After Transfer Portal Dustups, Can Contract Enforcement Rein in College Football’s Wild West?

This season’s college football transfer portal may have closed, but the controversy it sparked is just beginning. Two high-profile surprises involving college quarterbacks highlighted the growing tension between player mobility and contractual obligations. It brought into focus several unresolved questions about the enforceability of player agreements and potential liability for schools and athletes.

Around Jan. 2, Demond Williams, a quarterback for the University of Washington, entered an agreement with Washington to return for next season in exchange for a reported $4 million. Days later, he announced his intent to enter the transfer portal and seek to transfer to another university, notwithstanding his recent Washington agreement.

News outlets reported The University of Washington was “prepared for a fight” to enforce William’s contract. Then, on Jan. 8, Williams announced he’ll be returning to play at Washington.

The portal concluded with a last-minute announcement by quarterback Darian Mensah, who last year transferred to Duke, enjoyed a successful year and had just agreed to return, of his intent to enter the portal and transfer. Duke has since sought an injunction against Mensah, so while these questions remain unanswered for now, a court’s decision could bring clarity to several scenarios that are showing up more and more in today’s college football environment.

Three Shifts Driving Today’s College Game

The college game today is buffeted by the winds of three forces:

1. 1. 1. The NCAA-created transfer portal
      2. The structure gained from the Alston decision, which allows payment to players in exchange for agreements related to their name, image and likeness (NIL), often with specific university-affiliated collectives
      3. The House settlement, which now requires colleges to share a portion of athletic revenue with players, compensating athletes who compete in sports at those schools

The NCAA implemented the transfer portal in October 2018, when a player could only be compensated related to his scholarship and faced limitations on his ability to move to another school. Then the House litigation was filed in 2020. The Alston case, which gave rise to NIL deals, was filed in 2014 and decided in 2019, though not ultimately resolved until the Supreme Court affirmed it in the summer of 2021. In less than five years, the compensation frameworks of college athletics completely changed and made the transfer portal an outdated concept.

How Player Mobility Moved From Four-Year Commitments to Open Markets

Before this shift, players were bound to a school once they signed their initial scholarship papers. They were not allowed to transfer without consent of their university, unless they sat out a year. Schools might also allow the player to transfer to a lower-division school. This exposed players with professional ambitions to significant risk, so they almost always remained at their original schools. 

With litigation proceeding in the courts, the NCAA created the transfer portal. It allowed players during certain periods each year to enter their names into the portal to receive transfer offers. Shortly after, the NIL decision came down from the Supreme Court. The portal provided an NCAA-sanctioned pathway for players and agents to leverage the financial benefits of NIL. It quickly began to fundamentally change the nature of talent procurement, but it also fast-tracked a level of uncertainty and risk that colleges had not planned for.

Today, colleges can enter into an agreement to pay players to enroll and play football. The usual term seems to be per season, much like the old scholarship structure, which was renewable annually and based on the school year. However, today, it appears that a player receiving payment pursuant to such an agreement can still enter the transfer portal and open negotiations with another school. This raises issues about the rules and limits on this practice.

The historical roster development process revolves around visits from high school recruits and public announcements of “commitments” on social media when a recruit makes his decision, though the agreement is usually finalized months later on a national signing day. This informal approach yielded several surprises this transfer portal season, when athletes announced agreements to transfer to one school, but jumped to another before the contract was formalized. It is unclear whether those moves came after an oral agreement was reached or whether any memorandum of terms was signed and certain administrative processes not yet completed. Colleges have responded to the uncertainty of this environment with varying approaches. 

Some have suggested that an antitrust exemption or other federal intervention and a collective bargaining agreement is required. This outcome will take time and cooperation of a divided Congress. Additionally, there may be limits on how well it can be implemented, since college athletes have limited tenures based on four years of eligibility and do not appear to slot well into the typical labor/management relationship.

Could Contracts and Courts Call the Next Play?

Parties could approach the entire endeavor as a matter of contract, which it is, on several levels, using courts to resolve contract issues should circumstances require. This is what nearly occurred with Williams and Washington. If the conflict hadn’t been resolved, it could have presented an opportunity for the courts to examine some of these contract questions, like:

• • • Was Williams a capable party with legal representation who, with full understanding and no improper influence, entered into a binding contract to receive financial benefits and perform services pursuant to the contract terms?
    • Did he misrepresent his intent to Washington in those negotiations and, if so, is he liable for damages incurred by the university?
    • If he entered into an agreement with another school, would the school also be liable for damages?
    • Was the contract between Williams and Washington enforceable, or did the university violate it such that Williams had the right to terminate it?

In other words, there would have been a trial of a contract lawsuit like any other that occurs daily in U.S. courts. A court decision on a case like this could help carve out a path for schools and players moving forward.

It is often said that college football is a business now, and entering, performing and enforcing contracts is something businesses do every day. Universities and their athletic departments should consider taking a more businesslike approach to engaging talent, especially at the transfer portal level, and rely less on approaches that rely on older NCAA concepts and trust in verbal commitments.

For example, when an agreement is reached with a player on terms of an agreement, it should be immediately formalized for the protection of both parties. While even oral agreements can be enforceable, parties can strengthen protections with written and signed deal points. This also allows a university to commit in writing that it will do what it has orally represented that it will do.

As to structure of a contract between player and university, one solution might be for each conference to develop a uniform agreement for its teams, such as an SEC- or Big Ten-approved document. However, that might create antitrust issues and allegations of collusion by schools in the conferences. In the current environment, it may be safer for each university to prepare its own contracts and act independently on its own behalf. 

What Should University-Player Contracts Include?

A school’s contract should include:

• • • The term of the agreement (will the contract last one year, two or three?)
    • Limited contingencies (such as approval of an NIL component by the NIL Clearinghouse and “no shop” clauses)
    • The compensation amount and payment schedule
    • Metrics for additional payments such as incentives
    • Requirements for participation in off-season training and other activities
    • Forfeiture or termination provisions in the event of disciplinary suspensions
    • Moral turpitude clauses and similar provisions present in most athletic contracts
    • Nondisclosure provisions
    • Exclusive dealing requirements during the contract term
    • Waiver of rights to enter the portal while the contract is in force, which might be identified as separately bargained for and compensated

How Contracts Could Level the Playing Field

The NCAA might wish to be involved in the contracting process, but this could provide ammunition for an antitrust challenge. The cleaner alternative may be for each university to develop its own contract, and for the conferences and the NCAA to mandate in their rules and bylaws (or similar contracts which govern the members of a conference) that all member universities and conferences abide by and respect the binding contracts of the others, which is already the law. Interference with such contractual relationships could be punished by the conference or the NCAA by substantial fines, forfeiture of wins, suspension of the offending university from sanctioned play, forfeiture of television revenues, or similar sanctions.

However, the evidence to support imposition of such sanctions would be provided by the outcome of legal proceedings, not by NCAA-administered investigations, some of which have been the subject of judicial criticism. This way, if a school interferes with valid contractual relations between another university and its player, that school would take on substantial risks. A loss in court could have painful consequences to the offending university or its representatives, including a verdict imposing money damages. 

Disputes would be resolved between the schools and the parties to the contract as it might arise, with suit likely filed in the federal court district where the school is located and the contract would have been performed. Contract law tends to be very similar throughout the states, and discovery rights and subpoena power of the courts would keep lawsuits moving and prevent stonewalling by any party. Players could enforce their contracts the same way.

The real “transfer portal” would then be determined by when the contract between university and player expires or is legally terminated. That timeline would determine when that player is eligible to “transfer,” much like free agency. The existing portal could be repurposed as a registry maintained by the NCAA. A player could still enter his name, solicit offers and represent that he is free from contractual arrangements with or obligations to another university. Then, a university seeking his services could conduct due diligence and confirm the player’s statement. This approach could be a fairly simple process and seems to create an open market, police bad actors and promote order. 

It is often stated that the sport today is the Wild West. If that is the case, the parties should circle their wagons and protect themselves. Thorough contracts prepared by capable lawyers, and their aggressive enforcement in the judicial system, if necessary, can begin to restore stability.

Please contact Tom Sullivan, Rhett Parker or any member of the Phelps sports, media and entertainment team with questions or for advice or guidance.