After loss in court, NCAA pausing investigations into third-party NIL deals

Following another courtroom loss, the NCAA has halted investigations into booster-backed collectives or other third parties making name, image and likeness compensation deals with Division I athletes.

In a letter to member schools Friday, NCAA President Charlie Baker said the Division I Board of Directors directed enforcement staff “to pause and not begin investigations involving third-party participation in NIL-related activities.”

The move comes a week after a federal judge granted a preliminary injunction in a lawsuit brought by the attorneys general of Tennessee and Virginia. The antitrust suit challenges NCAA rules against recruiting inducements, saying they inhibit athletes’ ability to cash in on their celebrity and fame.

“There will be no penalty for conduct that occurs consistent with the injunction while the injunction is in place,” Baker wrote in the letter, which was obtained by The Associated Press. “I agree with this decision, while the progress toward long-term solutions is underway and while we await discussions with the attorneys general. In circumstances that are less than ideal, this at least gives the membership notice of the board’s direction related to enforcement.”

The judge’s decision had prompted speculation about whether the NCAA would make a long-shot appeal as it fights to maintain its decades-long amateurism model for athletes in the face of rapid change. Baker noted that three specific policies involving NIL compensation remain in place and will be enforced, including prohibitions on schools directly playing athletes and any payment or compensation being tied specifically to athletic performance.

The move was not a surprise.

“The NCAA is essentially saying we’re not going to do something that’s been deemed illegal,” said Joshua Lens, a former attorney and college athletics administrator who is now an assistant professor at the University of Arkansas.

Lens also noted Baker avoided mentioning Congress in his statement.

“That’s fascinating to me because almost all of his statements in the past several months, if not longer, have been kind of this open plea to Congress to get involved,” Lens said. “Now, today, that wasn’t mentioned.”

Those who work for and with the booster-funded collectives that handle millions of dollars worth of NIL deals with college athletes say lifting the antiquated recruiting rules will bring more clarity and simply make permissible what was once banned.

The NCAA’s only jurisdiction over collectives has been rules banning boosters from being involved in recruiting and from offering money or something of value to attend certain schools.

Even then, a school was at risk of being punished if a collective broke those rules. That’s what happened at Tennessee, which drew scrutiny from the NCAA for NIL deals between athletes and The Vol Club, which is managed by Spyre Sports Group, a marketing agency.

The NCAA altered its enforcement agenda a week after Tennessee and Virginia essentially celebrated a victory in their public fight against the sanctioning body.

“Their hands were kind of forced because of that Tennessee ruling,” said Kasey Havekost, a former Division I athlete who is now a higher education attorney at Bricker Graydon. “The NCAA is still fighting, though. They have to; that’s all they have left.

“But this hurts them. It’s death by a thousand paper cuts at this point.”

Officials from both the University of Tennessee and the Tennessee Attorney General’s office declined to comment Friday.

Faced with a wave of state laws clearing the way for college athletes to earn money based on their celebrity, the NCAA lifted its ban on in 2021 while making it clear that its approximately 500,000 athletes are still considered amateurs who cannot be paid to play. NIL wasn’t meant to be a stand-in for paying college athletes, but that’s what it has become.

Baker and the NCAA have so far sought unsuccessfully a limited antitrust exemption from Congress to put rules in place that they say will preserve the amateurism model of college athletics. That model is under fire from multiple lawsuits and efforts by athletes to be considered school employees who can seek compensation, including collective bargaining rights.

While Baker has spent much of his first year on the job leading the NCAA in Washington, meeting with lawmakers, he has stressed to membership that it needs to come up with its own solutions.

In December, Baker proposed a dramatic shift in the way the schools that compete at the highest level of college sports compensate their athletes.

Baker’s so-called Project D-I calls for all 363 Division I schools to offer unlimited educational benefits and enter into NIL licensing deals with athletes. The hope is that by bringing NIL activities in-house, it could decrease the need for collectives to arrange compensation and pay athletes.

Baker also proposed the creation of a new tier of Division I, where it would be required for schools to pay at least $30,000 per year to at least half their athletes.

The proposal of a new tier of D-I was met with a cool reception by many whose schools would be most impacted, but Baker has stressed the idea was intended to kick-start conversations about possible solutions.

The Big Ten Conference and Southeastern Conference, the wealthiest and most powerful of the Division I leagues, formed a joint advisory committee last month to try to tackle the many issues facing college sports.

“Now we’ve got this judge indicating that he’s in favor of the NCAA continuing to not allow schools to directly compensate for NIL,” Lens said. “So we’re kind of starting to go in circles a little bit as we try to figure this thing out.”