States Raise New Questions About NCAA Ban on NIL Deals for Prospective Student-Athletes

The State of Tennessee and the Commonwealth of Virginia brought suit against the National Collegiate Athletic Association (NCAA) in a federal court in Tennessee. The suit seeks, among other things, a declaration that the NCAA’s name, image, and likeness (NIL) recruiting ban for prospective student-athletes violates Section One of the Sherman Act.

The complaint, filed by the states’ attorney generals, takes the position that the NCAA’s current ban on prospective student-athletes, which includes both high school athletes and current college athletes who enter the transfer portal, discussing potential NIL opportunities before the prospective student-athlete enrolls at a university restricts competition and violates Section One of the Sherman Act. The complaint highlights that under the NCAA’s current framework, coaches looking for new jobs can discuss and negotiate things such as their salaries, but prospective student-athletes are prohibited from doing just that with respect to NIL deals. The complaint points out that a player’s bargaining power is at its highest level when the player is still involved in his or her recruiting process. According to Tennessee and Virigina, the NCAA’s interim policy for prospective student-athletes greatly restricts, or in some cases, eliminates the player’s bargaining power by preventing prospective student-athletes from discussing, let alone negotiating, NIL deals before enrolling at a particular institution.

At this stage, it is also key to watch if other states with NIL laws like Tennessee and Virigina join this suit or file their own against the NCAA. Another factor to consider is that NIL laws in many states across the country, like the NCAA, also restrict using NIL deals to induce enrollment at a particular university. With legal battles across the country mounting against the NCAA, this case will be an important one to follow as its outcome will impact student-athletes, universities, collectives and businesses.

Please contact Nicholas Patti or any member of Phelps’ Litigation team if you have questions or need advice and guidance. Nicholas Patti is a licensed athlete-agent in the State of Florida.