Ethics CasesSport

Cases · NCAA Division I · 2024–2025

Tennessee and Virginia v. NCAA: The NIL-Recruiting Ban Falls

The NCAA's interim NIL policy let athletes earn from their name, image and likeness from 2021, but its guidance treated booster-funded collectives as boosters and barred them from NIL talks with recruits and transfers before they committed to a school. In January 2024, as the NCAA investigated the University of Tennessee, Tennessee and Virginia sued under antitrust law. In February 2024 a federal judge found the ban likely unlawful and enjoined it, and the NCAA paused NIL investigations. Florida, New York and the District of Columbia later joined, and in March 2025 the NCAA agreed to a consent judgment that permanently ended the ban and barred penalties for conduct covered by the injunction. Enforcement of booster NIL deals later passed to the conferences' College Sports Commission.

By Tanner Simkins, editor

Timeline

  1. The NCAA's interim NIL policy takes effect.
  2. NCAA guidance classifies NIL collectives that support one school as 'boosters,' barring their recruiting conversations.
  3. An NCAA investigation of Tennessee's NIL practices prompts the states to act.
  4. The NCAA announces its first major NIL-related recruiting violation case, against Florida State football.
  5. The attorneys general of Tennessee and Virginia sue the NCAA under the Sherman Act.
  6. The court denies a temporary restraining order for lack of irreparable harm, then hears argument on Feb. 13.
  7. Judge Clifton Corker grants a preliminary injunction against the NIL-recruiting ban.
  8. The NCAA and the states announce a settlement in principle.
  9. The court enters a consent judgment and permanent injunction.
  10. The House settlement takes effect, shifting NIL enforcement to the conferences' College Sports Commission.

The ethical issues

  • Can a governing body enforce rules that a court finds likely unlawful?
  • Protecting young athletes from exploitation vs. denying them negotiating leverage.
  • States suing on behalf of their own universities while also regulating them.
  • Retroactive penalties: whether athletes and schools should be punished for conduct permitted by a court order.
  • Competitive balance vs. free competition for talent.

Stakeholders

StakeholderInterests & obligations
Recruits and transfer athletesKnowing their NIL value and negotiating before choosing a school.
NCAAPreventing NIL deals from becoming recruiting inducements and keeping enforceable rules.
University of TennesseeAvoiding penalties in the NCAA's investigation.
State attorneys generalProtecting residents and state universities; enforcing antitrust law.
NIL collectives and boostersFreedom to offer deals to recruits.
Less wealthy schoolsCompeting for talent against richer programs and collectives.

The case

When the NCAA allowed college athletes to profit from their name, image and likeness in July 2021, it opened a market almost overnight. It also tried to stop that market from becoming a way to buy recruits. The rule it relied on, a ban on NIL negotiations between booster-backed collectives and athletes who had not yet committed to a school, did not survive its first serious court test. The challenge came not from athletes or schools, but from two states.

Background

As the federal court later recounted, fans, alumni and businesses quickly formed NIL collectives to arrange deals for a particular school’s athletes; the first known collective launched two months after the interim policy took effect. In May 2022, NCAA guidance classified collectives whose mission was to support a specific school as “boosters.” Boosters were barred from “recruiting conversations” and from promising NIL deals contingent on enrollment. In practice, prospective athletes and those entering the transfer portal could not discuss NIL deals with collectives until they had committed to a school.[1]

In January 2024, the NCAA was investigating the University of Tennessee’s NIL practices. According to reporting by The New York Times cited by On3, the inquiry centered on a booster-funded private plane used to fly a top quarterback recruit to Knoxville. Tennessee’s chancellor and athletic director publicly backed legal action against the NCAA.[4] On January 31, 2024, the attorneys general of Tennessee and Virginia sued the NCAA as parens patriae, on behalf of their residents, alleging that the “NIL-recruiting ban” was an illegal agreement restraining competition in the Division I labor market.[1][4]

The states’ complaint

The 20-page complaint framed the case around the Supreme Court’s 2021 decision in NCAA v. Alston, which held that NCAA compensation rules are “subject to the Sherman Act” and the rule of reason. In the states’ telling, the NCAA had accepted after Alston that it could no longer ban NIL pay, and was now “trying to stop that market from functioning.” The complaint offered an analogy: the ban was “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.”[8]

The states also cited their own laws. Tennessee’s NIL statute protects athletes’ right to earn compensation at “fair market value” and bars athletic associations, including the NCAA, from interfering with that right. Virginia’s 2022 law contains similar protections. The complaint said the two states were suing to protect more than 250,000 high-school and college athletes.[8]

The timing, the complaint argued, was what made the case urgent. On January 10, 2024, the NCAA said that schools and collectives “would continue to be prohibited from engaging in NIL discussions with prospects or potential transfer student-athletes.” On January 11, it announced its first major NIL-related recruiting case: a Florida State assistant football coach had facilitated a contact between a transfer prospect and a collective’s chief executive. The penalties included two years of probation and a reduction in football scholarships, which the complaint summarized as “All for giving a prospective student a ride to a meeting.”[8] The complaint also pointed to the regular signing period for Division I football, which opened on February 7, 2024. That window, it said, was when recruits had the most bargaining power, and under the ban they would have to “commit before knowing what NIL opportunities might be available.” The states cited an industry report that collectives accounted for nearly 75% of all NIL compensation, so barring talks with collectives cut recruits off from most of the market.[8]

The rules and governance

The case turned on Section 1 of the Sherman Act, which bars unreasonable restraints of trade. Courts judge NCAA rules under a “rule of reason”: the challenger must show a substantial anticompetitive effect; the NCAA must then offer a procompetitive justification; and the challenger can respond by showing that less restrictive means would achieve the same benefits.[1] A second rule mattered too. The NCAA’s “Rule of Restitution,” Bylaw 12.11.4.2, lets it penalize athletes and schools that act under a court order if the order is later reversed, which can discourage schools from relying on injunctions.[1][2]

The injunction

The court first denied the states a temporary restraining order, finding no irreparable harm. After further briefing and a February 13 hearing, Judge Clifton L. Corker granted a preliminary injunction on February 23, 2024.[1]

He first addressed whether antitrust law applied at all. Earlier Sixth Circuit precedent had called NCAA recruiting rules non-commercial, but the judge said that decision predated NIL: “Agreements between NIL collectives and student-athletes are undoubtedly commercial transactions.” He described the ban as “an agreement among competitors to refuse to discuss prices” with recruits until they had chosen a school, which suppresses negotiating leverage and “knowledge of value.”[1]

He then rejected each of the NCAA’s justifications. On preserving amateurism, he wrote that the NCAA “fails to show how the timing of when a student-athlete enters such an agreement would destroy the goal.” On competitive balance, he said the argument “is not devoid of logic,” since “top talent will likely follow the money,” but that spreading competition by restraining trade “is precisely the type of anticompetitive conduct the Sherman Act seeks to prevent,” and that any special exemption is a matter for Congress. On protecting vulnerable recruits from exploitative deals, he found the ban more likely to “foster economic exploitation” by suppressing their leverage.[1]

The states themselves, he found, had shown no imminent harm. Their fears of an NCAA “hammer” were “theoretical and chimerical,” and NCAA counsel denied knowing of pending investigations. The harm to athletes was different: without a free market, “student-athletes simply have no knowledge of their true NIL value,” and the short windows in which recruits and transfers choose schools could not be recreated later. The court enjoined the NCAA from enforcing any rule that barred athletes from negotiating NIL compensation with third parties, including collectives, and from applying the Rule of Restitution to that conduct.[1]

Settlement

In the following months, NCAA President Charlie Baker halted NIL investigations, according to On3.[4] On January 31, 2025, the NCAA and the states announced a settlement in principle. Tennessee Attorney General Jonathan Skrmetti said the states had “blocked the NCAA’s unlawful enforcement against Tennessee students and schools,” and the NCAA said the deal would not obstruct the pending House settlement.[4] By then Florida, New York and the District of Columbia had joined the suit.[2]

The consent judgment, entered March 21, 2025, made the injunction permanent.[5][2] The NCAA may not enforce the NIL-recruiting ban, apply the Rule of Restitution to conduct taken in reliance on the injunction, or bring any adverse action, “including penalties already negotiated but not yet assessed,” over conduct the injunction covered. It may not revive the ban through new rules or interpretations. For five years, it must post proposed Division I NIL rules at least 30 days before a final vote and meet with the states if they object.[2] The NCAA admitted no wrongdoing.[2] Its guidance stressed that pay for athletic performance or for work never performed remained prohibited.[3]

Aftermath

The House settlement, approved in June 2025, moved enforcement of booster-funded NIL deals away from the NCAA. Baker wrote that the NCAA would “increasingly shift our focus… away from enforcing rules prohibiting and limiting financial benefits,” leaving that job to the conferences.[6] Their College Sports Commission now reviews deals from collectives and other associated parties for a valid business purpose and fair compensation, a system that has drawn its own legal challenges.[7] In a 2025 concurrence, Sixth Circuit Judge Amul Thapar listed the permanent end of the NIL-recruiting ban among the developments with “market-altering effects” on college football.[5]

The core dilemma

Should a sports governing body be able to restrict when and how young athletes negotiate payment, in order to keep money from driving recruiting and to protect competitive balance, if those restrictions suppress the athletes’ bargaining power and may violate antitrust law? And who should decide: the NCAA, the courts, the states or Congress?

Competing values

  • Protection vs. autonomy: Shielding 17- and 18-year-olds from pressure and exploitative deals versus respecting their right to know and negotiate their value.
  • Competitive balance vs. free competition: Spreading talent across schools versus letting the market work.
  • Rule enforcement vs. legality: The NCAA’s duty to enforce its rules versus the law’s limits on what those rules can do.
  • State advocacy vs. neutrality: States acting for their residents and universities versus the appearance of protecting a home school under investigation.

Strongest arguments

For the states: The ban was an agreement among competing schools not to discuss price with recruits until they had committed, the kind of restraint antitrust law treats as anticompetitive on its face. It kept athletes from learning their worth during the brief windows when their leverage was greatest, and the NCAA’s justifications either failed or could be met by less restrictive rules.[1]

For the NCAA: Without the ban, NIL deals would become recruiting inducements funded by boosters, effectively pay-for-play. Wealthier programs would hoard talent, competitive balance would erode, and inexperienced recruits would be exposed to pressure and bad contracts. The NCAA’s ability to set these rules, it argued, was essential to college sports as a distinct product.[1]

Applying the frameworks

Justice & fairness (Rawls)

Behind a veil of ignorance, would you accept a rule that limits recruits’ bargaining power in the name of competitive balance? An athlete from a low-income family might see the ban as denying fair value for their labor. Someone imagining themselves at a small school might value balance more. Rawls’s difference principle would ask whether the restriction benefited the least advantaged, and the court’s finding suggests it mostly benefited the schools.

Rights-based

From a rights perspective, athletes own their name, image and likeness and have a claim to negotiate its use freely. The NCAA’s protective rationale is a form of paternalism: restricting choices for the chooser’s own good. Rights-based reasoning asks whether that protection respected the athletes’ autonomy, or whether less intrusive safeguards, such as disclosure, education or agent regulation, would have served them better.

Utilitarian

A utilitarian would weigh the benefits of an open market (athletes’ earnings, informed choices, economic activity) against the possible costs (escalating booster spending, less competitive balance, pressure on young athletes, and weaker oversight). The injunction and settlement shifted that balance toward the market, and the House settlement’s clearinghouse was a later attempt to recover some of the lost controls.

Walk it through: the Simple Decision Model

  1. Spot the issue: An NCAA rule restricts recruits’ NIL negotiations, potentially suppressing their earnings in violation of antitrust law.
  2. Gather facts: What the rule prohibits, how it is enforced, its effect on athletes’ leverage, and evidence for its claimed benefits.
  3. Test options: Keep and defend the ban; narrow it; replace it with disclosure and contract protections; leave NIL to the market; seek legislation.
  4. Check codes and law: NCAA bylaws and guidance, the Sherman Act and the rule of reason, state NIL laws, and court orders.
  5. Decide and document: Adopt rules with clear, evidence-based justifications and document why less restrictive options would not work.
  6. Communicate and follow up: Tell schools and athletes what is allowed, refrain from punishing reliance on court orders, and monitor effects on recruiting and athletes’ welfare.

What’s settled and what’s contested

  • Settled: The court found the ban likely unlawful and enjoined it on February 23, 2024; the NCAA agreed to a consent judgment that permanently ended it on March 21, 2025, without admitting wrongdoing; pay-for-performance remains prohibited under NCAA rules.[1][2][3][5]
  • Contested: whether the ban was ever necessary to protect competitive balance or athletes; whether the states acted out of principle or to protect a home university; whether the College Sports Commission’s system reintroduces similar restraints in a different form.

Why this case matters

The case marked the point at which the NCAA effectively lost its power to police NIL payments from boosters. It shows how rules adopted through interim guidance can collapse under legal scrutiny, how state governments became players in college sports governance, and why the next enforcement system was built on a court-approved settlement rather than NCAA bylaws alone.

Key terms

Myth of amateurism
The critique that athletes generate large revenues without the pay or labor protections other workers have. Tested by justice, consent and dignity.
Commercialization
The process of turning sport into a product and a business enterprise, with profit pressures that can compete with principle.
Agency
An athlete’s ability to make decisions and act independently about their body, career and voice.
Paternalism (hard and soft)
Restricting someone’s choices for their own good. Hard paternalism overrides competent, informed adults; soft paternalism steps in when information or autonomy is compromised.
Institutional accountability
Structures that make a sport organization explain its decisions and face consequences: clear authority, transparency, appeals, independent oversight and enforcement.
Due process
Fair procedures before a sanction: notice, a chance to respond, an impartial decision-maker and a right of appeal.

Definitions from the Ethics Cases glossary.

Discussion questions

  1. Was the NIL-recruiting ban a reasonable protection for young athletes or a restraint that kept them from knowing their worth?
  2. Should a state attorney general sue a national body in a dispute involving a university in that state? What conflicts arise?
  3. The judge said competitive balance is 'a legitimate and important endeavor' but not a valid reason to restrain trade. Do you agree?
  4. Is it fair for the NCAA to agree never to punish conduct that occurred under the injunction?
  5. Does the College Sports Commission's approach solve the problem the NCAA's ban was meant to address?

Sources

  1. State of Tennessee v. NCAA, No. 3:24-cv-00033, Memorandum Opinion and Order (Feb. 23, 2024) — U.S. District Court, Eastern District of Tennessee (via CourtListener)
  2. Joint Motion for Entry of Consent Judgment and Permanent Injunction (Mar. 17, 2025) — New York State Attorney General
  3. Consent Judgment on NIL Opportunities for Prospective and Transferring Student-Athletes — NCAA
  4. NCAA settles NIL-driven lawsuit with Tennessee — On3
  5. Pavia v. National Collegiate Athletic Association, No. 24-6153 (opinion) — U.S. Court of Appeals for the Sixth Circuit
  6. A Letter from NCAA President Charlie Baker (June 6, 2025) — NCAA
  7. Class-action lawsuit filed against NCAA, power conferences and College Sports Commission over House settlement — Yahoo Sports
  8. State of Tennessee v. NCAA, No. 3:24-cv-00033, Complaint (Jan. 31, 2024) — U.S. District Court, Eastern District of Tennessee (via CourtListener)