Welcome to McCarter’s Playing Field: Sports Law Insights, where you’ll find the latest in sports law, notes about our practice, and important updates for athletes, teams, institutions, facilities, investors, and others in the industry.
House v. NCAA Update
As previously reported, the April 7 House v. NCAA hearing ended with Judge Wilken giving the settlement parties an opportunity to address certain concerns regarding the implementation of roster limits and the impact of the 10-year settlement on future athletes.
The following week, the parties filed a revised settlement which addressed the future class member issue. As reported by Michael McCann and Daniel Libit for Sportico, the parties updated the release provisions “to clarify that future Division I athletes will not release their athletes’ injunctive relief claims until they have received notice and an opportunity to object.” However, the modified proposal did not address the Court’s concerns regarding roster limits. While the litigation parties asserted that the revised settlement met the “fair and reasonable” standard for approval, objections flooded the docket. Judge Wilken, reaffirming her earlier concerns, admonished the attorneys to find a way to grandfather in or phase in the roster limits in order to have a chance of approval.
On the evening of May 7, the parties submitted another updated proposal, this time modifying the language to allow, but not require, schools to grandfather in roster limits. The key updates to the roster limit provisions are as follows:
- Roster limits will not apply to any athlete on a Division I roster during the 2024–2025 academic year who was, or would have been, removed from that roster for the 2025–2026 academic year due to the settlement.
- Roster limits will not apply to high school athletes recruited to join a Division I roster for the 2025–2026 academic year who would have been removed because of the new limits.
- Athletes falling into either of these two categories will not count against any roster limits for the duration of their Division I eligibility.
- If an athlete transferred—or planned to transfer—due to being informed they would lose their roster spot under the new limits, NCAA rules will not prevent that athlete from transferring back to their original school or rescinding the transfer.
Following these changes, objectors continued arguing that the settlement would still harm class members by eliminating roster spots. In response, class attorneys emphasized that the updated language sufficiently addresses the judge’s concerns by allowing for grandfathering. However, as noted by Michael McCann, the revised proposal still leaves open the possibility that athletes who opt out of the settlement may be affected by the roster limits. Class attorneys maintain that roster decisions have always been at the discretion of coaches, and nothing in the settlement changes that longstanding reality.
Neither side appears likely to concede, but, for now, only one opinion truly matters: Judge Wilken’s. It remains to be seen whether the latest revisions will be enough to warrant approval of the settlement.
Power Conferences Looking to Take Control Back in Rule Enforcement Through Contract
As detailed in the story below, Tennessee has passed a new NIL law that allows schools to disregard forthcoming rules stemming from the House settlement. Tennessee is not the first state—and likely won’t be the last—to enact legislation enabling schools to circumvent the settlement’s guidelines.
In response, officials from the power conferences have drafted an unprecedented contract designed to prevent schools from using state laws to override the new House-related policies. This contract would require institutions to waive any right to pursue legal action against the College Sports Commission.
As reported by Ross Dellenger, the drafted contract has been circulated to numerous school administrators and would obligate participating schools to enforce the new policies, regardless of any conflicting state laws. Institutions that refuse to sign risk losing their conference membership—and the competitive opportunities that come with it.
States are Not Beholden to the NCAA
States are trying to obtain competitive advantages in recruiting college athletes, and right now, it appears Tennessee leads the pack on athlete-friendly laws. The state’s new NIL law will prohibit basically any restrictions that may come with the House settlement. Most notably, the House settlement has a cap for how much schools can pay athletes, and creates a clearinghouse run by Deloitte that will review all NIL deals over $600 to, first, determine if the deal is a school-affiliated deal, i.e., between an athlete and an “associated third party.” If not, the deal will be assumed to be for fair-market value. If the deal is an affiliated deal, the clearinghouse will perform a full analysis to either “clear” the deal as meeting fair-market value or flag the deal as a potential risk to the athlete’s eligibility. Tennessee law now prohibits these restrictions from taking effect at schools in the state. Tennessee is not the first state to pass laws that conflict with and supersede regulations that may arise from the House settlement, and with the current competitive and chaotic landscape of college athletics, they likely will not be the last.
Rutgers Football Player Receives Preliminary Victory on the NCAA’s Five-Year Rule
Continuing the trend started by Vanderbilt QB Diego Pavia of challenging the NCAA’s rule that junior college (JUCO) seasons count toward eligibility limits, Rutgers football player Jett Elad secured perhaps the most significant ruling to date. Elad obtained a preliminary injunction from Judge Zahid N. Quraishi in the U.S. District of New Jersey, allowing him to remain eligible for the 2025–2026 football season despite having played four seasons within a five-year span.
Elad argued that the NCAA’s policy, which counts JUCO seasons against a player’s eligibility, constitutes a violation of Section 1 of the Sherman Act by unreasonably restraining trade. In his opinion, Judge Quraishi emphasized the commercial nature of college eligibility and the anti-competitive effects of the rule, noting that it restricts athletes’ opportunities to earn NIL compensation, thus making the Sherman Act applicable.
Judge Quraishi highlighted the specifics of Elad’s NIL opportunities at Rutgers, stressing the substantial financial impact of his deals. He emphasized that for many athletes, especially those unlikely to have professional careers, NIL earnings may represent their primary chance to profit from their athletic talents.
This ruling—and Judge Quraishi’s focus on the economic consequences of the NCAA’s eligibility rules—could prompt significant changes to NCAA policy and lead to a wave of similar litigation challenging eligibility restrictions.
NCAA Advises Tennessee Court Not to Consider Elad Decision in College Baseball Case
On February 12, Alberto Osuna, the former UNC Tar Heel and JUCO baseball standout, sought to follow in Diego Pavia’s footsteps by submitting a waiver for an additional year of NCAA eligibility, intending to play the 2025 season at the University of Tennessee. Osuna needed this waiver given NCAA’s “JUCO Rule,” as referenced in the Elad case discussed above. However, U.S. District Judge Charles E. Atchley denied the request, leaving Osuna’s hopes of continuing his college baseball career in doubt.
Following the favorable ruling in Elad’s case, on April 25, Osuna petitioned the court to reconsider its decision. In response, the NCAA argued that reconsideration should be granted only under “narrow and defined circumstances.” The organization further stated that the Elad ruling “does not provide a sound basis for” reconsideration and asserted that the New Jersey court had erred in its decision.
The NCAA’s response suggests an effort to preempt any potential ripple effects that could challenge longstanding eligibility rules.
Arkansas Implements Law Exempting NIL Money from State Income Tax
In recent months, several states proposed bills that would create tax exemptions for NIL earnings, aiming to incentivize athletes to sign with schools in those states. Arkansas is the first state to officially enact such a law. The new legislation allows schools to directly compensate athletes through NIL deals, exempting those payments from state income tax. Additionally, the law provides for confidentiality of those payments, potentially with the intention of shielding them from the new NIL clearinghouse requirements that would take effect if the House settlement is approved.
NCAA Implements Rule Changes
The NCAA Board of Directors voted to approve nine legislative proposals that would eliminate 153 existing NCAA rules, contingent on final approval of the House settlement. These changes, all part of the settlement, include allowing direct payments to athletes through revenue sharing, introducing roster limits, and eliminating scholarship caps. Other notable changes include the creation of an NIL enforcement entity and the establishment of an NIL clearinghouse, which would oversee and evaluate NIL deals to ensure that (1) a valid business purpose exists and (2) the compensation falls within a reasonable range.
Louisiana to Directly Pay Athletes, No Matter What Happens in House
The Louisiana government issued an executive order, with the intention of allowing Louisiana schools to directly pay college athletes. The Order says that it “shall remain in effect until the earlier of: A) The effective date of any federal law enacted after the date of this Order regulating the rights of student athletes to receive compensation for the use of their NIL; or B) The effective date of any settlement related to the [House] Litigation.”
NCAA’s Very Own Roger Goodell?
As mentioned in our last newsletter, if the House settlement reaches final approval, the Settlement Implementation Committee is expected to take over monitoring compliance, and as noted by Bryan Fischer in Sports Illustrated, the committee is expected to take on a similar role to that of NFL Commissioner Roger Goodell. The entity detached from the NCAA is “set to police everything from compliance with the salary cap to issues surrounding external NIL deals circumventing the process to, even, handing out penalties to potential violators.” It should be especially interesting to see how the committee handles compliance with the Deloitte clearinghouse, which will review NIL deals for fair-market-value. Deloitte has recently said that 70% of the NIL deals previously completed between collectives and athletes would have been flagged as potentially non-compliant.
Collective News
The main collective at Cal, California Legends Collective, has pulled all funding to the program and is holding these funds until the school puts newly hired GM of football, Ron Rivera, in charge of the program. SFgate notes that this tension stems from the school’s neighboring rival, Stanford, putting newly hired GM Andrew Luck in charge or all decision-making for the football program. California Legends Collective wants Rivera to be granted the same decision-making power as Luck and is far from pleased that he currently reports to Chancellor Rich Lyons. This is a fascinating story that outlines the power these school collectives hold and further emphasizes the direction football and basketball programs are heading, being led by General Managers.
Villanova Star Wants His Money
You might remember the instant classic between Villanova and UNC in the 2016 March Madness final. That game ended with UNC’s Marcus Paige hitting one of the craziest off balance three-pointers you’ve ever seen to tie the game with seconds left, only for Villanova’s Kris Jenkins to come up the court moments later and hit a buzzer-beater-three to win the national championship as confetti rained down. What you might not remember is that this game was before the NIL-era of college sports, and despite Kris Jenkins becoming an instant star that moment, the college junior was not able to profit from his quick rise to fame. Now he is suing the NCAA for the missed opportunity.
Michael McCann shares that Jenkins opted out of the House settlement, and has now filed suit in the Southern District of New York. Jenkins “contends the NCAA, the ACC, the Pac-12, the Big Ten, the SEC and the Big East violated antitrust law by agreeing to eligibility rules that barred him from capitalizing on his NIL while he played at Villanova.” Jenkins holds perhaps the most iconic college sports moment of the past 20 years, and he contends that the brand deals and merch sales would have flooded in had he been able to profit off the moment while it was still hot. Jenkins’ suit contains many of the same arguments as similar suits we have seen recently against the NCAA—mainly that the NCAA’s use of his NIL without compensating him is an antitrust violation. Jenkins hopes he will prevail and be awarded damages to make up for the compensation he believes he missed out on in 2016.
Shaq Takes on Major Role at Sacramento State
NBA legend Shaquille O’Neil has agreed to become the volunteer GM of basketball at Sacramento State, where his son, Shaqir, currently plays. Shaq’s new role creates a star-studded duo leading basketball at Sacramento State, as former NBA player Mike Bibby is the current head coach of the program. Shaq joins in on the trend of current and former star athletes taking on GM/Assistant GM roles at schools.
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