The NCAA is at a pivotal moment in history, one that will transform collegiate athletics as we know it. The organization is currently treading water on the issues concerning name, image, and likeness (NIL) and being sued left and right by future, current, and former student-athletes. However, lawsuits from student-athletes seeking compensation from the NCAA are not a new issue.
On July 1, 2021, in response to legislative pressure, public debate, and legal challenges, the NCAA introduced an interim NIL policy. The policy permits athletes to profit from their NIL but prohibits “pay for play” (i.e., athletes cannot be paid as an inducement to play or enter into or negotiate a NIL agreement prior to enrollment in a university).
Initially, this policy appeared to be a positive step forward for the NCAA. However, legal disputes continued. Prior to the policy, the NCAA faced an antitrust lawsuit, Grant House v. NCAA, in 2020. A group of Division 1 athletes filed a suit to challenge the NCAA restraints that prohibited them from receiving compensation for their NIL. The NCAA may have hoped that implementing the new guidelines would halt the lawsuit; however, in response, the athletes refiled and now seek back pay for:
Following Grant House v. NCAA, two more antitrust lawsuits—Hubbard v. NCAA and Carter v. NCAA—were filed, raising further questions about how the new NIL framework would function. In an effort to mend the fight and supply clarity on the matters in the three consolidated cases, the parties entered settlement discussions. The proposed settlement was filed in the Northern District Court of California for the presiding Judge, Claudia Wilken, to review. The settlement plan included the following:
On September 5, 2024, Judge Wilken declined to grant preliminary approval for the settlement, instructing attorneys to go back to the drawing board. Judge Wilken stated she had concerns about the settlement, including the language around third-party NIL payment restrictions, specifically from boosters and NIL collectives. NIL collectives, typically comprised of alumni, pool money from boosters and businesses to support university athletics by providing athletes with NIL opportunities through a variety of activities. Currently, some university collectives are paying athletes $7 million to $20 million annually for NIL activities. For example, Ohio State’s collective has purportedly spent between $18 and $20 million.
However, the proposed revenue-sharing model would cap annual university contributions at $20–$23 million to student-athletes, potentially limiting the collectives’ spending power and, in turn, athletes’ earnings. The settlement plan also requires booster contributions to serve a “valid business purpose.” Judge Wilken believed this language could enable the NCAA to limit payments from collectives and other third-party deals, potentially reducing athletes’ earning opportunities and prompting future lawsuits from athletes who believe this language limits their earning potential. Judge Wilken also questioned how the NCAA and universities would define a valid business purpose.
Both parties submitted a revised settlement plan, which Judge Wilken preliminarily accepted. Yet, many unresolved issues remain, such as Title IX implications and the potential classification of athletes as university employees. These uncertainties will likely lead to further legal challenges.
Historically, women’s sports have been on the backburner of attention from universities. Even in the issuance of backpay, approximately 75 percent will be allocated to football, while less than 20 percent will go toward women’s basketball. Concerns persist over how funds will be distributed among female athletes under the new revenue-sharing model.
As of now, athletes are not considered employees or independent contractors, but this may change in the coming years. The National Labor Relations Board stated in Johnson v. NCAA that athletes may be considered “employees” under the Fair Labor Standards Act after several athletes filed a complaint alleging violations of the act and state wage laws. These and other labor issues will require attention from athletic departments.
Former Heisman trophy winner Reggie Bush filed a lawsuit against the NCAA, USC, and PAC-12, seeking compensation for NIL earnings during and after his time at USC. Reggie’s suit is one of many by former collegiate athletes demanding compensation for their NIL prior to 2016. Terrelle Pryor is another former athlete to join the bandwagon. During Terrelle’s collegiate career, he was involved in a scandal that essentially ended his career. Terrelle and other teammates were accused of trading equipment, autographs, and memorabilia for money. In other words, Terelle profited from his NIL and, as a result, faced punishment. This is just the start of former athletes suing the NCAA and their alma maters. I would not be surprised if these cases lead to another class action.
Legally, athletes are prohibited from entering pay-for-play deals. This prohibition extends to negotiations with collectives prior to enrollment. However, a federal judge in Tennessee granted an injunction earlier this year that prohibited the NCAA from punishing boosters or athletes for negotiating any NIL deal as part of the recruiting process. This would legally permit collectives to offer a student-athlete a NIL collective deal as an incentive to attend their university before they commit. Currently, this injunction only stands in Tennessee, but I expect other states to start to follow.
