In a case that could end the NCAA’s role in restricting name, image and likeness opportunities for college athletes and lift prohibitions on pay-for-play inducements, Tennessee attorney general Jonathan Skrmetti and Virginia attorney general Jason Miyares sued the NCAA in a Tennessee federal district court on Wednesday for violating federal antitrust law.
The AGs assert the NCAA is “thumbing its nose at the law” by barring prospective college athletes from “discussing potential NIL opportunities before they actually enroll.” This alleged interference makes it more difficult for prospective college athletes to stimulate competition among potential NIL collectives and other providers, thus “preventing” these athletes “from obtaining full, fair-market value” for their NIL.
The lawsuit comes as the University of Tennessee is reportedly facing its latest in a long succession of NCAA investigations. According to multiple media reports, the latest probe looks at the relationship between the UT-focused NIL collective activities and Volunteer recruits. The New York Times reported this week that the investigation specifically is looking into allegations that UT’s starting quarterback Nico Iamaleava was flown on a private jet provided by the Volunteer Club, a collective that is linked to a Knoxville-based marketing agency called Spyre Sports Group. On Tuesday, attorney Tom Mars posted on X a statement on behalf of Spyre Sports Group, saying that its contractual relationship with Iamaleava was “independent of the University of Tennessee or anyone associated with its athletics program.”
Skrmetti and Miyares highlight what they regard as a problematic NIL policy where, although the NCAA “facially allows college athletes to earn” money through NIL without violating rules, it prohibits NIL opportunities that are deemed “recruiting inducements.” A collective thus can’t “condition NIL opportunities upon an athlete’s attendance at a particular school” without running the risk of jeopardizing the eligibility of an athlete or placing a school in the NCAA’s crosshairs.
Skrmetti and Miyares also highlight how college athletes generate “massive revenues for the NCAA, its members and other constituents in the college-athletics industry” and assert “none of whom would dare accept such anticompetitive restrictions on their ability to negotiate their own rights … those athletes shouldn’t have to either.”
To that end, the AGs demand an injunction that would prohibit the NCAA from enforcing its “NIL-recruiting ban,” meaning the NCAA could no longer take steps “to prevent prospective college athletes and transfer candidates from engaging in meaningful NIL discussions prior to enrollment.” They also seek a court order declaring the ban violates section 1 of the Sherman Act.
The AGs also try to bolster their argument by citing problematic case law for the NCAA. They emphasize that in NCAA v. Alston (2021), the U.S. Supreme Court clarified the NCAA is not owed deference under antitrust law and thus its rules are subject to ordinary scrutiny. While acknowledging Alston “involved only education-related compensation”—and thus not pay-for-play or NIL—Skrmetti and Miyares stress Justice Brett Kavanugh’s concurring opinion. In it, he castigated the NCAA as a cartel engaged in practices that, in any other industry, would easily run afoul of antitrust law since they treat the labor as ineligible for pay.
The basic antitrust problem for the NCAA is that its rules restricting economic opportunities for athletes are formed through NCAA member schools and conferences. Members are competing businesses, such as when they compete for students, faculty and grants. Under antitrust law, competing businesses are forbidden from conspiring in ways that, on balance, harm economic competition—including, at least in some ways, the competition for college athletes. The NCAA and members engage in a form of “horizontal price fixing” by not allowing athletes, who under NCAA rules can only be paid by schools up to the grant-in-aid, from obtaining their market value.
Skrmetti and Miyares also highlight Ohio v. NCAA, where a federal judge issued a restraining order (later a preliminary injunction) prohibiting the NCAA from restricting college athletes from transferring to their third college. The NCAA’s so-called “double transfer ban” was deemed to have unreasonably interfered with athletes’ ability to attend a school that maximizes their well-being, including for economic reasons (like NIL opportunities). The AGs argue the NCAA’s “NIL-recruiting ban” shares the same fundamental problem in that it prevents players from maximizing their potential value through playing college sports.
The NCAA is armed with a bevy of legal defenses.
For starters, the association will distinguish the core legal claim in Tennessee & Virginia v. NCAA from others that led to defeats, and thus downplay the relevance of other case law.
Although the Supreme Court ruled 9-0 against the NCAA in Alston, the case had nothing to do with NIL. It concerned NCAA rules limiting the amount of money colleges could pay athletes for education-related expenses. As the AGs repeatedly note, Kavanaugh wrote an oft-quoted concurring opinion that advocated a broader rebuke of NCAA amateurism rules. But the majority opinion authored by Justice Neil Gorsuch was the opinion that set precedent and it was narrowly constructed. It made clear the Court was only addressing education-related expenses, not pay-for-play, NIL or other topics. How the Court would review pay-for-play restrictions under antitrust is unknown, but several of the justices voiced concerns about deeming them illegal.
Further, the NCAA can insist its rules are reasonable restraints to further NCAA amateurism goals. Unlike arguably rigid practices that enabled the use of colleges players’ identities in video games without permission or compensation (O’Bannon v. NCAA), which made it impossible for schools to compensate athletes for education-related expenses (NCAA v. Alston) or that treat an athlete seeking to transfer to their third school differently from one seeking to transfer to their second school (Ohio v. NCAA), the NCAA might maintain its pay-for-play rules are fact-intensive, with member schools and other impacted parties empowered to present their side of the story. The NCAA can also point out that a federal judge in Illinois recently found the NCAA can lawfully deem pay-for-play payments that are cloaked as NIL payments violate eligibility rules (Bewley v. NCAA).
Although you wouldn’t know it from the NCAA’s recent record, antitrust cases are very difficult to win. One study has found defendants prevail in 97% of cases where courts apply rule-of-reason (weighing of pro and anti-competitive factors) analysis and such analysis applies here. To the extent the NCAA can describe its challenged restriction as reasonable and flexible, the more likely it is the NCAA would prevail in court.
Also, the NCAA might portray the plaintiffs as proxies for influential state universities—specifically the University of Tennessee—and stress the high deference courts historically accord membership organizations when a member challenges application of a rule. NCAA rules prohibiting pay-for-play are not unilaterally imposed by the NCAA—they are formed through member institutions’ proposals, discussions and voting. As a member institution, UT and other NCAA colleges in Tennessee and Virginia contractually assent to follow those rules and accept the NCAA’s enforcement of them.
Tennessee’s stake in the litigation is clear given UT’s current situation with the NCAA, but Virginia’s is less obvious. The complaint references Virginia enacting a law in 2022 that protects college athletes’ right to earn NIL compensation and says that Tennessee and Virginia “have each expressed a clear state interest in protecting prospective and current college athletes’ NIL opportunities.” Virginia, through its attorney general, therefore justifies its role in the case as a necessary step to shield Virginia law from acts that violate federal antitrust law.
The new lawsuit arrives as the NCAA is defending against multiple challenges to its broader system of amateurism. College athletes from USC and Dartmouth College could be declared by the NLRB employees of their schools, and possibly also their conferences and the NCAA, under the National Labor Relations Act and then form unions. Johnson v. NCAA could lead to the recognition of college athletes as employees under the Fair Labor Standards Act and guarantee them minimum wage and overtime pay rights. The NCAA also faces a potentially multibillion dollar payout for unpaid TV money if it loses the In Re College Athlete NIL Litigation (a.k.a. House v NCAA) class action, while Carter et al. v. NCAA could render the grant-in-aid (capping schools payment to athletes to tuition, books, room and board, and related expenses) a violation of antitrust law, thereby paving the door for college athletes to be paid market value scholarships.
Meanwhile, UT has had a tendentious history with the NCAA’s infraction process. In 2011, the school fired head men’s basketball coach Bruce Pearl after he was found to have misled NCAA investigators about hosting a recruit at his home for an impermissible unofficial visit. This followed a 22-month NCAA investigation of Tennessee’s entire athletic department. Pearl was ultimately given a three-year show-cause penalty after which he was hired by Auburn. UT’s head football coach at the time, Lane Kiffin, also received a notice of violations for making contacts with recruits. A decade later, UT was again forced to address alleged NCAA recruiting violations, this time by head football coach Jeremy Pruitt and his staff. The NCAA accused Pruitt of 18 Level I violations and a general failure to maintain a compliant program, after Tennessee was found to have, among other violations, paid cash to prospects between 2018 to 2021. Pruitt, who was fired, eventually was given a seven-year show-cause penalty while Tennessee was put on five-year NCAA probation and made to pay $8 million in fines.