(CN) — Tennessee and Virginia are asking federal courts to block the National Collegiate Athletic Association from enforcement actions over name, image and likeness programs that financially benefit student-athletes.
In an antitrust lawsuit filed in the Eastern District of Tennessee Wednesday, the states say the NCAA prohibits recruits from discussing so-called NIL deals prior to recruitment, a practice that violates the federal Sherman Act by restricting a fair and competitive market.
The suit comes a day after the University of Tennessee was notified it was under investigation and subject to potential enforcement actions, reportedly for offers it made last season to five-star quarterback Nico Iamaleava, projected to start for the team in 2024.
With Wednesday’s complaint, the states are seeking a preliminary injunction against the NCAA for prohibiting student-athletes from negotiating NIL benefits while they are considering which college to attend. Tennessee and Virginia claim the practice amounts to an abuse of market power and exploitation by “artificially depressing” the compensation of athletes.
The NCAA approved the NIL policy in 2021, in response to a unanimous order of the U.S. Supreme Court. Subsequently, states passed their own laws allowing prospective athletes to make money from NIL rights. According to one report, in the first year of NIL, “the average NCAA Division 1 athlete had received $3,711 of money through NIL while some big-name players scored six-figure deals.”
While the details of the NCAA's investigation into UT have not been fully released, a Jan. 30 letter from University of Tennessee Chancellor Donde Plowman to NCAA President Charlie Baker calls the NCAA’s accusations “factually untrue and procedurally flawed.”
The three-page letter encouraged the NCAA to set “clear rules” while also stating the organization “owes member institutions a spirit of partnership in problem-solving.” Plowman said the NCAA has a duty to be "intellectually honest” with all stakeholders and the public.
Name, image and likeness rights can be very lucrative. University of Southern California basketball player Bronny James, the son of NBA standout LeBron James, is estimated to lead NIL earnings with more than $7 million in compensation last year. Louisiana State University gymnast and social media star Olivia Dunne was paid more than $3 million, while Texas quarterback Arch Manning collected more than $2 million.
Current NCAA policy allows prospective college athletes to earn money from sponsorships and appearances, but the plaintiffs claim the policy also has a “glaring restriction — it prohibits the use of NIL as ‘recruiting inducements’ for 'prospective' college athletes." Colleges may run afoul of the policy if they directly or indirectly — through individual boosters or so-called “collectives” — negotiate NIL opportunities as a condition of attendance at a particular school.
Yet the organization does permit the negotiation and discussion of other forms of financial compensation, such as scholarships, “which are conditioned on a student’s enrollment and athletic participation at a particular institution,” according to the states.
The “mishmash of guidance and rules” has not been enforced until recently and “restricts schools from competing to arrange NIL compensation for prospective college athletes and suppresses athletes’ NIL compensation by deterring the free movement of labor,” the states argue in the complaint.
In recent weeks, the NCAA has announced enforcement actions against Florida State University and, more recently, investigations into the University of Florida and the University of Tennessee.
Wednesday’s lawsuit is similar to one filed in December by other states targeting the NCAA’s rules on player eligibility amid transfers. A judge in West Virginia did issue a temporary restraining order in the case, while a final order remains pending.
In a statement posted to X, formerly Twitter, University of Tennessee President Randy Boyd said the lawsuit “challeng[es] injustices and protect[s] our fundamental values.”
“Our university and our elected leaders in state and federal government have shown an unflinching commitment to ethical integrity,” Boyd wrote. “Their actions remind us that fairness, due process and the spirit of collegiate athletics should never be compromised.”
The NCAA has not yet responded to Wednesday’s lawsuit, which has been assigned to U.S. District Judge Clifton L Corker, an appointee of President Donald Trump.
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