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The Transfer Portal and Name, Image and Likeness

By Husch Blackwell

Read Husch Blackwell’s 2024 NCAA Compliance Report: College Athletics in Transition.

The athletics news cycle for the first quarter of 2024 has centered on two things: the transfer portal and college athletes’ ability to earn compensation based on the use of their Name, Image and Likeness (NIL), which in some instances appear to go hand in hand based on the current prevalence of some NIL collectives and schools attempting to use NIL to entice athletes to transfer to other athletics programs.

Previously, all Division I student-athletes, regardless of sport, had a free one-time transfer, provided they met the following conditions found in the NCAA Division I Bylaws:

  1. The student-athlete has not previously transferred, unless they used the discontinued/non-sponsored sport exception.
  2. The student-athlete would have been academically eligible had the student remained at his or her prior institution.
  3. The head coach of the institution to which the student-athlete transfers certifies that no contact was made with the student-athlete or any individual associated with the student-athlete without authorization through the notification of transfer process.
  4. The student-athlete provided written notification of transfer to the institution during the time period specified for their sport (i.e., “Transfer Portal Window”).

As expected, the joy of increased flexibility did not last long. Almost immediately upon establishing a uniform one-time transfer exception, the onslaught of waiver requests for two-time and three-time undergraduate transfers, transfers who missed the Transfer Portal Window, and midyear transfers seeking immediate winter or spring eligibility began.

In an attempt to explain additional parameters, NCAA transfer waiver guidelines reached an unsustainable length, and member schools, who were not privy to specific personal and protected information of other student-athletes, had difficulty reconciling the waiver granted for Student-A from the waiver denied for Student-B. Then, a few institutions, received one waiver denial too many.

After the NCAA denied the transfer waiver appeals of several men’s basketball student-athletes, from West Virginia, Miami of Ohio, and Cincinnati, several Attorneys General filed suit in U.S. District Court for the Northern District of West Virginia alleging that (1) NCAA transfer rules restrain the labor market of Division I talent, and restrain student-athletes from freely moving to improve their economic opportunity, personal growth, and well-being; and (2) the NCAA Rule of Restitution is unlawful.

Ohio Attorney General Dave Yost commented, “The rule is riddled with so many exceptions that the NCAA cannot plausibly substantiate its prior justifications…We’re challenging it in order to restore fairness, competition and the autonomy of college athletes in their educational pursuits.”

The District Court granted a 14-day Temporary Restraining Order (TRO), finding the NCAA’s Transfer Eligibility Rule likely violates Section 1 of the Sherman Act. Five days later, on December 18, plaintiffs and the NCAA agreed to convert the TRO into a preliminary injunction, and the NCAA agreed to suspend enforcement of its transfer restrictions for all student-athletes seeking to transfer and be eligible for the 2024-25 academic year.

In mid-January 2024, the Department of Justice joined 10 states and the District of Columbia after the plaintiffs filed an amended complaint to add the United States, the states of Minnesota, Mississippi and Virginia and the District of Columbia as co-plaintiffs.

Ohio et al. v. NCAA is yet another case that began with revenue sports but the consequences of which will affect all sports. The sports that did not have the one-time transfer exception until the 2021-22 academic year—football, men’s basketball, women’s basketball, baseball, and men’s ice hockey—are certainly at the forefront. However, now that there is a uniform rule applicable to all sports, any challenges to that rule will also apply to all sports.

On April 22, 2024, the NCAA approved significant changes to NCAA Division I transfer eligibility and NIL rules, effective immediately. The NCAA adopted legislation allowing immediate eligibility for all NCAA Division I transfer student-athletes who are academically eligible; in good standing in accordance with their previous institution’s standards; and meet the applicable “progress-toward-degree” requirements at their new institution.

Read Husch Blackwell’s 2024 NCAA Compliance Report: College Athletics in Transition.

Name, Image, and Likeness

Since the day it became permissible for student-athletes to partake in commercial endorsements, the NIL landscape has been called the “Wild, Wild, West.” For three years, there have been dozens of competing state laws, interpretations, and policies coupled with a boldness of certain individuals seemingly prompted by a perceived lack of enforcement of the remaining rules. When the NCAA attempted to enforce rules related to NIL collectives engaging in activities with prospective student-athletes, it once again resulted in an antitrust case and preliminary injunction that prohibited enforcement of certain NCAA rules related to boosters and NIL Collectives’ ability to communicate with athletes prior to enrollment at an institution.

The Attorneys General from Tennessee and Virginia brought the action in Tennessee federal court on behalf of prospective student-athletes who were ostensibly denied the opportunity to negotiate compensation for NIL with any third-party entity including boosters or a collective of boosters by NCAA rules. In making its determination, the court stated, “Fair market value may be equal to or less than the NIL deals student-athletes can currently receive after selecting a school. But without the give and take of a free market, student-athletes simply have no knowledge of their true value. It is the suppression of negotiating leverage and the consequential lack of knowledge that harms student-athletes.”

The NCAA continues to lobby Congress to intervene and establish some stability. Various federal bills have been introduced that would codify students’ NIL rights, ban boosters and other third parties from offering inducements to students to play for a particular university, and establish disclosure requirements. However, legislatures seem uninterested in participating in the NCAA’s whack-a-mole approach to governance. Instead, they want to see comprehensive legislation that includes guaranteed rights to student athletes, including health and safety measures and long-term protections. With an upcoming election and a number of domestic and international issues to manage, few are optimistic that the NCAA’s legislative issues will be addressed by Congress any time soon. As a result, it will be up to the individual institutions, conferences, and NCAA national office to figure out how to make this work. The NCAA subsequently announced it would pause NIL investigations until further notice. For all the months of controversy regarding the nuances of NIL rules, Division I membership seemed to unanimously agree on two NIL concepts: no pay-for-play and no recruiting inducements. But the current legal landscape would suggest that even those foundational concepts may come to an end, sooner than many may like.

With respect to immediate action, in January, the NCAA Division I Council adopted legislation that creates (1) a voluntary registration process for NIL professional service providers such as agents and advisors; (2) a de-identified disclosure database of athlete NIL deals of $600 or more, which also makes disclosed information available for examination by the NCAA upon request; (3) an athlete penalty for failure to disclose their NIL agreements within 30 days; and (4) the development of educational resources including standardized NIL contract terms. These initiatives will go into effect in August 2024. The NCAA is also likely to provide additional discretion for its schools to be more involved in directly arranging and facilitating NIL opportunities. However, this discretion will likely stop short of bringing all NIL operations and NIL collectives “in-house” or permitting schools to negotiate NIL deals directly on behalf of their student-athletes.

Read Husch Blackwell’s 2024 NCAA Compliance Report: College Athletics in Transition.