As 2024 comes to a close, permutations in the arena of name, image and likeness (NIL) impacting collegiate athletics continue unabated.
Most prominently, Northern District of California District Judge Claudia Wilken preliminarily approved the proposed settlement agreement to resolve the trio of pending antitrust cases known colloquially as Carter, House, and Hubbard. While a number of judicial hurdles must be cleared before the settlement is finalized and implemented, Judge Wilken’s ruling is a significant step toward a new system of rules and athlete compensation for collegiate athletics.
Relatedly, the University of Tennessee (UT) became the first Division I program to announce that it was implementing a “talent surcharge” on football season ticket prices. While couched in broader terms of supporting athletics, the initiative is designed to maintain Tennessee’s competitive advantage while accounting for “revenue sharing” with its student-athletes.
Finally, states continue to act on NIL in the absence of federal legislation. In September, Georgia Governor Brian Kemp issued an executive order permitting direct revenue sharing between schools and athletes and prohibiting the National Collegiate Athletic Association (NCAA) (and others) from taking adverse actions against schools within the state for a variety of NIL-related activities. Contemporaneously, Pennsylvania’s senate passed a resolution asking Congress to regulate NIL at the federal level. The legislature’s proclamation echoed NCAA President Charlie Baker’s renewed plea for intervention, made days before.
Carter, House, and Hubbard Settlement Receives Preliminary Approval
As Pillsbury covered at the time, in late May of 2024, the NCAA, the five “power” collegiate athletics conferences, and the plaintiffs to three federal antitrust lawsuits (In re College Athlete NIL Litigation, 4:20-cv-03919-CW (N.D. Cal. 2020)) publicly announced they had agreed to terms to settle those cases (the “Settlement”).
In broad terms, the Settlement contained two components: (i) backwards-looking payment of nearly $2.8 billion in damages to former student-athletes; and (ii) prospective injunctive relief allowing for annual revenue distribution directly to student-athletes and, among other changes, regulating third-party NIL compensation.
The parties filed the complete set of Settlement documents with the court in July along with a motion asking presiding District Judge Claudia Wilken to grant the settlement “preliminary approval.” At the court’s September 5, 2024, hearing on the motion, Judge Wilken articulated pointed concerns about the components of the Settlement that sought to restrict an athlete’s ability to freely negotiate and enter into contracts with third parties (such as a collective or local business) for use of the athlete’s name, image and likeness.
The pertinent Settlement provisions required:
- Mandatory reporting of third-party NIL deals in excess of $600;
- Payments through such deals reflect accurate market value compensation for the athlete’s name, image and likeness;
- Submission of such NIL deals to a third-party clearing house to assess whether they accurately reflected market compensation for the use of the athlete’s name, image and likeness; and
- An arbitration system to adjudicate disputes between an athlete and/or school and the NCAA as to whether a particular NIL deal satisfies those requirements.
During the hearing, Judge Wilken directed the parties to address those concerns in supplemental filings. On September 26, 2024, the parties “clarified” the contemplated NIL regulatory scheme through modest amendments to the Settlement. Instead of applying to third-party NIL agreements with “boosters,” the restrictions would only apply to NIL contracts between an athlete and an “Associated Entity or Individual.” That defined term includes:
- Individuals who have donated (collectively) more than $50,000 to a school;
- An entity (and its representatives) that exists “in significant part” to “promot[e] or support[]” a school’s athletics program or student-athletes;
- An entity (and its representatives) that creates or identifies NIL opportunities; and
- Those asked to assist in recruiting or retaining student-athletes.
In practice, the “clarified” Settlement would still capture NIL collectives, many local businesses, and the vast majority of fans and alums that donate meaningful amounts.
Separately, on October 7, 2024, Judge Wilken granted the Settlement preliminary approval and set a final hearing date of April 7, 2025. In the interim, members of the class of plaintiffs will be permitted to formally object to the terms of the Settlement.
Separately, on October 23, 2024, the court in Fontenot v. NCAA et al., 1:23-cv-03076-CNS-STV, granted a joint request of the parties to stay that case through the date on which Judge Wilken “issues a ruling on the final approval of the House settlement.” Fontenot is unrelated to the Carter, House, and Hubbard cases, but similarly alleges that the NCAA and athletic conferences violated federal antitrust law by conspiring to enact rules prohibiting athletes from receiving compensation for the use of their name, image and likeness, including through the distribution of media broadcast revenues.
Revenue Distribution Cap Set for Year One of the Settlement
On November 1, 2024, Ross Dellenger of Yahoo Sports reported via X (formerly known as Twitter) that the “power” conferences are projecting that schools will be permitted to distribute up to $20.5 million to student-athletes in the first year of the Settlement:
The Settlement establishes that, during its 10-year term, schools will be able to annually distribute up to 22% of what is defined as the “Average Shared Revenue.” An oversimplification of the defined term is the average revenue of a “power” conference school in the prior year. The Settlement calls for annual 4% increases and several recalculations of the appropriate “Average Shared Revenue” figure.
Assuming that the Settlement receives final approval, is implemented in 2025, and the projected $20.5 distribution limit does not change, the first five years of the Settlement would proceed as follows:
The projected $20.5 million distribution cap reported by Yahoo Sports is lower than what the industry consensus predicted—between $22 and $23 million.
The University of Tennessee Implements “Talent” Surcharge
On September 10, 2024, UT Athletic Director Danny White announced in a YouTube video address to alums and fans that the university will implement a “10% talent fee” on 2025 football season ticket prices.
White’s prepared remarks did not specifically invoke the Settlement. However, White directly referenced name, image and likeness compensation and proclaimed that UT would strive to be a leader in “revenue sharing.” White also tied resources (and revenue) to competitive advantage, stressing that “[t]his will give our teams the best chance to be successful and bring championships home to Rocky Top.”
UT becomes the first school to implement such a ticket surcharge or transparently pass anticipated “revenue sharing” costs on to fans and alums. In the weeks that followed UT’s announcement, other schools have not taken similar actions—yet.
Nevertheless, with the Settlement receiving preliminary approval, many Division I schools are preparing to take part in voluntary revenue sharing with athletes to some degree. As noted above, schools are projected to be allowed to distribute up to $20.5 million in the first year of the Settlement. Schools are, accordingly, examining additional avenues through which to generate revenue either to distribute to student-athletes or to offset other operational costs.
UT’s “talent” fee becomes perhaps the first—and most prominent—such stream.
Georgia Governor Signs Executive Order Permitting Direct Revenue Sharing
Changes to the national NIL landscape also continue to occur at the state level. On September 17, 2024, Governor Brian Kemp took unilateral executive action to enhance existing statutory NIL rights and curb enforcement of private organization rules restricting those rights.
Pursuant to Gov. Kemp’s two-page executive order, the NCAA, athletic conferences or any other entity with authority over intercollegiate athletics are prohibited from taking “adverse action” against any post-secondary educational institution within Georgia for “facilitating compensation, offering compensation, or compensating an intercollegiate student-athlete for the use of such student-athlete’s NIL[.]” The upshot of the governor’s action is that, under Georgia law, schools are entitled to directly compensate their student-athletes for the use of their name, image and likeness, and can lend assistance to help athletes secure NIL agreements with third parties. The only restriction is that schools cannot use state funding to compensate their athletes.
Georgia now joins Virginia (covered by Pillsbury here) as the only other state to proactively permit under state law direct student-athlete payments from schools. Georgia was a relatively early adopter of NIL legislation, passing state law nearly two months before the NCAA lifted its restrictions on such compensation in June of 2021.
The expiration of the executive order is expressly tied to the “effective date” of either the Settlement or the implementation of federal NIL legislation.
Continued Calls for Congressional Intervention
Finally, there are continued entreaties for Congressional action in the area of NIL and athlete compensation. On September 27, 2024, NCAA President Charlie Baker again called for federal NIL regulation:
Baker’s statement came in the wake of a well-publicized, but anecdotal, instance of an athlete deciding to withdraw from competition and transfer to another school. The genesis of the athlete’s decision was reported to be, at least in part, a disagreement over NIL payments.
Twelve days later, on October 9, the Senate of Pennsylvania adopted Resolution No. 350, authored by Senate Appropriations Committee Chair Scott Martin (R-Lancaster). Sen. Martin’s resolution expressly “[u]rg[ed] the Congress of the United States” along with the NCAA to “pursue legislative remedies that would help provide uniformity of the name, image and likeness policy across the states.”
The brief legislative “request” cited the 2021 Supreme Court’s 2021 decision in NCAA v. Alston, 141 S. Ct. 2141 (2021) and the NCAA Division I Council’s adoption of new NIL legislation in January 2024.
Pennsylvania has had NIL legislation in effect since July 1, 2021, which broadly allows college athletes to be compensated for the use of their name, image and likeness. Pennsylvania law, similar to the Settlement’s terms, requires that NIL payments be “commensurate with the market value of the student athlete’s name, image or likeness” and “may not be provided in exchange” for “participat[ion] or perform[ance] at a particular institution of higher education.” The legislation, however, does not go on to further define what constitutes “market value” and does not establish any mechanism to review or assess whether a particular agreement satisfies such requirement. On December 7, 2022, the Pennsylvania Interscholastic Athletic Association approved allowing high school athletes to be compensated for their NIL with certain restrictions.
Senator Martin’s resolution passed 49-0 with one abstention.
RELATED ARTICLES
The Contest for Collegiate NIL Rights: How the Protect the Ball Act May Insulate the NCAA
The Brisk Evolution of Name, Image and Likeness (NIL) Rights