NCAA settles NIL-driven lawsuit with Tennessee

Just over a year ago, a judge in the U.S. Eastern District Court of Tennessee granted a preliminary injunction against the NCAA in a lawsuit centering around NIL filed by the attorneys general of Tennessee and Virginia. The decision sent ripples across college sports, allowing booster-funded NIL collectives to negotiate deals with high school and transfer portal recruits before commitments.

On Friday afternoon, Tennessee and the NCAA reached a settlement agreement. A status report was due to the court on Friday, initiating the decision to settle. Per the filing, the injunction will continue, and it will not interfere with the completion of the House v. NCAA settlement.

The antitrust lawsuit was filed exactly a year ago by the attorneys general of Tennessee and Virginia. The settlement will be finalized along with a request for a permanent injunction by March 17, according to the filing. The settlement must be approved by U.S. District Judge Clifton Corker in Tennessee to go into effect.

“We’ve been fighting hard to protect Tennessee student-athletes,” Tennessee Attorney General Jonathan Skrmetti said in a statement. “Last year, we blocked the NCAA’s unlawful enforcement against Tennessee students and schools, and now this settlement in principle lays the groundwork for a permanent solution.”

The lawsuit originated after the NCAA began investigating Tennessee on its NIL practices in multiple sports. According to the New York Times, the NCAA’s search at Tennessee centered around the use of a private plane to fly Tennessee quarterback Nico Iamaleava to Knoxville while he was a recruit, with funds for the plane raised by boosters. Tennessee Chancellor Donde Plowman and athletic director Danny White, along with multiple politicians, have been vocal supporters of taking legal action against the NCAA.

In the wake of the injunction, NCAA president Charlie Baker halted NIL investigations last year. The NCAA has lost its grip on controlling inducements or pay-for-play. Now, the attention will shift to the NIL clearinghouse that is included in the House v. NCAA settlement. According to that agreement, all third-party deals of more than $600 from boosters or NIL collectives will have to be approved by a clearinghouse.

“The NCAA has reached a settlement that resolves the issues Tennessee and the other involved states raised without posing an obstacle to completing the House, Carter and Hubbard settlements,” the NCAA said in a statement. “We anticipate full terms will be released later in the spring.”

With Friday’s settlement, the NCAA severed another blow to its enforcement power. The decision leaves college sports’ governing body nearly powerless over NIL payments until revenue sharing is scheduled to begin July. 1. Corker, who granted the preliminary injunction nearly a year ago, previously wrote that the NCAA was surprising athletes.

“Without the give and take of a free market, student-athletes simply have no knowledge of their true NIL value,” the judge wrote last February. “It is this suppression of negotiating leverage and the consequential lack of knowledge that harms student-athletes.”