Ire of Tennessee Attorney General Again Pointed at NCAA in Latest Antitrust Lawsuit

SALT LAKE CITY, UT - MARCH 16: The NCAA logo is seen in the second half of the game between the Northwestern Wildcats and the Vanderbilt Commodores during the first round of the 2017 NCAA Men's Basketball Tournament at Vivint Smart Home Arena on March 16, 2017 in Salt Lake City, Utah. (Photo by Christian Petersen/Getty Images)

State attorneys general in Tennessee and Virginia have sued the National Collegiate Athletic Association (NCAA) for allegedly violating antitrust laws related to student-athlete use of their own name, image, and likeness, commonly known as “NIL,” according to the lawsuit filed in the United States District Court for the Eastern District of Tennessee on Wednesday, January 31.

“The NCAA has started enforcing rules that unfairly restrict how athletes can commercially use their [NIL] at a critical juncture in the recruiting calendar,” the lawsuit reads. “These anticompetitive restrictions violate the Sherman Act, harm the States and the welfare of their athletes, and should be declared unlawful and enjoined.”

The Sherman Act is a federal statute in U.S. antitrust law that prohibits monopolistic practices and aims to promote fair competition across various industries.

Tennessee, along with nine other states and the District of Columbia, also sued the NCAA in December over similar antitrust violation allegations, challenging the NCAA’s authority to enforce a one-year delay in eligibility for athletes transferring between schools as a violation of the same antitrust statute.

Tennessee, NCAA Spat Goes Public

Just a day prior to the suit being filed, Sports Illustrated broke the news that the NCAA was likely investigating The University of Tennessee for “major” violations of NIL benefits for student-athletes.

In a letter obtained in a public records request by Knox News, University of Tennessee Chancellor Donde Plowman said the NCAA was “morally wrong” for making the allegations, in an email sent to NCAA President Charlie Baker. The NCAA declined to comment on the matter to the outlet, citing confidentiality.

“The implications of the NCAA enforcement staff’s approach to date goes beyond just our institution, but also could harm many more student-athletes who have done nothing wrong – all based on the administrative disputes of adults,” Plowman said in the email to Baker, according to the outlet. “This is morally wrong and undermines the credibility of the NCAA’s stated interest of acting in the best interest of student-athletes.”

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She was met with strong support by state officials before and after the lawsuit was filed, including Tennessee Gov. Bill Lee, who praised her on social media 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 universities and student-athletes,” he said in a statement posted on X. “It’s time for the NCAA to establish clear rules in the interest of student-athletes, rather than try to retroactively enforce ever-changing name, image and likeness guidance.”

More on the Suit

In a press release, Tennessee Attorney General Jonathan Skrmetti, along with Virginia Attorney General Jason S. Miyares, stated that the suit was filed because of their belief that the NCAA places anti-competitive restrictions on the “ability of current and future student-athletes to benefit from their” NIL.

“Student-athletes are entitled to rules that are clear and rules that are fair,” said Mr. Skrmetti. “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 attorneys note a 2021 Supreme Court decision that ruled in favor of college athletes in a similar antitrust suit, which ruled the NCAA, the umbrella organization that regulates college sports, could not “restrict benefits related to education, such as free laptops or paid post-graduate internships,” according to SCOTUSblog.

That Supreme Court case was a result of a class action lawsuit against the NCAA by Division I football and basketball players.

“Despite having monopoly control over college sports, for decades, the NCAA somehow escaped much antitrust scrutiny,” the new lawsuit stated. “That all changed in 2021 when the U.S. Supreme Court decided [that case]. That case rejected the NCAA’s long-held arguments about why its amateurism rules are exempt from the Sherman Act.”

The University of Tennessee’s Pride of the Southland Band performs before an NCAA college football game in Knoxville, Tenn, on Oct. 3, 2009. (Wade Payne/AP Photo)

Mr. Skrmetti, in an accompanying press release to Wednesday’s lawsuit, stated Tennessee and other states enacted “laws to foster a thriving NIL market for the benefit of student-athletes,” following the high court’s 2021 ruling—but contrary to those laws, the NCAA continued to adopt “a shifting and opaque series of rules and guidelines that thwart the ability of student-athletes to get fair compensation for their NIL.”

“Plaintiffs, and many other States like them, have facilitated a vibrant and growing marketplace for NIL deals,” the lawsuit stated. “But the NCAA is thumbing its nose at the law. After allowing NIL licensing to emerge nationwide, the NCAA is trying to stop that market from functioning.”

The suit alleges that just this month, the NCAA announced proposals related to “student-athlete protections in NIL,” which allow current athletes to pursue NIL compensation but bans prospective college athletes, including current college athletes looking to transfer to another school, “from discussing potential NIL opportunities before they actually enroll.”

“It’s like a coach looking for a new job and freely talking to many different schools, but being unable to negotiate salary until after he’s picked one (the depressive effect on coaches’ wages in such a dysfunctional market is obvious),” the suit continued.

More on What the NCAA Prohibits

According to the attorneys general, the NCAA currently “prohibits prospective student-athletes from discussing potential NIL opportunities with schools and collectives prior to enrolling.”

This includes restrictions on negotiating with collectives and reviewing NIL offers prior to making enrollment decisions, which the states argue do not allow student-athletes to “adequately consider the full scope of NIL-related services a school might offer upon enrollment.”

“Student-athletes generate massive revenues for the NCAA, its members, and other constituents in the college sports industry—none of whom would dare accept such anticompetitive restrictions on their ability to negotiate their own rights,” Mr. Skrmetti said in a press release. “Student-athletes shouldn’t be left behind while everyone else profits from their achievements.”

The attorneys further allege beyond hurting student-athletes, the enforcement of these rules violates competition in the free market.

“The NCAA has entered into an illegal agreement to restrain and suppress competition in the relevant markets through the adoption and enforcement of the NIL-recruiting ban,” the lawsuit stated.

They also allege that the NCAA and its member institutions have engaged in an “illegal horizontal group boycott” against prospective student-athletes who contract and negotiate NIL agreements with collectives.

“The group boycott/refusal to deal encompasses the NCAA and its members’ concerted acts to restrict prospective college athletes from negotiating NIL deals with collectives and from ultimately being fairly compensated for the use of their NILs in the United States and its territories and possessions, in violation of section 1 of the Sherman Act,” the suit states.

They also allege consumer harm as a result of the reduced competition among Division I schools.

“The NIL-recruiting ban yields few, if any, procompetitive benefits in the relevant markets to the NCAA’s member institutions, NIL entities, college athletes and prospective college athletes, or consumers of NCAA athletics contests.”

The attorneys general request various forms of relief, including a court order declaring the NCAA’s NIL-recruiting ban a violation of the Sherman Act and preliminary and permanent injunctions against enforcing the ban.