State Attorneys General Allege NCAA’s NIL Regulations Violate Federal Antitrust Law

The Tennessee and Virginia attorneys general (AGs) filed a joint lawsuit alleging the NCAA’s NIL regulations violate federal antitrust law. In a press release published by Virginia’s attorney general, he stated that both Virginia and Tennessee “allege that the NCAA’s restrictions on the ability of current and future student-athletes to negotiate and benefit from their…[NIL] rights violate federal antitrust law and is harmful to current and future student-athletes.” The lawsuit comes just one day after it was reported that the University of Tennessee is under NCAA investigation for potential NIL violations.

The current lawsuit also comes roughly three years after the Supreme Court’s Alston decision, which held that the NCAA could no longer prohibit college athletes from earning compensation from their NIL. Following this decision, the NCAA announced interim NIL policies (which remain in effect), in addition to various states and universities that have also enacted their own NIL regulations. Both Tennessee and Virginia’s state legislature enacted their own respective NIL regulations, and both generally provide that the states have an interest in protecting prospective and current college athletes’ NIL opportunities. The states’ NIL statutes also expressly prohibit athletic associations, including the NCAA, from “interfering with athletes’ ability to earn NIL compensation.”

The lawsuit alleges “the NCAA is thumbing its nose at the law. After allowing NIL licensing to emerge nationwide, the NCAA is trying to stop that market from functioning.” The lawsuit also points to a recent NCAA proposal which permits current athletes to pursue NIL compensation, but bans prospective college athletes from discussing potential NIL opportunities until they enroll at the university. The AGs claim that by “prohibiting such interactions, the NCAA’s current approach restricts competition among schools and third parties (often NIL ‘collectives’) to arrange the best NIL opportunities for prospective athletes.”

As laid out in the complaint, the AGs assert that the “NCAA has started enforcing rules that unfairly restrict how athletes can commercially use their [NIL]…at a critical juncture in the recruiting calendar.” Currently, Florida State University, the University of Florida, and the University of Tennessee are all under NCAA investigation for potential NIL violations. The AGs assert that the NCAA’s NIL “anticompetitive restrictions violate the Sherman Act, harm the States and the welfare of their athletes, and should be declared unlawful and enjoined.” Importantly, the AGs asked the court for a temporary restraining order and preliminary injunction that would prohibit the NCAA from enforcing its NIL recruiting rules. A decision is expected in the coming days.

The lawsuit also comes at a time when NCAA President Charlie Baker and other interested parties have pleaded with federal lawmakers to enact federal NIL legislation, which would provide an antitrust exemption allowing the NCAA to govern without being sued for alleged antitrust violations. However, Congress has yet to act.