By Alex G. Anderson, of Pillsbury
The National Collegiate Athletic Association (NCAA) has historically been afforded a wide berth to implement and enforce its rules under the auspices of protecting the “revered tradition of amateurism” in college athletics. For decades, it relied on this principle as a means to enforce its prohibition on college athletes receiving compensation when faced with legal challenges and public calls for reform.
The landscape began to shift in 2016 when the Supreme Court (O’Bannon) ruled that the NCAA’s bar on student-athletes profiting from the commercial use of their name, image, and likeness (NIL) violated federal antitrust law. Five years later the Supreme Court again held (Alston) that the NCAA had violated federal antitrust law through enforcing rules that precluded student-athletes from receiving compensation through education benefits. Less than two weeks later, the NCAA rescinded its prohibition on student-athletes earning compensation for NIL. Three years later, the idea that “paying” college athletes is against the rules seems like an echo from a distant time.
A through line can be traced from these events to the NCAA’s and “power” conferences’ recent approval of terms to settle a trio of pending antitrust lawsuits: Carter, House, Hubbard. Pillsbury previously covered this development in depth, and it is anticipated that a “long form” settlement agreement will be filed with the court in the near future.
The Carter/House/Hubbard Settlement’s Impact on NIL
Several elements of the settlement directly impact NIL.
First, the NCAA will remit nearly $2.8 billion in NIL “back-pay” over the next ten years to current and former players. It is anticipated that the vast majority will be distributed to “power” conference men’s basketball and football players.
Second, moving forward, schools will voluntarily be able to annually share between $20 and $22 million (a figure that will rise) with current and future student-athletes. While the characterization of the revenue and the mechanism for distributing such funds remain unsettled, distribution may take the form of schools paying their players for the right to use their NIL.
Third, while third-party NIL collectives may pursue modified missions, and their relationships with schools may evolve, they are not going to disappear from the college athletics landscape.
Finally, while the details remain murky, the NCAA and the conferences aim to enforce NIL-related rules through a yet-to-be determined system. Such rules would include restricting third-party payments to “true” NIL, in an effort to curb what the NCAA views as de facto “pay-for-play” arrangements in the current system. The enforcement mechanism would reportedly not be conducted through the NCAA’s enforcement staff and Committee on Infractions, which are the traditional enforcement and adjudicative bodies for NCAA rule violations.
The Protect the BALL Act
Even if the settlement is approved, the NCAA and athletic conferences face continuing legal exposure. The NCAA accordingly continues to lobby Congress for legislation on several issues, including an exemption from federal antitrust law. One recently introduced bill would achieve that goal and expressly touches on the governance of NIL compensation.
On May 8, 2024, (several weeks before the settlement terms were approved) Congressmen Russell Fry (R-SC) and Barry Moore (R-AL) introduced the “Protect the Benefits for Athletics and Limit Liability Act,” or the “Protect the BALL Act” (the “Act”). The Act, a six-page “skinny” bill, is designed to provide the NCAA and conferences with a federal safe harbor from legal challenges. With that protection, those entities could in tun effectively govern college athletics.
On this point, the Act’s protective scope encompasses federal antitrust law, including the Sherman Antitrust Act of 1890. Historically, antitrust law has been the vehicle to successfully challenge NCAA actions with respect to restricting broadcast rights and capping coaching salaries. Over the last decade—and, in particular, since the Alston decision—courts have been more willing to subject NCAA rules and decisions to greater antitrust scrutiny, including on issues of student-athlete compensation. In recent months, courts have enjoined the NCAA from enforcing its transfer eligibility rules and rules restricting a player’s ability to communicate and negotiate with third-party NIL collectives. If enacted, the Act would protect the NCAA (and athletic conferences) from such legal challenges in the future.
The scope of the Act specifically targets player compensation and NIL. By expressly including “name, image, and likeness” revenue in the Act’s definition of “compensation,” the Act gives the NCAA and athletic conferences the authority to cap, restrict, or curtail these payments. Not only would the NCAA be able to lawfully limit direct payments from institutions and conferences, but the legislation would also likely allow them to implement rules limiting third-party NIL payments:
- An institution, interstate intercollegiate athletic association, or conference shall not be in violation of any law or regulation, and shall not be subject to any manner of claim or cause of action … for —
- the adoption of, agreement to, enforcement of, or compliance with any rule or bylaw of an interstate intercollegiate athletic association, conference, or institution that limits or prohibits a student athlete from receiving compensation from an interstate intercollegiate athletic association, conference, institution, or other person or entity;
By protecting the NCAA and athletic conferences from “claims” that arise out of a “rule … that limits … compensation,” the bill arguably gives the NCAA the ability to pass a rule limiting NIL compensation and be immune from claims arising out of the enforcement of such rules, including challenges under federal antitrust law. This language is particularly relevant in light of the terms of the Carter/House/Hubbard settlement, which artificially “caps” annual revenue distribution and seeks to enforce rules with respect to third-party NIL payments.
To date, the NCAA has not formally endorsed the Act. However, the NCAA National Student-Athlete Advisory Committee Chairs at each level of competition (Division I, II, and III) were all quoted in the press release for the bill.
There is reason to be skeptical that the Act will be signed into law. Two-dozen federal bills concerning NIL and athletics governance have been introduced in recent years. Only one has made it out of committee—the Protecting Student Athletes’ Economic Freedom Act. That bill would preclude student-athletes from being designated as employees. Even if the Act was passed by the House of Representatives, at this time, it lacks the necessary bipartisan support to clear the Senate and be signed into law.
The text of the “Protect the BALL Act” can be viewed here.
Pillsbury summer associate Rachel Thompson contributed to the research, drafting and editing of this post.
