Under New NCAA Rules, Court-Enforced Contracts Are Still the Best Bet to Prevent Tampering
In reaction to the recent “no rules” environment in which certain NCAA member schools interfered with relationships between other universities and enrolled players, the NCAA plans to increase penalties against those it determines are guilty of tampering.
The latest move adds to mounting questions about how the NCAA will investigate claims, how long investigations will take, and what relief a victim university could expect to secure. It also raises concerns about how players and schools can protect their rights and their investments.
The Big Ten recently asked the NCAA to pause enforcement activity because in the "current framework," tampering rules "cannot be credibly or equitably enforced…." Several days later, the SEC commissioner commented that this issue “doesn't mean the NCAA should just stop. But the notion that a memo would be sent and that changes things when the NCAA is perceived as sitting on the sidelines, that's not a workable solution." The NCAA responded that it intended to continue its enforcement initiatives, and on April 1, its Division I Cabinet adopted new rules to address “ghost transfers.”
What the new NCAA rules change (and what they don’t)
The “ghost transfer” rules show an intent to penalize universities that enroll players who were not in the transfer portal at the time of transfer.
These rules, though mentioning significant “automatic” sanctions, do not purport to impact schools that induce an already enrolled player to enter the portal. As long as the player is induced to enter the portal before it closes, he can be contacted and negotiated with until he withdraws from it or transfers to another school (or thereafter if there is ongoing tampering). In the meantime, the school affected by the tampering remains out in the cold.
The new rules do address last year’s high-profile situation where Xavier Lucas transferred when the portal was closed. Lucas argued that he was free to transfer schools at any time, like any ordinary student, regardless of the existence of an NCAA-created transfer portal.
Possible pushback against the new rules
While stabilizing the stampeding transfer environment is a desirable objective, the new rules will likely face challenges claiming that they restrict movement of labor, reduce competition for talent and limit players’ opportunity to achieve optimal market value. It could be seen as a mandate, rigidly limiting transfers based on the circumstances of the transferee at the time of a two-week transfer window. This could produce the unintended effect of setting the NCAA up for additional challenges that the rules are commercially based, making them eligible for Sherman Act review.
Meanwhile, the clearer issue of legal tampering remains. The NCAA has signaled intent to create new rules for that as well, but there are rules against it already. As recognized by the Big Ten and the SEC, the issue is how they can be meaningfully enforced.
How could the NCAA work with the courts to address tampering?
The compensation allowed by the House settlement is provided to players pursuant to individual contractual agreements. Both parties to a contract have legally enforceable rights. One effective response to tampering is for schools to have thorough and binding contracts with players covering revenue sharing and institutional name, image and likeness (NIL) rights, including well-defined duties and periods of time, such as multiple seasons.
Then, any transfer by a player to play his or her sport during the contract term, whether in the portal or, as Lucas argued, like any other student can transfer, is a breach of the contract. This would support direct legal action and does not require an NCAA investigation. A valid contract also gives schools legal recourse against other universities that induce a player to breach their contract as tortious interference, for which punitive damages can usually be recovered.
While some schools have tried to recover from players under liquidated damages provisions in their contracts, Wisconsin’s suit related to the Lucas transfer is the first to assert claims directly against an allegedly interfering university. The suit is moving forward in state court, and soon, a jury will speak. At that time, the tampering university will discover whether its conduct was worth the cost.
For now, the NCAA remains in the middle of investigating and punishing tampering. Meanwhile, for over 200 years, the courts of the United States have been adjudicating breach of contract lawsuits. There is an opportunity here. The NCAA could work with the courts’ tried-and-true processes, leaving the fact-finding and financial damages phases to the courts and imposing its organizational sanctions based on court outcomes. This could make enforcement clearer, quicker, less burdensome for the NCAA, and more likely to discourage future tampering.
Please contact Tom Sullivan, Rhett Parker or any member of the Phelps sports team with questions or for advice and guidance.
