NCAA Settles Lawsuit with Tennessee, Drops Recruiting NIL Ban

Tennessee’s legal fight against the NCAA’s NIL rules has ended in victory, as a settlement permanently removes recruiting restrictions for athletes.

Tennessee Volunteers quarterback Nico Iamaleava (8) throws during the second half of the College Football Playoff first round game against the Ohio State Buckeyes at Ohio Stadium in Columbus on Dec. 22, 2024. Ohio State won 42-17. / Adam Cairns/Columbus Dispatch / USA TODAY NETWORK via Imagn Images

The NCAA has once again been forced to retreat in its ongoing battle to regulate name, image, and likeness (NIL) rights, this time settling a lawsuit with the attorneys general of Tennessee, Virginia, and several other states.

The agreement, which was announced in a federal court filing on Friday, effectively cements a permanent injunction against the NCAA’s ability to enforce NIL restrictions on recruiting—marking another major blow to the organization’s already diminished control over college athletics.

The settlement, which must be finalized by March 17, prevents the NCAA from reviving its NIL recruiting ban and guarantees that college athletes will retain the ability to negotiate NIL deals as part of their recruitment.

The case, originally filed in January of 2024 by Tennessee and Virginia, was sparked by the NCAA’s investigation into the Tennessee Volunteers recruitment practices, specifically surrounding a private flight used to transport quarterback Nico Iamaleava to Knoxville.

The investigation, which was seen as a direct challenge to Tennessee’s booster-led NIL efforts, escalated into a broader legal battle over the NCAA’s authority to police NIL compensation.

Tennessee Attorney General Jonathan Skrmetti, a vocal critic of the NCAA’s enforcement tactics, declared victory, stating to the Knoxville News Sentinel, “Last year, we blocked the NCAA’s unlawful enforcement against Tennessee students and schools, and now this settlement in principle lays the groundwork for a permanent solution.”

The federal courts have been clear on the NCAA’s dwindling authority. In February 2024, U.S. District Judge Clifton Corker issued a preliminary injunction, preventing the NCAA from enforcing its NIL restrictions. The ruling was a legal earthquake, confirming that the NCAA’s prohibition on NIL payments as recruiting inducements likely violated federal antitrust law. With the settlement, that preliminary injunction will now become permanent.

This outcome not only protects NIL recruiting but also weakens the NCAA’s ability to control athlete compensation in the future. Just as importantly, it clears a path for the upcoming House v. NCAA settlement, a sweeping antitrust resolution set to bring revenue sharing to college sports.

Under that agreement, schools will be able to distribute up to $20.5 million per year in direct payments to athletes, but NIL collectives will remain an integral part of the recruiting process. The NCAA had sought to impose stricter rules on booster-funded NIL efforts, but with this new settlement, those restrictions may be dead in the water.

With another legal loss on its record, the NCAA finds itself at a crossroads. Its enforcement power has eroded to the point of near irrelevance, and the courts have shown little patience for its repeated attempts to impose restrictions on player compensation.

For universities and athletes, the message is clear: The power has shifted. Schools no longer need to tiptoe around NIL discussions, and recruits can openly negotiate deals without fear of retroactive punishment. The NCAA, once the gatekeeper of college athletics, has been reduced to a bystander as the landscape continues to evolve around it.

With the settlement finalized, all eyes now turn to the House v. NCAA case, where the next stage of college sports’ transformation awaits. If Friday’s settlement proved anything, it’s that the days of the NCAA dictating terms to athletes and schools are over.

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