By Traci Bransford and Lexi Trumble, or Parker Poe
The ever-evolving collegiate athletics landscape experienced back-to-back seismic shifts in April and May 2024 when the NCAA Division I Board of Directors ratified two rule change proposals from the Division I Council, and news of the long-awaited House settlement broke. Recently-adopted NCAA rule changes grant student-athletes two massive wins: increased flexibility to transfer schools and retain immediate eligibility and, second, access to additional institutional support and assistance with name, image, and likeness (NIL) activities. With NIL monetization at its core, the House settlement provides for payment of $2.8 billion in back damages to former student-athletes and permits prospective revenue-sharing of up to approximately 22% of the average Power Five school’s revenues, which is anticipated to begin in the fall of 2025.
These changes come in the wake of significant litigation battles, targeted legislative efforts, and passionate national discourse surrounding the current and future state of college sports. The NCAA rule changes (effective upon adoption) and the House settlement’s terms (currently being negotiated) require careful consideration by student-athletes, athletics administrators, and third parties alike to avoid potentially catastrophic legal pitfalls.
Institutional NIL Support: A Play by Play
Much like a dominant offense’s shots on goal, NIL developments just keep coming following the implementation of the NCAA’s interim policy in July 2021. Perhaps foreshadowing the landmark House settlement which would come just one month later, the April adoption of new NIL rules permits institutions to increase NIL-related support for student-athletes, including by identifying NIL opportunities and facilitating deals between student-athletes and third parties.
To receive that school support for their NIL activities, however, student-athletes are required to disclose to their school information related to NIL activities equal to or exceeding $600 in value no later than 30 days after entering or signing the NIL agreement. Student-athletes’ receipt of this increased institutional support is contingent upon their disclosure of information regarding their NIL activities, including applicable parties’ contact information, services rendered, term length, compensation, and payment structure. Prospective student-athletes will be required to disclose the same information for pre-enrollment NIL activity within 30 days of enrollment to accept school assistance in NIL activities after becoming a student-athlete. The NCAA clarified that student-athletes are not obligated to accept assistance from the school and that they must maintain authority over the terms in their own NIL agreements.
Important guardrails still surround NIL activity, although they’re toppling quickly. When announcing the rule changes, the NCAA stated explicitly that existing prohibitions against outright pay-for-play and schools compensating student-athletes directly for use of their NIL would remain in place. Usurped by news of the House settlement, however, that ban on direct compensation flowing from schools to student-athletes may prove all but extinct. As competing authority from the NCAA, federal courts, and state legislatures continues to emerge, the ways in which boosters, collectives, conferences, and institutions alike render NIL assistance to current and future student-athletes must evolve with flexibility and dexterity.
Compliance with federal statutes, including Title IX, remains paramount as schools adjust to recent developments. Title IX of the Education Amendments of 1972 is a federal law that prohibits sex discrimination in any federally funded education program or activity and requires gender equity in 13 different athletics program areas. Institutional support for or facilitation of NIL activities may implicate at least two of those Title IX program areas — athletic financial assistance and publicity.
With respect to athletic financial assistance, the U.S. Department of Education’s Office for Civil Rights (OCR) has declared in guidance documents related to athletic scholarships and cost of attendance that “athletic financial assistance includes any financial assistance expenditures through the institution’s athletics program and any other aid that is connected to a student’s athletic participation.” Direct compensation of student-athletes for NIL activities flowing from an education institution may effectively double schools’ budgets for such NIL payments: Title IX may require the school to make equivalent benefits proportionately available to male and female athletes. Alternatively, categorization of House-permitted NIL payments flowing from a school, a conference, or even a collective may be deemed purely market-driven, and the payments themselves may fall outside of Title IX’s ambit. The mechanisms by which the revenue-sharing payments are made will continue to foster discussion and debate until the terms of the settlement are fully negotiated.
The requirement to equitably provide male and female student-athletes with publicity resources, however, is absolutely triggered when institutions exercise greater control over NIL activities. Schools are required to expend equitable efforts to publicize male and female athletes, and neither news of the market-driven House settlement nor the permission to offer increased “assistance in supporting [NIL] activities” granted by the NCAA in May relieves institutions of their obligations that gender equity mandate.
Institutions should engage experienced legal counsel to advise coaches, athletics administrators, compliance staff, and other athletics stakeholders on the complex (and evolving) regulatory and statutory schemes governing NIL activities. As the NCAA and state legislatures continue to move the chains with respect to “permissible” NIL activities, Title IX remains a pivotal piece of civil rights law and requires schools to promote aggregate gender equity.
Transfer Athletes’ Eligibility: Out of the Penalty Box
Also, effective as of the date of adoption, Division I student-athletes who transfer will be immediately eligible to play at their next school, regardless of whether they transferred previously — as long as they meet certain academic eligibility requirements. Under the new guidelines, transfers must have left their previous school in good standing (not subject to disciplinary suspension or dismissal) while academically eligible and will have to meet progress-toward-degree requirements at their new school in order to receive immediate eligibility. Student-athletes are expected to enter the transfer portal within their sport’s notification-of-transfer windows (except in the case of the departure of a head coach or discontinuation of a sport), and athletes are not able to transfer mid-year and play for a new school in the same athletic season. Division II leadership passed similar legislation eliminating year-in-residence requirements and implementing new academic standards for immediate eligibility.
The revision of the transfer eligibility rules intersects with changes to permissible NIL activities in that schools must now contend with NIL discussions related not only to attendance at a particular institution but also to student-athlete retention. As student-athletes consider significantly expanded enrollment options for their collegiate athletics career, schools should remain mindful of rules restricting (or permitting) NIL opportunities related to recruitment and retention. Coupled with terms of the House settlement foreshadowing the elimination of NCAA scholarship limits and revision of roster caps, increased transfer flexibility will require compliance staff and athletics administrators to carefully monitor numerical trends and proportions relevant to Title IX’s requirements to provide equitable athletics participation opportunities and financial assistance to male and female student-athletes.
Conclusion: Reviewing Recent Game Film
Recent rule changes and litigation outcomes represent the continuation of shifting attitudes toward and regulation of collegiate athletics nationwide. Consultation with experienced legal counsel is critical as colleges and universities grapple with implementing recent developments and avoid potentially costly legal landmines.
Traci Bransford is a partner in Parker Poe’s Atlanta office and leads the firm’s Sports & Entertainment Industry Team. She can be reached at tracibransford@parkerpoe.com.
Lexi Trumble is an associate attorney in Atlanta and focuses her practice on advising colleges and universities on a range of complex compliance issues, with a particular focus on Title IX gender equity and college athletics. She can be reached at lexitrumble@parkerpoe.com.
