Why Tennessee, NCAA NIL battle matters for future of college sports

After 30 months of avoiding the inevitable, the NCAA has arrived at its inflection point. 

Since taking the job nearly a year ago, NCAA president Charlie Baker has done everything to right the governing body. Find an escape hatch in Washington, DC. Working with administrators to right the world of NIL. 

But now the NCAA has formally launched an investigation into Tennessee athletics, inquiring about multiple NIL violations. The NCAA issuing a notice of allegations is just a formality. But the Volunteers, similar to other institutions across the college football landscape, have no plans of sitting by the wayside.

The attorneys general in the State of Tennessee and Commonwealth of Virginia filed a lawsuit on Wednesday in the Eastern District of Tennessee, challenging the NCAA’s ban on NIL in high school recruiting. At its root, it’s an antitrust lawsuit arguing the body does not have the right to put restrictions on compensating college athletes. 

This all boils down to the NCAA trying to govern the world of NIL.

Booster-driven collectives have become crucial in retaining and attracting top talent. Collectives make up roughly 90% of all dollars in the space. They have become the recruiting tool in college football. The NCAA recently levied sanctions on Florida State and is also investigating Florida for the Jaden Rashada saga. 

“Student-athletes are entitled to rules that are clear and rules that are fair,” Tennessee Attorney General Jonathan Skrmetti said in a statement. “College sports wouldn’t exist without college athletes, and those students shouldn’t be left behind while everybody else involved prospers. The NCAA’s restraints on prospective students’ ability to meaningfully negotiate NIL deals violate federal antitrust law. Only Congress has the power to impose such limits.”

The NCAA’s problems are not just in Tennessee. Court cases across the nation are aiming for the body. If the NCAA fails to win, college sports would be looking at athletes being classified as employees, unionization, unlimited transfers and recruits negotiating agreements before enrolling at an institution. 

Simply put, the NCAA is holding on for its life as college sports approaches a professional model. 

On3 is breaking down everything to know about what’s going on at Tennessee and how it plays into the future of the NCAA:

Why is this NCAA investigation important?

When news broke that the NCAA was investigating Tennessee athletics for NIL violations on Tuesday, sources quickly indicated to On3 that the Volunteers would probably take legal action against the governing body. That formally came to fruition on Wednesday morning. 

Tennessee and Virginia are pursuing a temporary restraining order that would bar the NCAA from enforcing its NIL inducement ban for recruits and players in the transfer portal. More importantly, the filing states that the Court must grant the TRO by Feb. 6, the day before National Signing Day. 

The attorneys general aren’t expected to be alone in the case for long. Similar to how the Department of Justice and other states joined a multi-state lawsuit challenging the NCAA’s transfer eligibility rule, other states are expected to join this lawsuit against the NCAA’s NIL rules. 

The odds are in the NCAA’s favor. According to Sportico, one study has found defendants prevail in 97% of cases where courts apply rule-of-reason (weighing of pro and anti-competitive factors) analysis.

The lawsuit included the language surrounding NIL relationships in recruitments because the NCAA is specifically investigating the relationship between the Tennessee-driven NIL collective Spyre Sports Group and quarterback Nico Iamaleava. A top prospect in the 2023 recruiting class, he signed an NIL deal with Spyre that could see him make $8 million in his college career. 

Tennessee athletic director Danny White and Spyre co-founder James Clawson are declarants in the lawsuit. 

Spyre’s attorney Tom Mars released a statement on Tuesday night that the deal was a representation agreement and did not induce Iamaleava to attend Tennessee. Spyre is well known as one of the richest collectives in the space; the organization has played a key role in the formation of the trade association for NIL collectives, too.

The New York Times reported Tuesday that the NCAA is investigating the use of a private plane to fly Iamaleava to Knoxville while he was a recruit, with funds for the plane raised by boosters. 

Tennessee receiving political support

When the news first came out the NCAA was looking into multiple potential NIL violations on Rocky Top, Tennessee Chancellor Donde Plowman pushed back in an email to Baker. She aimed at the body’s NIL rules, calling them “intellectually dishonest.”

“The NCAA’s allegations are factually untrue and procedurally flawed,” Plowman wrote in the letter. “Moreover, it is intellectually dishonest for the NCAA enforcement staff to pursue infractions cases as if student-athletes have no NIL rights and as if institutions all have been functioning post-Alston with a clear and unchanging set of rules and willfully violating them.”

Plowman also defended Tennessee, pushing back on the suggestion that the athletic department had lost institutional control.

Tennessee Gov. Bill Lee also backed the lawsuit against the NCAA on Wednesday. 

“The University of Tennessee has been nothing but forthcoming with the NCAA, and I thank Chancellor Donde Plowman for taking a stand on behalf of all student-athletes,” Lee wrote in a statement. “It’s time for the NCAA to establish clear rules in the interest of student-athletes, rather than trying to retroactively enforce-ever changing name, image and likeness guidelines.”

The Volunteers are operating on the same page, making a united pushback against the NCAA. If more states join the fight, expect the pitch to grow. 

What does this mean for NCAA?

The NCAA is currently pushing up against external forces that could lead to an employment model in college sports. On the docket of legal fights that could force employment: Two National Labor Relations Board cases – one involving USC, the Pac-12 and the NCAA – and the other involving Dartmouth men’s basketball players; and the Johnson v. NCAA lawsuit carries employment implications as well.

The House v. NCAA antitrust case could also put the NCAA and college sports on the hook for $4.2 billion in retroactive NIL pay and broadcast revenue owed to thousands of athletes. Along with the lawsuit challenging the body’s transfer portal rules, another has emerged in Tennessee against NIL rules. 

With the TRO deadline just six days away, an interim resolution will be coming soon. But this is a battle the NCAA cannot afford to lose if it wishes to hold onto an amateur model. 

Baker, the NCAA president, is working on a project that would create a subdivision of Division I that affords the freedom to craft policies and enables compensation to athletes through a trust fund. That plan, dubbed Project D-I, has created some uneasiness in the Power 4 ranks, as some power brokers believe it does not thwart the outside legal threats. 

The NCAA has yet to make much progress on Capitol Hill after 11 Congressional hearings on NIL since 2020. The body still has not secured its antitrust exemption, either, allowing for lawsuits to take the NCAA to court arguing it violates the Sherman Act. 

As one source told On3 on Wednesday, the NCAA is being put to the test.