As the college sports world eagerly awaits a final approval for the historic House v. NCAA settlement, the focus has centered on how this new revenue-sharing world will be policed.
The key, according to those directly involved in shaping this new era of college athletics, is a collective buy-in on following the rules and not looking to break a system before given time to stabilize. The penalties for disobeying could be severe.
In a yet-to-be-finalized and evolving discussion around potential penalties, universities could face anywhere from fines to suspension to even conference expulsion if they do not follow the rules of the new enforcement system, including agreeing not to sue the new entity, according to those directly involved in that conversation.
Yahoo Sports first reported on expulsion as a possible enforcement penalty to schools that don’t obey the rules.
“We’re trying to structure in a way that there is significant incentive to follow the rules and significant disincentive if you don’t,” says one source directly involved in the process.
Confusion, frustration mount
The language was included in the newest draft of a membership agreement for the newly formed College Sports Commission, which will be tasked to police and enforce NIL and revenue-sharing rules tied to the House settlement terms. Several drafts of the membership agreement have been authored in recent months, but the latest document included stiffer language. Many athletic directors within the power conferences were not surprised by the harsh penalties, though some were unaware of its existence.
“While we have heard as ADs that the penalties would be steep, this is the first I had seen the expulsion and no-lawsuit pledge,” an ACC athletics director told CBS Sports.
At the Big Ten’s spring meetings in California this week, it was a hot topic of discussion Tuesday in a joint meeting of Big Ten conference officials, athletic directors and coaches. Very few people, even high-ranking athletics officials, have seen a full draft of what will be included in the new entity, eliciting some confusion and frustration in light of media attention around the latest draft. It prompted plenty of questions from administrators and coaches that boiled down to: What exactly are we signing up for?
Enforcement agreement aims to end college sports’ ‘wild west’ era, but stiff legal battles are sure to follow
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What’s the purpose of College Sports Commission?
In essence, the CSC is set to become a smaller, more agile version of the NCAA’s enforcement arm. The new organization will be led by a CEO expected to have no ties to collegiate sports and with a legal/regulatory background. The CEO will have final say on settlement-related items and enforcement of fair market value NIL deals of greater than $600, according to sources, and could be named shortly after the House settlement is approved; multiple insiders believe the eventual hire has been zeroed in on but cannot be officially brought on board yet.
Scrutinized NIL deals would be subject to arbitration, and if the third party sides with the CSC’s findings, players and universities would face penalties – the severity of which is not yet entirely known. The new CEO is expected to have considerable latitude to penalize as they see fit, according to those familiar with the situation, and won’t be boxed into a strict penalty structure that must be followed.
An athlete who accepts a deal flagged by a Deloitte-administered clearinghouse called “NIL Go” as “pay for play” and does not meet a fair market value range would be ruled ineligible. While the NCAA’s investigations typically take months to years, the CSC is expected to conduct and close investigations in a considerably more timely manner. The hope is that the process will be more transparent, too, and give schools more opportunity to have a say in it.
Meanwhile, the membership agreement for the CSC has prompted questions about its legality in a system that has been under attack in the court system for years, from the O’Bannon case to Alston to House, which was filed in 2020 and helped lead to the implementation of NIL regulations from the NCAA in 2021. Those regulations, however, have proven toothless in the face of legal challenges and legislation in more than 30 states. The question that arises now anytime new rules are introduced: Is this legally enforceable?
The thinking among college leaders is the CSC will have some legal protection because of the House settlement. Current players who opt into the settlement are bound to the terms, which include the formation of the CSC as an enforcement entity. That entity, as explained in the settlement terms, is required to install a binding arbitration process, which players are required to follow as members of the settlement. Essentially, the athletes cannot sue over a deal flagged as not meeting fair market value.
“Unless the new state laws specifically create a new legal claim that gives them right to sue, which I don’t think they do, the players’ legal claims would still be wiped out by the settlement,” said Sam Ehrlich, a sports law professor at Boise State. “And even if the rules do allow players to sue, there’s a strong argument that the settlement also blocks similar claims under state law since it’s a similar field of law.”
States gearing up for the chaos
Tennessee, which successfully sued to stop the NCAA’s enforcement of NIL-related “pay to play” rules, has already passed a state bill that bars its schools from participating in rules that restrict athlete pay and prevents the NCAA from penalizing it for following its state law. That bill has roiled other power conference leaders and runs contrary to the hope that the House settlement can bring some level of stability after years of unregulated spending and player movement has upended college sports.
A bill introduced in the New Jersey Senate on Tuesday also intends to protect universities and athletes from athletics associations pursuing punishment and would allow those athletes to seek legal remedies against the CSC or NCAA if they are penalized by the association(s). Arkansas passed similar legislation earlier this year, including protections from open records laws and punishment from athletics associations, but not if a university has “expressly agreed” to be a member of that athletic association. In other words, Arkansas universities and players will be required to follow the CSC’s rules and regulations if the university is a member of the association.
CEO to oversee college sports rules enforcement after House v. NCAA settlement is finalized, per report
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Questions, skepticism over legal process
There has been considerable industry skepticism on whether the new fair market value-driven clearinghouse would hold up to a legal challenge. As player compensation went through the roof over the last calendar year, a combination of front-loaded NIL deals with the impending revenue share money, would salaries really come crashing down to Earth if a school only had $15 or so million to spend on football? Multiple Power Four ADs recently expressed concern to CBS Sports that schools would look for loopholes and continue to spend “pay for play” NIL money to get around the cap. With football rosters that have reached upwards of $30 million, according to industry sources, they questioned whether they’d abide by a cap and clearinghouse system that would halve that number.
That, according to those involved in the House settlement and enforcement process, would defeat the entire purpose.
“We all signed off on the settlement, we all signed off on the framework,” said a source directly involved in the process. “I don’t think it should be particularly surprising that we’re going to have membership rules and regulations that say you have to follow our rules and regulations. If you don’t, then there will have to be consequences. You can’t have people saying they’re going to come together for a stable framework with rules and regulations and just simply choose not to follow the rules and regulations.”
Within that is an emphasis that the Power Four conferences named as defendants in the House lawsuit — the ACC, Big 12, Big Ten and SEC — are voluntary membership organizations. The belief, among those involved at the Power Four level, is that membership rules have legal precedence for being upheld and wouldn’t subject the organizations to the type of antitrust issues that have typically been a loser for the NCAA and others. Naturally, there is confidence amongst the agreement’s authors that it can be enforced and stand up to legal scrutiny.
Critics, including some prominent sports law attorneys, believe it will spur another avalanche of lawsuits. It could evoke intervention from state attorneys general as the NCAA has faced on multiple issues. There are also questions about whether state immunity would provide protection to universities.
Still, this is a line in the sand that those involved feel has to be made. They know they will be sued, most likely on Title IX, after revenue share goes into effect, but the threat of lawsuits shouldn’t supersede the need to give the settlement a real chance to be successful.
Every university that has opted into the settlement needs to follow the rule, they say.
And if they don’t want to — they can seek membership elsewhere.
Mark Hillard
Rebecca Howard
Elmer Polite
Rick Schlesinger
Corey Taylor
Sheila Wiggins
