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Lawsuit seeks to block NCAA limits on sports donors

Written by The Anand Market

Updated on:

The attorneys general of Tennessee and Virginia filed suit Wednesday against the NCAA, saying the body that regulates college sports has no right to block the increasingly common practice of wealthy promoters paying to attract the best recruits.

THE suit was filed a day after it was disclosed that the NCAA was investigating the University of Tennessee football program for recruiting violations involving a donor group that arranged to pay athletes. That could spark a broad legal battle over the very nature of college sports, which is in the midst of a rapid transition from a closely monitored amateur system to some sort of unfettered professional market.

The driving force behind this change has been donor collectives, which are groups of alumni and other promoters who donate money intended to compensate high-level athletes, sometimes in amounts close to professional levels. To do this, they are exploiting the NCAA’s new “name-image likeness,” or NIL, rules, which were intended to allow athletes to get paid for endorsements but which, in practice, allow almost anyone to do so. pay, and for almost any reason.

In fact, the collectives pay salaries disguised as endorsements and now play a central role in the process of courting players in football, basketball and other sports.

The lawsuit seeks to remove one of the few NCAA rules that limit these collectives – and one of the last vestiges of the amateur model.

This rule is that collectives cannot recruit high school students or transfer students to play at the school of their choice by offering them money.

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The attorneys general, seizing on the issue even before the NCAA issued specific charges against the University of Tennessee, said the restriction amounted to an unlawful restraint of commerce. They argue that collectives should be free to outbid each other to recruit, as schools do for the best coaches.

“This ban on zero recruiting limits competition,” the attorneys general said in the suit, arguing that the limit “artificially diminishes the zero compensation that college athletes could otherwise obtain in a free market.”

The NCAA did not immediately respond to a request for comment.

The suit was filed by Tennessee Attorney General Jonathan Skrmetti, a Republican appointee who often took conservative legal positions during his 17 months in office. Reports released Tuesday about the NCAA’s investigation into the University of Tennessee drew a scathing response from the school and sparked outrage among its fans.

The collective of donors at the heart of the Tennessee case paid to fly a high school quarterback to campus on a private jet, according to a person familiar with the matter. The Tennessee collective released a statement saying it followed NCAA rules and that his contract with the quarterback — which could earn him $8 million — did not require him to attend Tennessee.

Virginia’s participation in the lawsuit raised the possibility that a number of other states with top-ranked public school sports programs could join the lawsuit. Virginia Attorney General Jason S. Miyares is an elected Republican.

The collectives first emerged in 2021, when the NCAA — after losing a series of lawsuits that eroded its regulatory authority — declined to challenge a series of state laws that allowed players to profit from their names , their image and their likeness.

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Since then, for the most part, there has been little evidence that the NCAA sought to control these collectives. The New York Times counted more than 140 collectives now operating in schools across the country, with budgets reaching $10 million or more.

In just a few years, college coaches and players say, money offered by collectives has become the dominant factor in recruiting and retaining athletes. Last year, for example, the University of Iowa’s starting quarterback told the Times that he transferred from the University of Michigan after the Iowa team made him a written offer outlining His salary.

College sports officials complained that the NCAA allowed the name-and-image likeness system to become a pay-for-play system in disguise.

Many state laws, including one passed nearly two years ago in Tennessee, echo the NCAA’s ban on fee-for-service payments. Tennessee law states that compensation cannot be provided in exchange for athletic performance in order to “maintain a clear separation between amateur intercollegiate athletics and professional sports.”

That contrasted with the argument made by Tennessee’s attorney general in Wednesday’s lawsuit, which appeared to accept that collectives paid players to play for their schools. The attorney general said athletes had the right to maximize those payments, polling schools about where they would be paid the most.

“Very few college athletes become ‘professional’ in their sport, and thus their NIL value is at its highest level during their short college careers,” the lawsuit states. “Their ability to negotiate the best NIL deal is essential.”

The result was a boon for many players, but also a chaotic market, lacking the rules, unions and minimum wages that govern the professional sports labor market. In this semi-clandestine free agent market, college athletes had little idea of ​​their true value.

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In recent weeks, the NCAA has also shown some signs that it is seeking to rein in collectives.

NCAA President Charlie Baker has proposed that schools be allowed to enter into NIL agreements directly with athletes — a move that could diminish the collectives’ impact and could be codified by the association later this year. A high-level NCAA committee this month proposed other rules that would tighten regulations, including requiring athletes to report any transactions over $600 and requiring schools to further disassociate themselves from boosters who reveal have been involved in wrongdoing.

The NCAA’s enforcement wing fined Florida State University after a football coach there brought a prospective transfer student to a group meeting. And he’s investigating the University of Florida, where a collective offered $13.85 million to a high school quarterback — but then didn’t pay.

The lawsuit filed Wednesday seeks to establish a legal ruling allowing these types of transactions, ushering in an era where college athletes are treated like professionals before they even go to college.