There has never been a better time to be a collegiate athlete. The emergence of Name, Image, and Likeness (“NIL”) deals has allowed student-athletes from all sports the ability to partner with brands and market themselves in a way once punished by the National Collegiate Athletic Association (“NCAA”). In Alston v. NCAA, the United States Supreme Court made clear that “[t]he NCAA is not above the law” and that the association is bound by federal antitrust law.[i] In this case, the Court analyzed the Sherman Antitrust Act, which prohibits activities that restrict interstate commerce and competition in the marketplace, outlawing contracts or laws that unreasonably restrain interstate trade.[ii] Ultimately, the Supreme Court found the NCAA rules limiting student-athlete abilities to achieve financial benefit off of their image to be unreasonable because they were substantially anti-competitive in nature, violating the Sherman Act.[iii]
Since the landmark decision of NCAA v. Alston, college athletes have finally received the fair compensation they deserve. College Football stars such as Caleb Williams and Bryce Young have been some of the first beneficiaries of the groundbreaking NIL movement, as they both achieved millionaire status before making it to the professional level. However, these stars make up the minority of college athletes, as most athletes are looking to apply or transfer to the college environment that will fulfill their financial and athletic needs. Making it into the ideal situation is vital for most athletes, as the right environment can possibly allow for more endorsement opportunities or even provide athletes more playing time to strengthen their NIL valuation.
While making it to the right environment is vital for athletes to maximize their NIL potential, the NCAA’s NIL-recruiting ban following Alston v. NCAA limited entities from engaging with transferring and prospective collegiate athletes, limiting the athlete’s ability to determine which environment would best suit their needs. The NCAA’s rules stated that entities seeking to engage with collegiate athletes regarding NIL endorsements were forbidden from engaging with these athletes until the athlete “(1) signs a letter of intent, (2) participates in summer activities, (3) practices with the team or (4) attends class at the school.”[iv] This meant that athletes were unable to engage in endorsement negotiations until they had decided which school they wanted to attend. This is the very issue at the heart of a new lawsuit filed by the Attorney Generals of Tennessee and Virginia.
In Tennessee v. NCAA, the plaintiffs argue that the NCAA’s restrictions on transferring and incoming collegiate athletes must be alleviated because these athletes are unable to discuss “potential NIL opportunities before they actually enroll.”[v] While athletes are allowed to profit off of their NIL, these restrictions do not allow the NIL landscape to function freely. Instead, athletes and entities must be wary of being penalized if they negotiate before the student has committed to a school, which is reminiscent of the NIL landscape before the NCAA v. Alston decision in 2021.
On February 23, 2024, the U.S. District Court for the Eastern District of Tennessee issued a preliminary injunction, halting the enforcement of the NCAA NIL-recruiting ban in Tennessee and Virginia, allowing third-party entities, such as boosters, to negotiate with student-athletes prior to their commitment to an entity.[vi] In determining whether to grant the motion for a preliminary injunction, the Court balanced the following four factors: “(1) whether the movant has a strong likelihood of success on the merits; (2) whether the movant would suffer irreparable injury without the injunction; (3) whether issuance of the injunction would cause substantial harm to others; and (4) whether the public interest would be served by the issuance of the injunction.”[vii]
In analyzing the success of the suit on the merits, the Court used the Rule of Reason, requiring plaintiffs to first show an anticompetitive effect and, if successful, the defendant must show a procompetitive rationale for the restraint.[viii] The Court reasoned that this factor weighed in favor of granting the injunction, finding that the ban suppressed price competition by limiting the negotiating leverage of the recruits, despite the NCAA’s procompetitive rationales of maintaining a competitive balance among member institutions and safeguarding prospective student-athletes.[ix] This logic also supports the Court’s reasoning for the fourth factor favoring the plaintiffs, as an injunction against the ban would prevent anticompetitive behavior, thus serving public interests.[x] Furthermore, the Court found that the third factor weighed in favor of the plaintiffs because the issuance of the injunction would prevent irreparable harm to students by allowing them to negotiate NIL deals with third parties prior to a commitment to an entity, which outweighs the harm caused to the NCAA absent an injunction.[xi]
It is clear that the Court’s decision to grant the preliminary injunction is not only correct but should also be followed by a permanent restrain on the NIL-recruiting ban. The ban is an unreasonable restraint on trade in violation of the Sherman Act because it hinders athletes from pursuing the environment that could net them the best NIL deal, limiting the athlete’s ability to realize their NIL potential.[xii] In most employment markets, prospective employees are able to interview with several entities and understand their options, allowing them to make an informed decision regarding their place of future employment. However, prospective and transferring collegiate athletes are not afforded the same luxury, as they cannot make these informed decisions under the NCAA NIL-recruiting ban restrictions. While the NCAA argues that the ban maintains competitiveness among schools, as it does not allow the highest bidding boosters and associating officials to acquire athletes, their position ignores the best interest of the student-athletes. In order to experience the benefits that the NIL landscape offers to the fullest, prospective and transferring collegiate athletes must be able to negotiate with schools and supporting third parties to understand and appreciate their options and make an educated decision. A continuation of the NCAA’s restrictions would continue to put this association’s interests above that of the student athletes, going against the spirit of NCAA v. Alston.
Overall, the outcome of Tennessee v. NCAA will have a monumental impact on the NIL landscape, as the current injunction is not permanent. While the current NIL landscape was made a reality in 2021 after the NCAA v. Alston case, Tennessee v. NCAA has the potential of creating a free and transparent NIL market similar to that of the employment world if the current restrain on the NIL-recruiting ban is maintained. Although the NCAA will lose a bit of control over the NIL market if the court does not find in their favor, collegiate athletes will benefit tremendously, as they will finally have all the requisite information to make career-altering decisions regarding which college to attend.[xiii]
[i] Nat’l Collegiate Athletic Ass’n v. Alston, 594 U.S. 69, 112 (2021).
[ii] See id. at 88.
[iii] See id. at 102–07.
[iv] NCAA Approves New NIL Disclosure and Transparency Rules for Division I Student-Athletes, McGuireWoods (Sept. 3, 2024), //www.mcguirewoods.com/client-resources/alerts/2024/1/ncaa-approves-new-nil-disclosure-and-transparency-rules-for-division-i-student-athletes/.
[v] Compl. ¶ 4, Tennessee v. NCAA, No. 3:24-cv 33 (E.D. Tenn. Jan. 31, 2024).
[vi] See Tennessee v. NCAA, No. 3:24-CV-00033-DCLC-DCP (E.D. Tenn. Feb. 23, 2024), https://www.tn.gov/content/dam/tn/attorneygeneral/documents/pr/2024/pr25-18.pdf.
[vii] Certified Restoration Dry Cleaning Network, L.L. C v. Tenke Corp., 511 F.3d 535, 542 (6th Cir. 2007).
[viii] See David Fish, TN v. NCAA – Athletes and Antitrust Laws, Romano L. (Mar. 26, 2024), https://www.romanolaw.com/tn-v-ncaa-athletes-and-antitrust laws/.
[ix] See Tennessee, No. 3:24-CV-00033-DCLC-DCP, at 6.
[x] See id. at 13.
[xi] See id. at 9.
[xii] See Craig Smith, Tennessee Could be the One to Finally Gut the NCAA in Latest Court Filing, A to Z Sports (Jan. 31, 2024), https://atozsports.com/nashville/tennessee-and-virginia-sue-the-ncaa-for-nil-related-restrictions-on-wednesday/.
[xiii] See Paxton Elmore, NCAA Faces Lawsuit from State of Tennessee & Commonwealth Virginia, 102.5 Wow Country (Sept. 3, 2024), https://1025wowcountry.com/2024/01/31/22348/.
