The NCAA and the states of Tennessee and Virginia have reached a settlement that effectively dismantles the NCAA’s prohibition on using name, image, and likeness (NIL) deals in recruiting. This decision, announced on January 31, has major implications for universities, businesses, and student-athletes navigating the evolving college sports landscape.
How Did We Get Here❓
The battle began in January 2024 when the attorneys general of Tennessee and Virginia filed a lawsuit challenging the NCAA’s long-standing restrictions on NIL usage in recruiting—specifically targeting its impact on student-athletes in the transfer portal and high school prospects. The suit was triggered by the NCAA’s investigation into the University of Tennessee’s recruitment practices across multiple sports.
Early in the case, a federal court issued an injunction prohibiting the NCAA from enforcing its NIL-related recruiting rules, finding a strong likelihood that the plaintiffs’ antitrust claims would succeed. The NCAA quickly responded by halting enforcement and suspending any ongoing investigations related to NIL inducements. This effectively expanded the scope of the court’s injunction nationwide, marking a significant shift in how recruitment operates.
🤷🏻♂️ Why is This Settlement So Important❓
Pending final approval and a ruling on the request for a permanent injunction (set for March 17), this agreement further weakens the NCAA’s grip on the traditional amateurism model. Schools and boosters can now actively leverage NIL compensation as a recruiting tool without fear of NCAA penalties.
This settlement also sets the stage for another critical decision: the final approval of the House settlement in May, which would pay out nearly $2.8 billion in damages and, for the first time, allow schools to directly share revenue with athletes starting in the 2025-26 academic year. A key component of the House settlement is the introduction of a third-party clearinghouse to evaluate NIL deals exceeding $600, ensuring they align with fair market value. This oversight mechanism is the NCAA’s attempt to maintain competitive balance while preserving its role as a governing authority.
For athletes, the settlement offers more freedom in securing NIL compensation without the looming threat of NCAA infractions. However, universities and businesses must still operate within existing NCAA guidelines, which continue to prohibit direct “pay-for-play” agreements.
🧐 What’s Next?
This settlement is just one front in a much larger legal war against the NCAA’s traditional model of student-athlete amateurism.
🏈 Johnson v. NCAA: This case poses an existential threat to the NCAA’s long-standing assertion that student-athletes are not employees. A group of former athletes argues they should be classified as employees under federal and state labor laws, entitling them to minimum wage and overtime pay. In a critical ruling, the Third Circuit rejected the NCAA’s defense that amateurism alone justifies its labor model, creating a new legal test for evaluating student-athletes’ employment status. The case is now back in district court, with filings due in late March.
🏀 Eligibility Challenges & Antitrust Concerns: In December 2024, a federal judge in Tennessee ruled in favor of a Vanderbilt quarterback who sued the NCAA over eligibility rules that counted his junior college seasons against his total eligibility. This ruling led the NCAA to grant waivers to similarly affected athletes, allowing them to compete in the 2025-26 season.
⚾️ New NIL Challenges in Baseball: A Division I baseball player has filed a lawsuit seeking a preliminary injunction to extend his eligibility, arguing that the NCAA’s rules restricting his ability to play violate antitrust laws. His case, like others before it, highlights the growing legal pressure on the NCAA to reform eligibility standards that limit athletes’ ability to profit from NIL opportunities.
🛑 Bottom Line
The latest settlement is yet another sign that the NCAA’s traditional model of amateurism is crumbling. The next step is a determination that NCAA student-athletes are employees, which I predict is coming sooner rather than later.