On the heels of West Virginia lawmakers introducing a bill that would conflict with revenue-sharing limitations in the NCAA’s pending settlement of the House, Carter and Hubbard antitrust litigations, Oregon Rep. John Lively this week introduced a bill that would conflict with the settlement’s NIL disclosure provisions.
HB 3694 is another reminder for the NCAA that it might need to sue states to ensure the House settlement establishes a new, national arrangement for college sports.
The House settlement contains a provision instructing that college athletes’ NIL deals with third parties worth more than $600 are subject to independent review. The review would ensure the deals aren’t disguising pay-for-play arrangements—which remain prohibited by NCAA rules—as NIL contracts.
The review would rely on fair market value analysis, with the idea that if an athlete is set to be compensated for the commercial use of their identity, the amount of pay shouldn’t far exceed the real-world value of that identity. Compensation in excess of fair market value would suggest the deal is better understood as a pay-for-play scheme and thus disallowed. There are various criticisms of reviewing NIL deals, as some argue the fair market value of an NIL deal is whatever price the market produces.
The ability for independent review of an NIL contract hinges on access to that contract. HB 3694 would present a problem on that front. Among the bill’s provisions is a clause stating that any organization with authority over intercollegiate sports cannot require an athlete to disclose the terms of an NIL deal if the contract prohibits the athlete from disclosing. HB 3694 also states that while college athletes may have to disclose NIL deals to their schools, those schools must treat the information as “confidential” and exempt from disclosure under public records laws.
The Oregon and West Virginia bills aren’t unique in presenting state-based hurdles for the settlement, which U.S. District Judge Claudia Wilken could approve as soon as April. Other states, including Texas and Oklahoma, have laws that guarantee legal rights that pose potential conflicts with the settlement. As Wilken’s April 7 fairness hearing for the settlement nears, expect to see additional states weigh legislation designed to enhance college athletes’ economic rights in ways that go beyond, if not cut through, the settlement.
States, of course, can pass laws as they wish. The House settlement is not a law or even case precedent. It is a contract that, with Wilken’s blessing, will resolve the federal antitrust claims at issue in the three cases. In resolving antitrust claims, the settlement could spawn conflicts with state laws as well as with other federal laws, including Title IX, labor and employment laws. The settlement might also spark conflicts with other applications of antitrust law (such as with respect to NCAA rules limiting player eligibility, a topic that has generated multiple lawsuits in recent months).
Although the NCAA would prefer the settlement serve as a panacea and end myriad legal challenges, it can’t do that. Along those lines, a settlement should not be confused with a collective bargaining agreement, which pro teams and unionized employees extinguish or mollify a broader range of potential claims. Colleges and other impacted businesses relying on the settlement should tread carefully; for years to come, there will be a continued risk of athlete rights’ litigation.
That’s not to say the NCAA is helpless. As Sportico explained on Monday, the collegiate governing body could go on offense and sue states for violating the U.S. Constitution. The NCAA could depict states as interfering with a private, national membership organization whose members contractually assent to follow NCAA rules. To that end, the NCAA could argue states with settlement-defying laws are breaching the Commerce Clause, which forbids states from adopting laws that unduly interfere with other states’ economies, and the Contract Clause, which makes it illegal for states to impair contracts (including membership agreements). The NCAA has a track record of successfully using that approach. In NCAA v. Miller (1993), the NCAA defeated Nevada’s attempt to require due process safeguards that conflict with NCAA rules.
The NCAA could also try to persuade Congress to pass legislation. A federal bill that (1) immunizes the NCAA from antitrust lawsuits, (2) declares college athletes aren’t employees, (3) restricts Title IX lawsuits over settlement terms and (4) sets a national NIL standard would be welcome relief to the NCAA and its member conferences and schools. But the NCAA has lobbied for this type of legislation for years, and while every related Congressional hearing has garnered media attention, none have led to any laws.
