After what was reported as a “holdout” for more NIL money, University of Tennessee quarterback Nico Iamaleava left the Vols program last week and is expected to enter the transfer portal when it opens on Wednesday.
Iamaleava’s departure is emblematic of a college sports labor market that doesn’t quite work.
It’s uncomfortably situated between pro and amateur sports. It pays lip service to the lofty aspirations of higher ed but doesn’t want to interfere with the revenue engine known as big-time college sports. College leaders don’t want to recognize the athletes as employees, but that comes at a cost: NCAA attempts to regulate the market in arguably logical ways swiftly face antitrust lawsuits. The players, after all, can’t unionize as non-employees and thus can’t collectively bargain rules with the NCAA that would be immune from antitrust scrutiny.
Iamaleava, 20, signed with Tennessee in 2022 and landed an NIL contract with a collective worth led by Vols boosters that was reportedly worth as much as $8 million. Last season the former five-star recruit played well, throwing for 2,616 yards with 19 TD passes against only five interceptions. Media reports indicate Iamaleava wanted his yearly NIL pay raised from $2 million to $4 million. When those talks failed, he walked.
NIL isn’t supposed to be pay-for-play and the transfer portal isn’t supposed to be free agency. But they appear to be operating in that way in Iamaleava’s situation and that takes on legal significance in making sense of the fallout.
NIL is the college sports’ moniker forathletes being paid for the commercial use of their right of publicity. This right is captured by states’ laws and protects against using another’s persona for profit. That includes name, image and likeness but also voice, signature, nickname and other unique personal aspects. The right of publicity is foundational to endorsement, influencing and sponsorship deals in pro sports since those deals pay an athlete for use of their persona; a failure to pay them can lead to a misappropriation lawsuit.
Former UCLA basketball star Ed O’Bannon brought a groundbreaking lawsuit in 2009 over the use of his and other former college basketball players’ likenesses in video games without their permission and without paying them. His victoryplayed an instrumental rolein states adopting NIL statutes—statutes that led the NCAA in 2021 to drop eligibility rules that prohibited players from signing endorsement (NIL) deals.
But since 2021, NIL has often morphed into pay-for-play, at least at the highest levels of college sports. Collectives have offered to pay recruits to pick their school. The offer is couched as “NIL,” and might involve autograph sessions and meet-and-greets consistent with the right of publicity, but features a monetary value pegged less to the athlete’s persona and more to landing the recruit (and, accordingly, ensuring that rival teams don’t land that recruit). In other words, NIL primarily serves as a vehicle to pay the player to play for a school, akin to a signing bonus or employment contract in pro sports.
The NCAA’s attempt to regulate NIL collectives hit a roadblock in a case that involved Tennessee’s program and its NIL collectives. Last year, U.S. District Judge Clifton Corkerenjoined the NCAAfrom enforcing rules that attempt to regulate NIL collectives. He did so in a case brought by the attorneys general of Tennessee and Virginia and the judge found those restraints to constitute price fixing.
The transfer portal, meanwhile, is ostensibly designed to facilitate the transfer of a student athlete to another college, where the athlete remains a student and must meet academic requirements. Notice the word “student.” The portal is not supposed to move athletes, but rather move athletes who are also college students and whose credits transfer consistent with academic rules. When the NCAA used educational objectives to justify limitations on athletes who eyed more NIL money by transferring for a second (or third or fourth) time, a federal judgewasn’t convinced. Transfers are now unlimited even if they sometimes appear to have little or nothing to do with college education. It’s likely only a matter of time before the transfer portal itself faces antitrust litigation. The portalprobably would havefaced an antitrust lawsuit earlier this year had former University of Wisconsin cornerback Xavier Lucas been unable to join the University of Miami.
Iamaleava has substantial leverage. If he were sued for reneging on a collective-backed NIL deal, he could argue the contract is unenforceable. Tennessee’s NIL statuteexplicitly forbidscompensation “provided in exchange for athletic performance or attendance at an institution.” Iamaleava could insist he was mainly paid to play for the Vols, and the contract should be deemed voidable at his discretion.
In fact, Iamaleava has more bargaining leverage than he would if he were a University of Tennessee employee bound to an employment contract. In a world where college athletes are university employees, athletes could be contractually bound to remain at a school. Iamaleava likely also has more leverage than if he would as a member of a college athlete union that accepts, as part of a collective bargaining agreement, restrictions on the transfer portal. Remember, those restrictions would be exempt from antitrust scrutiny since they are collectively bargained. But because college athletes aren’t recognized as employees, they can’t form a union and there’s no antitrust exemption otherwise.
It’s clear colleges don’t want college athletes recognized as employees. But that position has engendered a world where a college athlete can legally switch schools, repeatedly, for more money and nothing can stop him or her without sparking antitrust litigation.
The situation will likely change, to some degree, if U.S. District Judge Claudia Wilken grants final approval to the settlement between the NCAA and current and former D-I athletes represented by theHouse,CarterandHubbardantitrust litigations.
The settlementwould authorizecolleges to directly pay athletes via a share up to 22% of the average power conference athletic media, ticket and sponsorship revenue with their athletes, with $20.5 million expected to be the initial annual cap. The settlement also entails independent review and potential arbitration over NIL deals, including deals with collectives, to ensure they reflect market value and aren’t concealing pay-for-play arrangements. How well that oversight plays out in the real world and whether it can withstand potential litigation, including by opt-outs and future college players who don’t join the settlement, remains to be seen. A system based on employment and collective bargaining would likely be on much firmer grounds.
For now, expect to see college sports continue to resemble pro sports except without the smart structures that make pro leagues work.
