Film Room: post-House NIL regulation insights

House Settlement Implementation Committee Update 

Last week, the NCAA issued a statement describing how the post-House framework is being developed by the Settlement Implementation Committee. The statement identified four areas of focus: 

1. Drafting new rules and clarifying existing rules to facilitate consistent compliance with all aspects of the settlement
2. Developing a digital platform for the reporting and measurement of payments made to student-athletes by their institutions to ensure compliance with the cap set forth in the proposed settlement
3. Creating a system to ensure that third-party name, image and likeness deals entered into with student-athletes are legitimate deals that will use the student-athlete’s NIL to advance a valid business purpose
4. Forming a new entity to enforce these rules with an emphasis on efficient investigative procedures, timely decision-making, appropriate penalties, and ensuring accountability for bad actors

The statement noted that “[t]he committee has also been working closely with Deloitte to create a system to track and evaluate all Division I student-athletes’ third-party NIL deals valued at $600 or more” and “[t]he new enforcement entity will use the system to help it evaluate whether these deals are within a reasonable range of compensation and made with the purpose of using a student-athlete’s NIL to advance a valid business purpose.” 

The details regarding items 3 and 4 – exactly how NIL deals will be judged and the process by which those decisions will themselves be judged – are both important and not yet disclosed. 

State of Tennessee, et al. v. NCAA

As a refresher, in February 2024, a federal court in Tennessee entered a preliminary injunction requested by the attorneys general of the state of Tennessee and certain other states enjoining the NCAA from enforcing rules that limited NIL discussions and negotiation in recruiting. A few months later, news broke regarding the House settlement, which itself would address the NIL rules framework. With NIL rules and enforcement in flux, the long-term impact of the Tennessee injunction and its interplay with House has been unclear.

This Monday, March 17, 2025, the parties in Tennessee filed proposed settlement terms with the Court that would make the preliminary injunction a permanent injunction, prohibiting the NCAA from restraining student-athletes in the transfer portal or recruits from negotiating NIL opportunities.

Notably, the proposed Tennessee settlement makes no express mention of any fair market value (FMV) restriction. Compare the proposed broad-based Tennessee injunction prohibiting the NCAA from restraining NIL negotiations in recruiting with the House settlement’s FMV restrictions applicable to Associated Entity/Individual third-party NIL, emphasized in the NCAA’s statement of last week that’s referenced above.

The following language in Paragraph 30 of the proposed Tennessee settlement arguably addresses that apparent tension: 

“The Consent Judgment does not itself enjoin the NCAA’s ability to adopt reasonable rules that prohibit compensation that is not for the student-athlete’s or prospective athlete’s NIL."

Perhaps the third-party enforcement entity will take the position that above-market NIL is “compensation that is not for the student-athlete’s or prospective athlete’s NIL.” 

Relatedly, Paragraph 32 of the proposed Tennessee settlement states that Article 4, Section 3, Paragraph 1 of the House settlement – the section that includes the placeholder acknowledging the ability of the NCAA and Defendant Conferences to make rules limiting NIL to “a valid business purpose” – “is, on its face, not enjoined” by the proposed Tennessee settlement. However, plaintiffs “retain the right to challenge any unreasonable application of that rule, or any other unreasonable rule in future litigation.” 

What happens if a hypothetical star recruit’s third-party NIL deal is rejected by the clearinghouse? Could a state view that action as unreasonable? 

It would be best to lower the risk of rejected deals and avoid resulting conflict wherever possible. As we’ve noted in past editions of Film Room, there are actions an institution can take now to do just that.