Abstract
The parties’ historic settlement agreement in In re: College Athlete NIL Litigation, more commonly known as House v. NCAA, has received significant attention from legal scholars, the national media, and college athletics constituents. While those groups focus on settlement outcomes, like universities sharing revenue with their athletes, and its imposition of roster limits, along with potential resulting Title IX ramifications, they have largely overlooked the creation of a new system for regulating collegiate athletes’ receipt of name, image, and likeness (NIL) compensation. Specifically, the settlement agreement’s inclusion of both a third-party and arbitration in NIL policy enforcement is drastic for college athletics and warrants examination.
Procedurally, this new process will determine whether collegiate athletes’ compensation from many NIL agreements falls within an acceptable range of compensation. When a third-party entity determines NIL compensation exceeds this suitable range, the student-athlete must decide among a few options on how they will proceed. Per the settlement agreement, a student-athlete in this situation may renegotiate or cancel the NIL agreement or proceed with arbitration on an expedited timeline, with the athlete’s university possessing the ability to fund the latter proceedings. Should a student-athlete proceed with an unapproved NIL agreement, enforcement actions could include loss of athletics competition eligibility. This article examines these new processes, their significant ramifications for universities and their student-athletes, and potential legal issues with them.
Introduction
The parties’ settlement agreement in In re: College Athlete NIL Litigation, more commonly known as House v. NCAA, is historic for numerous reasons and resulted in changes to several long-standing policies and practices in college athletics. Chief among the changes is that universities may share millions of dollars in revenue directly with their student-athletes under a new athlete compensation model.
Optimists, including National Collegiate Athletic Association (NCAA) president Charlie Baker, view the settlement as a means to eliminate or mitigate the perceived chaos emanating from the name, image, and likeness (NIL) era in college athletics. This NIL era commenced in July 2021 when, largely due to pressure from state legislatures, the NCAA began permitting collegiate athletes to accept compensation for use of their NIL. These changes allowed student-athletes to accept pay or in-kind compensation for third-parties’ use of athletes’ personal brands, for example.
Those who believe a state of chaos exists may point to examples like quarterback Nico Iamaleava refusing to participate in a University of Tennessee practice in an attempted professional sports-like “holdout” for increased NIL compensation or quarterback Matthew Sluka sitting out the remainder of UNLV’s 2024–25 season over an NIL compensation dispute after leading the team to wins in its first three games. More specifically, some idealists theorize that in the post-House settlement era, universities’ ability to provide additional compensation directly to their student-athletes will minimize the substantial influence that third parties like NIL booster collectives currently possess. Others hope the settlement will stem the tide of lawsuits against the NCAA.
The national media, legal scholars, and college athletics constituents have been quick to identify issues that remain in spite of—or perhaps because of—the settlement, however. These issues include Title IX’s potential application and athletics departments’ continued attempts to shift increased expenses in the form of additional athlete compensation to fans and/or nonathlete students.
Perhaps overlooked in the significant commentary regarding the House settlement is its controversial creation of an NIL policy enforcement process that differs vastly from any current or former such NCAA procedure. Specifically, the NIL rules enforcement process now includes both a third-party investigatory and adjudicative entity and arbitration. While the NCAA attempted to utilize a third-party to adjudicate certain rules violations allegations previously through the Independent Accountability Resolution Process, the disastrous practice was mercifully short-lived. The introduction of arbitration into the NCAA rules enforcement process in the post-House college athletics landscape is a first, however.
More specifically, the House settlement agreement created a system whereby a third-party clearinghouse evaluates certain NIL agreements that compensate student-athletes $600 or more to determine whether the compensation amount falls within a “reasonable range.” When the clearinghouse determines that an NIL arrangement’s compensation amount exceeds this acceptable range, the athlete is left with a couple of choices to avoid imposition of penalties, which can include loss of the ability to compete athletically. In such a situation, the student-athlete may choose to renegotiate or cancel the NIL arrangement or appeal the clearinghouse’s decision to neutral arbitrators. In the latter instance, a student-athlete’s university can fund their legal expenses.
In this new era of college athletics, universities and their NIL-involved student-athletes must familiarize and prepare to engage with this new process. Thus, this article explores the process and its potential ramifications, which, as the article shows, are significant for both universities and their student-athletes.
I. Pre-House Enforcement of NCAA NIL Regulations
A. College Athletics’s NIL Era
Prior to July 1, 2021, the NCAA staunchly enforced its amateurism rules, including those that prohibited a student-athlete from accepting compensation for use of their NIL. For example, University of Georgia football student-athlete and Heisman Trophy contender Todd Gurley missed four games due to suspension in the 2014 season after acknowledging he violated NCAA rules by selling autographed memorabilia.
One of the NCAA’s main rationales for precluding student-athletes from accepting NIL compensation was helping maintain and foster prioritization of academics over athletics, which simultaneously advanced its notion of amateurism within college athletics. And for most of the NCAA’s history, the public largely accepted that, because they are amateurs, collegiate athletes should not be able to accept compensation for their athletics exploits. Limiting athletes’ compensation to education-related benefits like athletics scholarships also helped differentiate the NCAA’s product—college athletics—from professional sports, where the employees receive salaries in exchange for their play.
Amid pressure from state legislatures, and in a seismic shift, the NCAA eliminated many of its long-standing rules forbidding student-athletes from permissibly accepting NIL compensation in late June 2021. As a result, and with limited exceptions, student-athletes could accept remuneration for use of their NIL beginning in July 2021. This pivot generally permitted student-athletes to accept compensation for selling their autographs, hosting camps or clinics, and promoting goods, services, and entities, for example. Student-athletes immediately took advantage of their newfound abilities, collectively earning over $900 million in NIL compensation within a year.
Instead of adopting a comprehensive NIL policy that included numerous new rules, the NCAA instead initially implemented a minimalist interim NIL policy. The interim policy’s basic stipulations included prohibiting both pay-for-play and use of NIL as a recruiting inducement, and requiring student-athletes to perform quid pro quo in exchange for NIL compensation.
The NCAA subsequently released guidance regarding the interim policy’s application on multiple occasions. In May 2022, for example, the NCAA clarified that NIL booster collectives meet its legislated booster definition, and thus NCAA rules largely preclude them from engaging in the process through which universities recruit prospective student-athletes. These entities formed as early as August 2021 and have provided millions of dollars in compensation to student-athletes in what many classify as pay-for-play or recruiting inducements in the guise of NIL compensation. The NCAA’s interim NIL policy was in place for over three years until the NCAA largely codified it as permanent legislation in 2024.
B. The Enforcement Staff and COI’s Roles in Enforcing NCAA NIL Regulations
Rules, such as those regulating NIL, are hollow unless enforced. Thus, the NCAA empowers a group of its employees known as the enforcement staff to enforce its myriad rules so compliant schools and coaches will not be disadvantaged. The enforcement staff effectually serves as the NCAA’s prosecutor, receiving and reviewing information regarding potential NCAA rules violations via numerous means, including anonymous tips. After reviewing this information in a fair, accurate, collaborative, and timely manner, the enforcement staff determines whether and how to proceed. If it believes the information it uncovers during an investigation may substantiate NCAA rules violations, the enforcement staff alleges potential Level I or Level II violations, with the former being the more egregious categorization.
When the enforcement staff alleges potential Level I or II violations, the Committee on Infractions (COI) ultimately determines their merit. Thus, while the enforcement staff is the NCAA’s prosecutorial group, the COI is the rules infractions process’s judge and jury. Founded in 1954, the COI is an independent administrative body consisting of volunteers. More specifically, COI panelists’ professional profiles include current and former university presidents, chancellors, athletics directors, conference commissioners, former coaches, attorneys, and professors. Thus, the COI touts the infractions process as peer-reviewed.
There are up to twenty-four COI members at any given time, a smaller panel of which considers each infractions case on the COI’s behalf. These volunteers love college sports and seek fairness and competitive balance in them. The COI ultimately produces a publicly available written decision detailing a case’s facts, violations, penalties, and reasons for its findings and penalties. The COI bases penalties on guidelines that attempt to align them with the violations’ severity and degree of fault while offsetting any competitive or advantage. Penalties range from monetary fines and vacation of wins and records to athletics scholarship reductions and postseason participation bans.
An example of this process occurring was in an NIL rules violations case involving Florida State University. The case resulted from an assistant football coach including an executive from an NIL booster collective in a prospective transfer student-athlete’s recruitment. Specifically, the assistant coach facilitated a meeting between the executive, the student-athlete, and the latter’s family. Not only did the assistant coach inform the student-athlete and their family about the meeting, the assistant coach transported them to it. During the meeting, the executive recruited the student-athlete on behalf of the University and offered him an NIL deal. The executive’s involvement did not end there, as they called and sent a text message to the student-athlete’s mother. The COI concluded that the executive’s recruitment of the prospective transfer student-athlete violated NCAA recruiting rules that existed at the time.
Penalties from the case included two years of NCAA probation; a financial penalty; scholarship reductions in the football program; recruiting restrictions; a two-year show-cause order for the assistant coach, which included a three-game suspension; and disassociation of the executive and collective for periods of time.
II. Post-House Enforcement of NIL Compensation Limits
A. House v. NCAA Background
Grant House, Sedona Prince, and other current and former student-athletes filed a class-action antitrust lawsuit against the NCAA and power athletics conferences in 2020. Considered the most significant antitrust case in college athletics history, the plaintiff-athletes argued that the NCAA deprived thousands of student-athletes of the opportunity to accept NIL compensation prior to permitting it on July 1, 2021. More specifically, the plaintiffs alleged antitrust law violations including fixing student-athletes’ amount of NIL compensation at zero, prohibiting student-athletes from engaging in the NIL market, fixing student-athletes’ compensation for their athletics services at an amount equal to or less than their scholarship amount, and limiting the number of available athletics scholarships.
Among other remedies, the lawsuit sought an injunction restraining the NCAA and power conferences from enforcing rules that the plaintiffs described as anticompetitive and unlawfully restrictive. Of note, the plaintiffs’ lawsuit targeted NCAA rules prohibiting universities from sharing revenue from media rights agreements with their athletes. The plaintiffs sought damages in the form of compensation that they would have received in the absence of these allegedly unlawful restraints, including back pay for lost NIL opportunities, such as from broadcasts and NIL arrangements with third parties.
With $20 billion in potential damages at stake, a loss in the case could have resulted in the NCAA and conferences seeking bankruptcy, effectively destroying the former. This possible nightmare scenario incentivized the NCAA to settle the case.
B. House v. NCAA Settlement
The parties agreed to settle the case in May 2024. At the time, the defendants described the settlement as a road map that would permit continuation of college athletics’ unique traditions and opportunities. One of the plaintiffs’ attorneys credited the settlement with modernizing college athletics and equitably allocating revenue to student-athletes.
More specifically, the parties’ mammoth and transformative settlement agreement included, among other things: NIL backpay for the plaintiffs and class members; the opportunity for NCAA-member universities to provide student-athletes with increased benefits, including NIL compensation; and utilizing roster limits in lieu of NCAA-legislated scholarship limits. Thus, the parties’ settlement agreement includes both backward-looking and forward-looking benefits for collegiate athletes.
Under the settlement agreement, the NCAA, conferences, and numerous universities will pay current and former student-athletes $2.8 billion over a ten-year period for NIL compensation. This distribution intends to compensate hundreds of thousands of athletes for lost NIL compensation opportunities, including their appearances in video games and on broadcasts of their competitions.
The settlement agreement permits universities to opt in to this new system that provides them the ability to share revenue with their athletes in a quasi-salary cap system similar to those that exist in many professional sports leagues. The agreement permits participating universities to share $20.5 million in revenue with their athletes in the 2025–26 academic year, an amount that will increase in subsequent years. Universities that opt into participating in the settlement agreement may also enter NIL arrangements directly with their athletes with any such compensation counting against the $20.5 million maximum total amount they can provide in revenue share payments.
The parties appeared before Judge Claudia Wilken in September 2024 for the settlement’s preliminary approval hearing at which Wilken professed concerns with the parties’ agreement. Specifically, Wilken took issue with its language regarding perceived pay-for-play NIL compensation and booster involvement that effectively permitted the NCAA to target NIL booster collectives by forcing them to prove their NIL payments served a valid business purpose. Wilken believed that the parties intended to continue to simultaneously permit NIL compensation for what they considered valid endorsement or sponsorship arrangements based on athletes’ right of publicity and mitigate pay-for-play and signing or retention bonuses for athletes disguised as NIL compensation. Wilken suggested that the parties go back to the drawing board to address her concern that such regulation could chill the marketplace to athletes’ detriment. She also queried why NIL deals with certain third parties would receive heightened scrutiny under the settlement agreement’s terms while universities’ deals with their athletes would not. Given her concerns, Wilken declined to preliminarily approve the agreement during the hearing.
After the preliminary approval hearing, the parties’ negotiations resulted in the filing of an amended settlement agreement that attempted to address Wilken’s concerns, and she granted preliminary approval of it in October 2024. Key to the amended settlement for the NCAA and conference defendants is their belief that it attempts to eliminate pay-for-play transactions and compensation to attend or remain at a university guised as NIL payments, instead permitting NIL payments that further valid business purposes that actually promote goods or services. Specifically, while the revised settlement agreement permits entities or individuals associated with a university, including NIL booster collectives, to compensate student-athletes for use of their NIL, such payments must be for a valid business purpose related to the promotion or endorsement of goods or services offered to the general public for profit and be at fair-market value rates.
The parties thereafter began notifying current and former student-athletes of the settlement’s terms and the procedures through which they could submit claims. And athletics departments proceeded to operate under the assumption that the revised settlement agreement would ultimately receive Wilken’s stamp of final approval, with some cutting student-athletes from rosters to meet the settlement’s imposition of roster limits.
Meanwhile, individuals and entities filed dozens of objections to the revised agreement, among them collegiate athletes like Louisiana State University gymnast Livvy Dunne, who objected to the settlement’s damages calculations. Another notable objector was the Department of Justice (DOJ), which took issue with the artificial cap on the amount that universities may distribute to their athletes, arguing that it does not represent free-market value and effectively shields against potential future antitrust claims. Yet another group of objectors focused on the settlement agreement’s replacement of NCAA scholarship limits with roster limits and the effects the change would have on nonscholarship student-athletes.
The parties sought Wilken’s final approval of the settlement agreement at an April 2025 hearing. After hearing and considering the objectors’ positions, Wilken provided the parties two weeks to amend their settlement agreement to address her concerns, which primarily involved the immediate imposition of roster limits and the effects on athletes who would lose their places on teams.
After the parties agreed to provide temporary flexibility to student-athletes affected by the imposition of roster limits such that they would not count against roster size caps, Wilken granted final approval of the settlement agreement in June 2025. In doing so, Wilken’s landmark decision ushered in a new era of college athletics that effectively cut the legs out from under the NCAA’s century-old amateurism model and repositioned college athletics as quasi-professional sports. Notably, prior to Wilken’s decision, the NCAA had not permitted universities to directly pay their athletes in its existence, which spans over a century.
Despite this substantial new cost in the form of additional athlete compensation, 319 Division I universities—82 percent of Division I membership—opted in to participating in the settlement for the 2025–26 academic year. The maximum amount that individual universities may share with their athletes in the 2025–26 academic year is $20.5 million, an amount that will increase in subsequent years. A common allocation breakdown is to provide at least seventy percent of this amount to football student-athletes, at least ten percent to men’s basketball student-athletes, and the remaining amount to student-athletes in other sports. In many cases, universities are allocating revenue to those sports that produce it as, for example, football programs generally generate roughly seventy-five to eighty percent of an athletics department’s revenue. In all, universities will share roughly a billion dollars with their student-athletes annually under the settlement.
These universities will enter revenue-sharing agreements with their athletes under which the latter receives compensation for things like media appearances and use of their NIL in advertisements. These contracts can include buyouts and penalties for transferring. Texas Tech University, for example, made headlines in July 2025 for its rumored three-year, $2.3 million revenue-sharing contract with a rising high school football prospect.
C. The Settlement Agreement’s Insertion of a Third-Party Entity into the NIL Rules Enforcement Process
In effect, the House settlement repositions college athletics under a professional sports-like model without expanding the NCAA’s rules enforcement authority. Thus, who—or what—will monitor and enforce NIL policies such as those seeking to eradicate pay-for-play NIL compensation? This section introduces and describes the responsible entity and the process by which it will enforce NIL compensation limits.
The House case’s amended settlement agreement inserts a third-party entity, referred to as the Designated Enforcement Entity, into the NIL policy enforcement process. Of note is that this clearinghouse also provides a compliance function, possessing the ability to provide advisory opinions when student-athletes have questions regarding the permissibility of potential NIL agreements. This process could benefit universities by increasing transparency regarding their student-athletes’ NIL deals with third parties.
More relevant to this article is the process through which the enforcement entity—the conference defendants have created the College Sports Commission (CSC) and hired Deloitte—will attempt to ensure that student-athletes’ compensation meets certain settlement agreement requirements. Specifically, the revised settlement agreement requires student-athletes’ NIL arrangements with certain third parties to both advance a valid business purpose and compensate student-athletes within a reasonable range.
The CSC is independent from the NCAA and possesses authority for enforcing the new rules that the NCAA adopted pertaining to the settlement, including those regarding roster limits, revenue sharing, and NIL arrangements. To enforce these policies, it possesses investigatory and adjudicative abilities.
Procedurally, the amended settlement agreement requires student-athletes to disclose NIL agreements with all third parties worth $600 or more to both their university and a database operated by the enforcement entity. Student-athletes report such NIL arrangements within five days of their execution through an online portal called NIL Go, which the CSC created with Deloitte’s assistance. This reporting requirement exists regardless of whether a student-athlete’s university opts in to the settlement. In the first couple months of NIL Go’s existence, the CSC analyzed over five thousand reported deals, which ranged from $600 to $1.5 million in compensation. As of this writing, CSC staff members are scrutinizing these reported deals manually, as opposed to using artificial intelligence.
The parties’ revised settlement agreement addressed Judge Wilken’s concerns regarding the original agreement’s use of the broad term “booster” by explicitly limiting the deals subject to heightened scrutiny based on the source of the student-athlete’s NIL compensation and the source’s relationship with the athlete’s university. More specifically, only deals between student-athletes and a narrower group of people or entities associated with universities will be subject to heightened scrutiny. Such entities include, for example, NIL booster collectives, a university’s marketing department, a booster-owned business, a university’s fundraising foundation, and a university’s media rights partner. One of the primary goals of this process is to keep universities from trying to use third parties to circumvent the $20.5 million revenue share cap. Another is to mitigate the authority that boosters and other third parties have gained in the NIL era and place more of the financial onus on universities.
For deals between student-athletes and these third-party entities, Deloitte will utilize a formula for determining whether NIL payments exceed an acceptable compensation range under the presumption that only deals that reflect something akin to fair-market value are legitimate. Thus, Deloitte will flag NIL compensation provided by this narrower group if, based on Deloitte’s calculations, it exceeds this range, defined as commensurate with compensation paid to similarly situated individuals, or is not for a valid business purpose to promote goods and services provided to the public for profit. The unacknowledged goal behind NIL Go is to prevent booster payments to student-athletes that have masqueraded as NIL compensation for over four years.
While acceptable compensation for an NIL arrangement is notoriously difficult to determine, Deloitte will access thousands of prior NIL deals involving collegiate and professional athletes to develop an acceptable compensation range for a deal or prospective deal within a day. Factors for determining this range include the student-athlete’s performance obligations under the arrangement, the athlete’s athletics performance and social media following, the local market, and the athlete’s university’s market reach. A deal potentially subject to rejection could be a local car dealership’s $1 million in NIL compensation to a student-athlete for deliverables that would normally result in $10,000 in compensation to a different endorser.
The CSC will also review student-athletes’ NIL deals with these select third parties to determine whether the latter’s use of the former’s NIL serves a valid business purpose, meaning promotion or endorsement of a good or service offered to the public for profit. In conducting this inquiry, the CSC will focus on whether the third party’s sale of goods or services is for profit—not whether the entity operates at a profit or loss. CSC guidance states that it could require the athlete or entity to provide documentation to verify compliance with this requirement, refusal of which could result in the CSC not clearing the NIL arrangement.
Once NIL Go completes its analysis, there are three potential outcomes. The CSC will either clear the deal to proceed as submitted, not clear it, or flag the arrangement for additional review by the CSC. In the latter instance, a flag could be the result of the need to conduct additional review over concerns regarding payor identity, compensation amount, or contract terms. When this occurs, the CSC conducts another layer of review and provides the student-athlete with guidance.
In instances of uncleared deals, the CSC provides student-athletes with three options. One possibility is to work with the payor to renegotiate the arrangement and resubmit it; student-athletes have the ability to resubmit a deal once. Another option is to cancel the deal and refund any compensation they already received. Or a student-athlete may appeal the CSC’s decision to not clear a deal to neutral arbitration, which the next section further explores.
If a student-athlete proceeds with an NIL deal that the CSC has rejected, the CSC’s chief executive officer enjoys enforcement power greater than the COI ever possessed. With final say in penalties, the CEO could declare that a student-athlete forfeited their competition eligibility by entering the rejected arrangement. Further, the athlete’s university could face reduction of financial distributions for violating the settlement agreement’s terms.
The CSC’s effectiveness is college coaches’ biggest question. College athletics constituents like Florida State University athletics director Michael Alford, University of Florida athletics director Scott Stricklin, Louisiana State University head football coach Brian Kelly, and Oregon State University athletics director Scott Barnes believe the CSC will enforce these NIL policies strictly. Big 12 Conference Commissioner Brett Yormark sums up this sentiment: “We’re providing rules. And we will be governed by those rules. And if we break those rules, you know, the ramifications will be punitive.” Effective enforcement could create a more level playing field in college athletics. Without it, a few universities with more resources would compete for championships. Power conference executives have gone so far as to circulate a draft document that university officials would sign that would, among other things, waive their right to pursue legal challenges against the CSC. Failure to sign this membership agreement could result in loss of conference membership and games scheduled against other power conference universities.
Other college athletics constituents are skeptical that the new system will work—or that it is legal. Regarding the former, some are not confident that the CSC and Deloitte will really be able to curb rule breaking. In fact, within a month of the settlement’s imposition, the CSC already relaxed its position regarding applying heightened scrutiny of NIL collectives’ deals with student-athletes. At first, the CSC denied dozens of deals between collectives and athletes, finding that the arrangements could not satisfy the valid business purpose requirement. After pushback from, among others, the House plaintiffs’ attorneys, the CSC will no longer apply additional scrutiny to collectives’ deals; instead reviewing only for a valid business purpose and range of fair market value compensation as with other deals. This is significant, as compensation from approved deals with third parties does not count against the $20.5 million revenue share cap. As a result, some see what was originally a $20.5 million hard compensation cap as morphing into a soft cap that collectives will exploit.
With respect to the concern that the new enforcement system would not withstand legal scrutiny, some feel that a rejected NIL deal could result in a lawsuit against the clearinghouse based on alleged violations of state NIL laws, tortious interference with contractual relations, and suppression of economic opportunities protected by state and federal antitrust laws. These doubts occur amidst a backdrop of at least one state—Tennessee—passing a bill permitting its universities to proceed without regard to the House settlement-related rules and attempting to preclude the CSC from enforcing them.
Regardless, by involving a third party—the CSC—in the NIL rules enforcement process, the NCAA acquiesced to significantly altering its long-standing history of almost exclusively using its own enforcement unit to enforce its rules. The NCAA’s lone previous dalliance using a third party to enforce its rules proved disastrous. Amid calls for enforcement reform, the NCAA created the Independent Accountability Resolution Process (IARP), an independent body that briefly presided over infractions cases deemed complex in 2018. The IARP’s existence was short-lived, however, for reasons including its inefficiencies, and many consider it a failure. And now another third party, the CSC, will now largely enjoy enforcement authority over third-party NIL arrangements.
D. The Settlement Agreement’s Insertion of Arbitration into the NIL Rules Enforcement Process
As stated above, the House settlement agreement creates a neutral arbitration system that permits student-athletes and their universities to challenge adverse CSC decisions regarding athletes’ NIL arrangements with third parties. While the introduction of the CSC into the NIL rules enforcement process is radical, its insertion of arbitration is likewise significant and unprecedented in college athletics.
Procedurally, the settlement permits a student-athlete or their university to appeal a CSC rejection of an NIL agreement, including when the basis for the rejection is Deloitte’s determination that the compensation exceeds its acceptable range of compensation. When a student-athlete proceeds with arbitrating the CSC’s rejection, Deloitte will serve as the prosecutorial group in front of arbitrators that the House parties approve. Once arbitration commences, the arbitrator must reach a final, written decision within 45 days.
If the arbitrators agree with Deloitte’s analysis that compensation from an NIL agreement exceeds the acceptable range, the student-athlete who entered it may terminate the agreement or renegotiate it. If a student-athlete accepts the compensation originally bargained in a rejected deal, they can be deemed ineligible for competition.
By including arbitration in their settlement agreement, the House parties intended to mutually benefit student-athletes, their universities, and the NCAA. While inserting arbitration into the NIL rules enforcement process largely removes the NCAA from it, optimists believe it should result in a more efficient and equitable process while potentially making it more difficult to challenge adverse decisions in court. According to the House parties’ brief on their revised settlement, any arbitrations will occur quickly and, absent good cause, any penalties issued by the CSC are stayed during such proceedings. Additionally, universities may especially appreciate the fact that arbitration can be less public than litigation. The NCAA benefits from arbitration as, theoretically, it provides some cover against potential antitrust claims since the NCAA no longer possesses jurisdiction over NIL rules enforcement as the proverbial judge, jury, and prosecutor.
III. Implications for Universities
Following Judge Wilken granting final approval of the House settlement, universities must alter their approach within athletics to become—or remain—competitive. While the national media focuses on universities’ newfound ability to share over $20 million in revenue annually with their athletes, universities face a new regulatory environment that includes a novel process for adjudicating potential violations of NIL regulations. This new enforcement mechanism is perhaps an even bigger sea change than revenue sharing for student-athletes, coaches, and administrators. The revised settlement agreement’s complexity increases this burden on university and athletics administrators faced with creating new processes to help ensure and monitor compliance with these new NIL policies.
A starting point for universities is evaluating current systems to determine whether they are adequate or require updating. Among necessary processes is one including facilitating and requiring disclosure of student-athletes’ NIL arrangements worth $600 or more and educating constituents about this requirement. This could prove difficult for some as many universities were previously averse to involvement with student-athletes’ disclosure of NIL agreements. Further, some states have counseled against it.
One power conference describes the amount of education that department staffers will need to deliver to student-athletes, coaches, and agents as monumental. Universities, however, must not only educate regarding the House settlement disclosure requirement but monitor for its compliance, too. Administrators’ monitoring practices can include observing student-athletes’ social media—especially high-profile student-athletes or those who compete in high-profile sports—for suggestion of unreported NIL deals and issuing reports to sport staff members listing agreements reported by student-athletes, in case sport staff members are aware of others. Not only is disclosure required in many instances, it ensures that NIL arrangements promptly receive Deloitte’s compensation valuation analysis.
Universities and their student-athletes should also familiarize themselves with, and take advantage of, the process through which the latter can receive an advisory opinion regarding potential NIL deals through the NIL Go platform. Universities may even consider requiring high-profile student-athletes or those in high-profile sports to utilize Deloitte’s advisory services as taking advantage of this resource could save proactive student-athletes and universities from significant hassle, anxiety, penalties, and arbitration and expenses related to arbitration.
Universities must prepare for teaming up with their athletes who, because of the CSC’s rejection of a deal, participate in the arbitration process. Designed to be more efficient than the current NCAA infractions process, student-athletes and universities must remain primed to face the relatively condensed forty-five-day arbitration timeline when challenging Deloitte’s determinations. Discovery deadlines, for example, will be tight. Thus, universities and their student-athletes must be equipped to produce evidence not only in the discovery process but to the arbitrator, too.
Further, arbitration will cost universities money. While some may utilize in-house counsel to arbitrate, others may hire outside representation, particularly those experienced with alternative dispute resolution. Further, the House settlement agreement provides universities with the option of paying for their student-athletes’ legal representation. This possibility first requires universities to determine whether such an arrangement creates an ethical conflict. This is not a new dynamic, however, as universities have long possessed the ability to pay for their prospective and current student-athletes’ legal representation in NCAA eligibility disputes, for example. Universities may consider evaluating whether and how funding such legal matters impacts their student-athletes’ cost of attendance calculations, however.
Navigating the post-House regulatory scheme, particularly Deloitte’s acceptable range of compensation determinations and the potential for arbitrating its conclusions, requires universities to evaluate current processes, create and implement new ones, and be prepared to participate in arbitration on a relatively condensed timeline. Given the dire potential consequences of adverse ruling, which include student-athlete competition ineligibility, universities must remain vigilant.
IV. Conclusion
The House v. NCAA settlement agreement significantly alters college athletics in myriad ways, including providing universities the ability to share tens of millions of dollars in revenue directly with their student-athletes. These student-athletes, however, risk their ability to compete by entering NIL agreements that, according to Deloitte’s calculations, exceed an acceptable range of compensation or that do not further a valid business purpose. Universities and their student-athletes can mitigate the likelihood of such a determination by proactively seeking an advisory opinion of potential NIL deals through NIL Go, disclosing NIL agreements, and remaining prepared to arbitrate instances where the CSC does not approve their NIL agreement. While such endeavors are largely new and complicated, college athletics’ new reality requires familiarity with, and preparedness for, them.
