The NCAA has agreed to permanently drop its rule prohibiting athletes from negotiating the terms of name, image and likeness payments until after they enroll in school.
The change is one of the terms of a legal settlement announced Monday between the NCAA and a group of state attorneys general, who sued the association last year claiming that the restriction on NIL negotiations violated federal antitrust law. The settlement, which still needs to be approved by the judge overseeing the case, marks another step forward as the college sports industry prepares to embrace a more professional business model in the months ahead.
The NCAA’s now-abandoned rule was designed to try to keep schools and booster collectives from using NIL deals as a recruiting incentive for incoming high school athletes and players in the transfer portal. Though schools and boosters were allowed to speak generally about the kind of financial opportunities that might be available on campus, they were prohibited from making a specific offer to an athlete until he or she was enrolled.
Despite efforts to keep money from becoming an inducement, many coaches have publicly stated that NIL packages are a major factor in the decision-making process of recruits.
Tennessee’s attorney general, Jonathan Skrmetti, filed a lawsuit challenging the rule last January, one day after the University of Tennessee revealed that its athletic department was being investigated for potential recruiting violations. Skrmetti argued that the rule kept athletes from negotiating with a school when their bargaining power was at its peak during the recruiting process. Florida, New York, Virginia and Washington, D.C., subsequently joined the lawsuit against the NCAA.
“With a multi-billion-dollar entertainment industry rising from the foundation of college sports, the kids who make it all happen should not be the only people denied an opportunity to prosper,” Skrmetti said in a statement Monday. “This settlement benefits generations of student-athletes, protects Tennessee universities from NCAA retaliation, and pushes college sports toward a new equilibrium that acknowledges financial reality while preserving competitive integrity. I’m glad to see the NCAA give up on defending a world that no longer exists.”
Last February, a federal judge in Tennessee granted a preliminary injunction against the rule. The injunction has allowed booster collectives and schools to make specific financial offers to athletes in the recruiting process during the past year. Monday’s settlement makes this change permanent. The NCAA’s current rules state that only third-party groups can pay athletes for their NIL rights, but that is on track to change this summer.
The association and its most powerful conferences have agreed to let schools pay athletes directly as part of the terms for a separate antitrust settlement, widely known as the House settlement. A hearing to approve the terms of that deal is scheduled for April 7. As part of the House settlement, each school will be able to share roughly $20.5 million with its athletes via NIL deals next academic year — a figure that is expected to steadily rise during the 10-year lifespan of the settlement.
An NCAA spokesperson said the deal was the result of months of negotiating with the states involved.
“This agreement continues the progress we have made over the last few years in allowing prospective and transferring student-athletes to seek out NIL opportunities,” the spokesperson said. “This judgment is fully consistent with the House settlement and underscores our support for student-athletes benefiting from their NIL and our commitment to provide increased benefits to student-athletes at every stage in their collegiate experience, creating a sustainable model for the future of college sports.”
Many schools have already started signing contracts with their athletes in anticipation of the settlement’s approval. Monday’s agreement clears the way for schools to continue negotiating the specific terms of these deals with athletes during the recruiting process.
