Film Room: DOJ Antitrust Division and DOE stir the pot

In this week’s edition of Film Room, we break down two eleventh-hour actions taken by outgoing leadership:

1. a loud objection filed by the Antitrust Division of the Department of Justice in the House case; and
2. a Fact Sheet regarding the applicability of Title IX to revenue share/NIL issued by the Department of Education.

DOJ Antitrust Division objects to House

We previously noted that the proposed revenue share was not a main focus of recent objections. That changed on Friday, when the Antitrust Division of the DOJ submitted a statement of interest urging the Court to “decline to approve the Proposed Settlement,” arguing, among other things, that the "Proposed Settlement replaces an agreement among competitors to cap compensation for use of college athletes’ NIL at $0 with an agreement among competitors to cap compensation at 22% of average revenue.”

Before the membership recoils at the thought of the settlement being derailed, it is important to keep a couple of things in mind:

1. This issue is not new to the Court. The imposition of a cap tied to 22% of average revenue (in year one) was crystal clear and perhaps the most eye-catching aspect of the proposed settlement. Significantly, the Court did not seem particularly concerned by the 22% cap at the September hearing and later granted Preliminary Approval of the settlement that includes those cap terms.
2. New leadership at the DOJ and its Antitrust Division may withdraw or even reverse its position in the coming weeks.

The window for objections closes at the end of the month, and the parties have until March 3, 2025, to submit briefing to the Court in support of the settlement.

DOE issues guidance on Title IX

On Thursday, January 16, 2025, the DOE issued an impactful Fact Sheet. Below, we will:

1. note the framework for Title IX assessment;
2. cover Fact Sheet impact and analysis; and
3. suggest a campus to-do list.

We know you want to skip to 3—do not do it! You’ll gain perspective you will not find elsewhere in 1 and 2.

1. Title IX Framework

The DOE’s Office for Civil Rights is the government entity that enforces Title IX. Ultimately, DOE activities are directed by the presidentially appointed Secretary of Education. The leadership of the DOE is set to change momentarily, and we do not know the new administration’s position on the applicability of Title IX to revenue share. The confirmation hearing for education secretary nominee Linda McMahon has not yet been scheduled.

Separate from the DOE, private parties (e.g., student-athletes) can bring a claim based on alleged violations of Title IX.

2. Fact Sheet Impact and Analysis

Here is the most impactful information from the Fact Sheet and our quick analysis:

• Scope of “financial assistance” – “OCR includes the amount of all compensation and other financial assistance provided by a school to its student-athletes when calculating the total amount of athletic financial assistance made available to men and women at a school.” [p.4]
  • Institutions can consider various categories of financial assistance (scholarships, Alston, etc.) when analyzing Title IX compliance.
• Internal NIL infrastructure – “A school may violate Title IX if the school fails to provide equivalent benefits, opportunities, and treatment in the components of the school’s athletic program that relate to NIL,” like opportunities for publicity and support services. [pp.5-6]
  • This expectation should be relatively manageable for institutions.
• NIL from institutions – “Compensation provided by a school for the use of a student athlete’s NIL constitutes athletic financial assistance under Title IX because athletic financial assistance includes any financial assistance and other aid provided by the school to a student-athlete that is connected to a student’s athletic participation; it is not limited to scholarships or grants.” [p.7]
  • If this position sticks, it would create tension with the market-based arguments featured in antitrust litigation that have driven the membership to this moment.
  • Under the Fact Sheet’s guidance, to comply with Title IX, a hypothetical institution arguably would be compelled to depart from a market-based analysis of NIL—for example, an institution may need to provide above-market NIL to student-athletes with sincerely low NIL value and below market NIL to student-athletes with sincerely high NIL value. This presents real legal exposure for institutions.
• NIL from third parties – “OCR does not view compensation provided by a third party (rather than a school) to a student-athlete for use of their NIL as constituting athletic financial assistance awarded by the school that must comply with 34 C.F.R. § 106.37(c).” [p.8]
  • Third-party NIL remains the space least encumbered by regulatory issues—see last week's edition of Film Room, in which we detailed the proposed settlement’s uncapped and, in some cases, unrestricted proposed third-party NIL space.
  • Institutions that are actively analyzing the regulatory and legal landscape will enjoy the best of both worlds—happy coaches on the recruiting trail who can present a compelling platform to recruits and peace of mind among administrators and campus leadership who have been proactive in limiting institutional risk.

3. Campus To-do List

The DOE’s position on the applicability of Title IX to revenue share/NIL had been an unanswered question that institutions have been accounting for in scenario planning. We now know the DOE’s perspective—or, at least, its current perspective—which should help institutions be more precise in their modeling.

Below are actions an institution can take now to get and stay ahead:

• Carefully analyze the various benefits your campus currently provides—or can provide, assuming House approval—that qualify as “financial assistance.” Balancing assistance across categories can bolster Title IX compliance.
• Revisit the planning of institutional NIL, including an analysis of legal exposure—Title IX and other potential litigation—resulting from potential program and student athlete distributions. Take your analysis to the next step by considering the range of penalties and risks (financial and otherwise) associated with different courses of action.
• Continue building the most robust and defensible infrastructure to facilitate compliant third-party NIL, the area where institutions can most easily distinguish themselves.
• Review internal operations to ensure publicity and support services are offered on an equivalent basis.

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