Newsletter, Image, Likeness Vol. 65: Tennesee And Virginia Take Aim At The NCAA

The Weekly Longer NIL Thought.

Recently, it was revealed that the NCAA is investigating the University of Florida (see Vol. 64) related to alleged NIL-related violations. That followed the NCAA and Florida State University coming to a resolution on agreed-upon NIL breaches (see Vol. 62). And then it emerged that the University of Tennessee is being similarly investigated ( Patrick Forde broke the news). Per The New York Times, the NCAA is looking into, at least in part, quarterback Nico Iamaleava being flown to Knoxville, Tennessee in a private plane before enrollment at the University of Tennessee.

While Florida has remained rather silent, Tennesee came out guns blazing, with strong commentary from its Chancellor and litigation initiated on antitrust grounds. Here's the Complaint.

That litigation was commenced by the attorneys general in Tennessee and the Commonwealth of Virginia against the NCAA. The case is pending in the Eastern District of Tennessee. It seeks to have the court deem that the NCAA's restrictions on NIL collectives communicating offers to high school athletes and those in the transfer portal should be stricken as unreasonable restraints on trade.

There has also been a motion for a temporary restraining order (TRO) filed that attempts to immediately prohibit the NCAA from enforcing its rules related to what it deems to be improper inducements to cause athletes to commit to schools. The intention is to have a ruling in place on the motion before National Signing Day (February 6, 2024).

"Student-athletes are entitled to rules that are clear and rules that are fair," said Tennessee Attorney General Jonathan Skrmetti close to the initiation of the litigation. "College sports wouldn’t exist without college athletes, and those students shouldn’t be left behind while everybody else involved prospers. The NCAA’s restraints on prospective students’ ability to meaningfully negotiate NIL deals violate federal antitrust law. Only Congress has the power to impose such limits."

"The NCAA’s allegations are factually untrue and procedurally flawed," wrote Tennessee Chancellor Donde Plowman. "Moreover, it is intellectually dishonest for the NCAA enforcement staff to pursue infractions cases as if student-athletes have no NIL rights and as if institutions all have been functioning post-Alston with a clear and unchanging set of rules and willfully violating them."

"The University of Tennessee has been nothing but forthcoming with the NCAA, and I thank Chancellor Donde Plowman for taking a stand on behalf of all student-athletes," added Tennessee Governor Bill Lee in a written statement. "It’s time for the NCAA to establish clear rules in the interest of student-athletes, rather than trying to retroactively enforce-ever changing name, image and likeness guidelines."

The following was published by Tennessee Athletic Director Danny White on February 1:

The best article I have read that discusses the NCAA's legal defenses comes from Michael McCann and Daniel Libit . They note that the NCAA will attempt to limit what can be used as binding precedent based on the unique claim here as opposed to, say, Alston v. NCAA, which had nothing to do with NIL. They further point out that antitrust cases are very difficult to win, with one study finding that defendants prevail in 97% of cases where courts apply a rule-of-reason analysis (controlling in this case), which weighs pro and anti-competitive factors. If the NCAA can establish that the restrictions are reasonable and flexible, then it helps the Association's defense.

"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," wrote McCann and Libit. "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."

The NCAA addressed the lawsuit outside of a court filing, which it rarely does. Here is the statement:

And as eloquently written by Ross Dellenger , "The NCAA’s predicament: For more than two years, coaches and administrators have staunchly encouraged the NCAA to punish schools for NIL violations. And, yet, when those punishments are delivered, the targeted schools vehemently decry them unfair and often even file legal challenges."

Dellenger also quoted me in his article where I stated a year ago, "We have an ecosystem where anything goes. There is pay for play and there are improper inducements. The only solution is to finally treat these athletes as employees. It’s free agency without salary caps, without a collective bargaining agreement. These athletes have more bargaining power than pro athletes."

In a separate article, Dellenger quoted my colleague Jason Belzer (whose company manages 45 collectives), who said, "We know the system needs reform, but there are a lot of student-athletes going to be hurt by this. There are a lot of athletes who have poor representation. And now every kid is going to be an open-market free agent? It is absolute chaos. That’s a disaster."

Anyhow, this issue is now before a federal judge. We should be gaining some clarity on where the case is going very shortly.

Is Florida Any Closer To Allowing HS Athletes To Benefit From NIL?

Its high school athletic association (the FHSAA) is 1 of 17 state high school athletic associations in the U.S. that refuses to modify its bylaws that currently prohibit high school athletes from monetizing their fame.

But there is now a draft of a proposal that would allow NIL for HS athletes in Florida if approved.

As I said to Jeremy Crabtree for his article, "The story I have been told for many months is that high school athletic directors are split almost 50-50 as to whether to keep the status quo or shift to follow many other state high school athletic associations that have modified their bylaws to allow for NIL activities. There is a real concern that Florida high schools will fall behind and the very top talent consider moving out of state. At the same time, athletic directors at the most prestigious athletic institutions are extremely concerned that allowing NIL will destroy the ecosystems they have built over time and empower athletes to an extent that schools lose their control."

A New Insurance Product Is Coming For Collectives.

Players Health says that it is introducing an insurance policy to help cover losses when players transfer to other schools. I am interested in seeing the policy language including what is covered and excluded, but haven't gotten my hands on it yet.

“Say a kid is making a half a million dollars and [a collective] really wants to get this kid, so they front-load the cash and then there's a set of deliverables that they have as the season gets closer,” Players Health CEO Tyrre B. said. “[The player] could transfer before the season ends and because they haven't violated any of the contractual obligations in the contract, there's nothing stopping them from being able to go. Now the collective is out of this cash. So we would insure that and make the collective whole, so that they can use the capital that they were going to deploy to go get another [athlete].”

The Collective Association Elects New Leadership.

At a meeting in Orlando, Florida, the group of 32 NIL collectives named Hunter Baddour (co-founder of Tennessee Spyre Sports) chairman, Walker Jones (executive director of Ole Miss Grove Collective) vice chairman, Russell White (president of Oncoor) president, Mackenzie Mulvey (also at Spyre Sports) treasurer, Ingram Smith (executive director of FSU The Battle's End) secretary, and Georgia's Matt Hibbs, Blueprint Sports' Rob Sine, as well as South Carolina's Jeremy Smith on the board of directors.

North Carolina Collective Raises $1 Million In 2 Weeks.

The Heels4Life NIL collective, a nonprofit organization, hit $1 million in its "Hold The Line" campaign. It has set $5 million as its minimum fundraising target for this year.

Ohio State QB Julian Sayin Signs With Panini.

It's an exclusive, multi-year partnership. Sayin is rep'd by Excel Sports.

Kentucky Basketball Player Reed Sheppard Inks Deal With The Dairy Alliance.

"Teaming up with The Dairy Alliance holds special significance for me. Growing up in Kentucky, I've always valued the close-knit relationship with those who contribute to our community's agricultural legacy," said Sheppard. "I look forward to leading this campaign that highlights the value of supporting our Kentucky dairy farmers and enjoying the nutritious benefits of dairy milk."

Final Thoughts.

That is it for Vol. 65 of Newsletter, Image, Likeness. Thanks to the more than 8,115 people who have subscribed to this newsletter thus far, and please feel free to share this free resource with others on LinkedIn or elsewhere.

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