As the April 7 court hearing in the House vs. NCAA landmark settlement case approaches, schools across the Power Four, Group of Five, and "basketball-centric" conferences are working diligently to define what athlete contracts will look like when the new "grant of rights" structure takes effect in July 2025. Just as name, image, and likeness (NIL) laws vary widely from state to state, these new memorandums of understanding (MOUs) being drafted by colleges also differ significantly, reflecting each institution's unique priorities and financial strategies.
What Rights Will These Contracts Define?
Emerging reports indicate that schools are focused on codifying their rights to "sublicense" an athlete's NIL value. This includes leveraging NIL rights for sponsorship deals, increasing media rights value, and future projects involving artificial intelligence. By securing these rights, universities create an enticing environment for top recruits, increase alumni and booster contributions, and enhance their athletic department's long-term financial outlook.
These contracts, which use language such as "irrevocable rights" to photographs and sound clips, are designed to ensure universities can adapt and modify athlete content for future use. This has profound implications for long-term revenue streams, potentially lasting in perpetuity, and could significantly impact how schools monetize their athletic programs.
The Transfer Portal and Post-Eligibility Considerations
A crucial aspect of these agreements pertains to athlete transfers and post-eligibility usage of their NIL. Many schools aim to retain the ability to use an athlete's likeness in a “group license” format, such as featuring former athletes in championship team promotions, game highlights, or future sponsorship deals. However, this raises critical questions about how institutions will protect former players' rights while maintaining control over their brand and media assets.
For athletes, the potential risks are evident. What happens if they transfer or discover that an institution has violated the terms of the MOU? Traditionally, contractual disputes are settled in court—a costly and time-consuming process. However, alternative dispute resolution (ADR) mechanisms are emerging as viable solutions.
The Role of Alternative Dispute Resolution in NIL Conflicts
In a recent episode of the "Trustees and Presidents: Managing Intercollegiate Athletics" podcast, Tim Nevius, a lawyer and co-founder of the Forum of Arbitration and Independent Resolution (FAIR) Sports, highlighted the growing importance of independent dispute resolution in college sports. He explained that FAIR is designed to serve as a neutral body that can facilitate fair resolutions between athletes and institutions.
One potential conflict area involves the transfer portal. If an athlete signs a multi-year agreement with a school but later decides to transfer, questions arise about whether they have violated provisions in their original contract. For example, if an institution provided financial incentives under the agreement, does the athlete owe that money back? Some contracts include "clawback" or "liquidated damages" clauses that require either the departing athlete or their new school to reimburse the previous institution.
What Happens When an NIL Dispute Arises?
Some MOUs are implementing structured dispute resolution processes. According to Sportico, certain contracts now require a step-by-step resolution process:
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Written Notice – One party must provide formal notice of a breach.
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Cure Period – The offending party has 10 days to rectify the situation.
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Good Faith Negotiations – If unresolved, both parties engage in discussions for 20 days.
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Legal Action – If no resolution is reached, the matter may proceed to litigation.
This structured approach aims to prevent unnecessary legal battles while offering athletes and institutions a clear path to resolution.
The Future of NIL Contracts and Athlete Rights
With each institution and conference having the freedom to draft contracts according to their own interests, athletes must carefully evaluate the implications of these agreements. NIL deals are no longer just about earning money in college; they can have lasting effects on an athlete's career and financial future.
As the landscape of college athletics continues to evolve, athletes, their families, and advisors must navigate this complex new reality with diligence. Welcome to the new era of big-time college sports—where legal and financial expertise are as essential as talent on the field or court.