regulator of college sports may be coming to an end.
State legislatures appear to be emerging as the dominant providers of new NIL-related governance.(14) However, the NCAA has argued for a uniform federal solution, saying the growing patchwork of different state laws has created an uneven playing field.(15) Many lawmakers seem to agree, as several such bills have been introduced in Congress.(16)
A law creating federal NIL governance should inherently designate which issues are for legislation and which should be left to the NCAA. The emerging trend of recent rulings against the NCAA illustrates a common theme: courts are invalidating the NCAA’s restrictions on athletes in the workforce.(17) Although student-athletes cannot technically be considered school employees, the relaxation of transfer policies and zero-pay restrictions promotes a more competitive allocation of athletic talent on the open market to schools with well-paid collectives.
Thus, one direction of future legislation would be to focus on labor market governance for talented athletes. An effective future role for the NCAA may be to regulate the rules and structures of the sports themselves, rather than the participants in those sports. The NCAA would continue to be responsible for the areas in which it excels: determining and enforcing competition rules, negotiating television deals and providing support to student-athletes. This potential division of responsibilities between the NCAA and government would allow for more uniform standards and more streamlined and effective roles for both parties.
Dominic holds a 2L from Vanderbilt Law School. Before studying law, he graduated from the University of Virginia with a bachelor’s degree in government and from Georgetown University with a master’s degree in finance.
(1) Dan Whateley and Margaret Fleming, How NIL Deals and Brand Sponsorships Help College Athletes Make Money, Bus. Insider (September 19, 2023), https://www.businessinsider.com/how-college-athletes-are-getting-paid-from-nil-endorsement-deals.
(2) Amy L. Piccola, Tricia Duffy and Levi R. Schy, Monitoring of NIL legislationSaul Ewing LLP, https://www.saul.com/nil-legislation-tracker (last visited February 26, 2024).
(3) Christopher J. Brooks, When choosing universities, top young athletes say: “Show me the NIL”, CBS News (June 3, 2022) https://www.cbsnews.com/news/nil-college-athletes-boosters-collectives-nick-saban-coaches/.
(4) The new eco-political frontier: university sports, Magazine of the Common Good. (October 2, 2023), https://commongoodmag.com/the-new-econo-politique-frontier-college-sports/.
(5) Streams, above note 3.
(6) Brett Dawson, What is the NCAA Transfer Portal? Explain the process for athletes changing schoolsCourier J. (January 12, 2023), https://www.courier-journal.com/story/sports/college/2023/01/12/everything-you-need-to-know-about-the-portal-transfert -ncaa/69670749007/.
(7) Identifier.
(8) Jonathan Givony and Jeff Borzello, NIL agent says Miami Hoops star Isaiah Wong will enter transfer portal if NIL compensation is not increasedESPN (April 28, 2022), https://www.espn.com/mens-college-basketball/story/_/id/33823826/nil-agent-says-miami-hoops-star-isaiah-wong- enter it -transfer-portal-augmented-nile-compensation.
(9) David Cobb, Miami Isaiah Wong will stay with the Hurricanes and pursue other NIL deals after threatening a transfer, CBS Sports (April 29, 2022), https://www.cbssports.com/college-basketball/news/miamis-isaiah-wong-will-stay-with-hurricanes-pursue-more-nil-deals-after-threat of transfer/.
(ten) Trey Wallace, College football coaches are now in a NIL bidding war in the transfer portal with $100,000 shakedowns from their own players, Outkick (December 11, 2023), https://www.outkick.com/transfer-portal-nil-college-football-name-image-likeness-ncaa/.
(11) How many legal challenges does the NCAA face? It’s a lot and the impacts could be significantAssociated Press (February 23, 2024), https://apnews.com/article/ncaa-lawsuits-d3abf6cdbe606668eb9a91ffd2218f72.
(12) Teresa M. Walker and Ralph D. Russo, Judge hands NCAA another loss, says compensation rules likely violate antitrust law and harm athletesAssociated Press (February 23, 2024), https://apnews.com/article/tennessee-ncaa-lawsuit-nil-7ecfad9c88f8c8baa7e0f4bb00f22ec9.
(13) Identifier.
(14) Piccola et al., supra note 2.
(15) Ralph D. Russo, NCAA made ‘big mistake’ by not putting framework in place for zero compensation, new president says: AP (June 8, 2023) https://apnews.com/article/ncaa-baker-president-congress-nil-7bf8416505d1ffec57f89e805d39d766.
(16) Piccola et al., above note 2.
(17) See NCAA vs. Alston, Comment on 141 S. Ct. 2141 (2021), 135 Harv. L. Rev.471 (2021); How many legal challenges does the NCAA face? It’s a lot and the impacts could be significant, above note 11; Walker and Russo, above note 12.
