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SDF’s Collegiate Sports Practice Group Alert: Takeaways from NACDA

June 20, 2024 SDF’s Collegiate Sports Practice Group Alert: Takeaways from NACDA

Takeaways from NACDA

Now that we have all returned to the real world from our time in Las Vegas, it is an appropriate time to reflect on what we learned this year:

1. The world of collegiate athletics is generally unprepared for the new collegiate model. Although virtually every session of the conference focused on some aspect of the post-House settlement world, the sessions provided very few answers or the clarity universities will need to operate in the rapidly evolving post-House environment. Although some thought leaders have begun planning for the new model, most are taking a wait-and-see approach. This impractical approach will leave most athletic departments with just a few months after the House fairness hearing to make plans to share revenue and revamp their roster/scholarship model, each of which would typically be multi-year projects for college campuses. Universities and athletic departments need to be proactive in preparing for the new realities they will face following the House settlement and fairness hearing. Moreover, many A4 universities are missing a major opportunity to work with their conferences to help shape the terms on the settlement as it moves from term sheets to a full agreement.

2. College athletics needs new advisors. Most of the sessions lacked speakers with an understanding of the terms of the House settlement or the general workings of antitrust class actions. For example, some speakers spoke of student-athletes opting out of the future revenue sharing or bringing new antitrust actions if schools did not share the full 22% allowed by the settlement even though the injunctive relief class is brought under Federal Rule of Civil Procedure Rule 23(b)(2), which typically does not allow opt-outs and, in any event, the settlement only limits the NCAA and conferences from imposing a restraint that exceeds 22%. Universities need advisors who understand how antitrust class actions work to help them to plan for the post-House settlement world.

3. The traditional NCAA enforcement model is outdated. Sessions on NCAA enforcement and infractions topics, which traditionally garnered great attention at NACDA/NAAC, were not well-attended. The lack of focus on enforcement is a clear sign of how much more important NIL is currently for universities and an indicator of the widely held belief that the A4 may create its own enforcement mechanism. Not only is an extra-NCAA enforcement model expressly allowed by the House settlement, but the change is also a practical solution in a post-House settlement environment in which student-athletes at A4 schools could be receiving hundreds of thousands of dollars in revenue sharing. The bigger question will be how this new enforcement model will combine with current NCAA enforcement for cases that cover topics governed by both a new entity (e.g. NIL or benefits) and traditional NCAA enforcement (e.g. traditional financial aid, academics, or CARA, etc.).

4. Multimedia Rights providers such as Learfield and other college athletics businesses are “all in” on NIL-related services post-House settlement. The importance of pairing university marks with student-athlete NIL is increasing as we move towards a revenue-sharing plus market-based authentic NIL system. While many in college athletics were initially reluctant to dive into NIL, and many were very reluctant to pair University marks with student-athlete NIL, that wall has been fully torn down to allow universities to keep pace with the highly competitive marketplace of NIL compensation. Learfield and other industry leaders recognize this reality and are positioning their resources to take a very active role in the post-House settlement world. Universities should embrace industry leaders’ expertise in these areas and follow their lead in proactively planning for the future.

5. Congress needs to act, particularly on NIL compensation for international student-athletes. Now that the parties in House have done the heavy lifting of reaching an agreement, Congress should follow their lead and pass legislation to protect the future of college athletics. We have worked with many Senators and Representatives, and have found there to be a great deal of consensus on many of the key NIL-related issues, particularly avoiding student-athletes becoming employees. Nevertheless, given the divided nature of politics today, the chance of bipartisan legislation passing prior to the election is extremely unlikely, leaving just over 7 months to pass legislation before the new model starts. Congress’ failure to enact legislation governing NIL compensation is particularly problematic for international student-athletes on a student visa as the current workarounds are highly individualized, not guaranteed to be successful, and expensive to implement.

Please let us know if you would like to further discuss any of these issues or any other issues relating to the House litigation/settlement or NIL compensation. We are currently working with athletic departments, collectives and advising conferences to implement solutions and prepare for the post-House settlement market. Many changes need to be implemented now and schools need to be in constant conversations with their conference legal teams as the final settlement papers are prepared. Please let us know if we can assist your school or conference in preparation for a post-House settlement environment, or with any questions you have on these topics.

If you want to learn more about our thoughts on the House settlement, check out Jay Ezelle’s interview with Pete Nakos at On3 – How Judge Claudia Wilken could outline revenue sharing framework in House settlement – On3

Please Contact us with questions:

Jay Ezelle 205-868-6025 or

Daniel Feig 205-868-1844 or

Tabor Novak 205-868-6042 or

Clayton Bromberg 205-868-6084 or

Averie Jones 205-868-6043 or

This information is not intended to provide legal advice, and no legal or business decision should be based on its content. No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers. Read full disclaimer.
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