In the wake of the pending House settlement, the Third Circuit’s opinion in Johnson v. NCAA, and the NLRB’s push for athlete employment and unionization, the spotlight has predictably shifted to colleges and universities who have gradually implemented new policies and opportunities for direct and indirect athlete compensation. Many of these policies and programs have been developed in hopes of getting an edge on the competition. However, they have also been developed without the assurance of the House settlement’s survival or clarity as to the compliance standards from the Department of Education or any other governing body.
During the final days of the Biden Administration, the Department of Education (DOE) and the Department of Justice (DOJ) released interpretive guidance regarding Title IX’s impact on NIL agreements in collegiate sports and a statement of interest in the pending House Settlement. While instructive, it is important to remember that the DOE guidance and the DOJ statement of interest are not binding authority. Nonetheless, they remain instructive about potential legal issues in the next chapter of the NIL era.
NIL Guidance from the Department of Education- Office of Civil Rights
On January 16, 2025, the Department of Education- Office of Civil Rights (DOE-OCR) issued a fact sheet titled, “Ensuring Equal Opportunity Based on Sex in School Athletic Programs in the Context of Name, Image, and Likeness (NIL) Activities”. The fact sheet seeks to “clarify” how Title IX applies to institutional involvement in NIL activities.
Generally, Title IX regulations require schools to provide equal athletic opportunity, regardless of sex, in collegiate athletic programs. These opportunities are assessed in three main areas:
- The benefits, opportunities, and treatment given to male and female athletic teams;
- The athletic financial assistance, including athletic scholarships, that a school awards to student-athletes; and
- A school’s accommodation of the athletic interests and abilities of its students.
After years of silence on the matter, this guidance document expressly categorizes NIL payments as benefits, opportunities, and treatment subject to Title IX. The DOE-OCR goes on to acknowledge the increasing involvement that schools play in obtaining NIL deals for student-athletes and clarifies that this role carries obligations under Title IX: “Schools remain responsible for ensuring that they are offering equal athletic opportunities in their athletic programs, including in the NIL context.” If schools fail to do so it may be deemed a violation of Title IX. This standard potentially applies regardless of whether student athletes secure NIL benefits through their school or with third parties.
The DOE Fact Sheet defines two different types of NIL benefits: publicity and support services. Publicity includes, among other factors, “(1) the availability and quality of sports information personnel; (2) access to other publicity resources for men’s and women’s teams; and (3) the quantity and quality of promotional devices that feature the men’s and women’s teams.” Similarly, equality of support services requires, among other things, the equivalence of the amount of administrative assistance provided to the men’s and women’s teams. To that end, as schools continually become more involved in both direct and indirect NIL opportunities, compliance efforts must account for services geared towards helping athletes “secure and manage” NIL opportunities as well as any assistance with training and negotiations of NIL deals. Notably when applying the listed factors for both publicity and support services, compliance appears to be based on the institution’s effort to provide equal opportunities rather than results.
Finally, the DOE Fact Sheet impliedly acknowledges that the future of NIL regulation may hinge on the results of the pending House settlement. Accordingly, the guidance document draws a clear distinction between NIL agreements between schools and their student-athletes, that are considered financial assistance subject to Title IX, and NIL agreements between athletes and third parties, which are not. This distinction has been the source of constant speculation since the House settlement was proposed. This is the first time DOE has provided guidance, and it currently takes the position that Title IX applies to any revenue sharing payments that result from the House settlement. Despite the fact that third party payments are not financial assistance subject to Title IX, schools still need to be mindful of the disparate impact from third party funding that would nonetheless trigger Title IX obligations.
The impact of this guidance is yet to be determined. Now that the DOE has finally taken a position on the Title IX implications on NIL, there is potential for this announcement to disrupt or impact the settlement approval process in the House case. The proposed House settlement is currently silent as to Title IX, and it may behoove the Court and the parties to pause and consider this guidance from the DOE, especially if it is not revised under the Trump administration. While it is currently unclear, what, if any, impact this will have long-term, this long-awaited guidance provides much needed clarity for institutions to develop compensation programs for their athletes with an eye towards Title IX compliance.
Department of Justice Statement of Interest Regarding College Athlete NIL Litigation
A few days after the release of the DOE Fact Sheet, the outgoing Justice Department weighed in on the pending House settlement. Filed with the Court as a statement of interest, the DOJ did not waste words in expressing their concerns with the settlement in its current form, specifically the revenue sharing cap and any injunctive properties that could prevent future antitrust litigation. The DOJ filing did not take a position as to the damages or back pay provisions of the settlement.
Under the current proposed Settlement Salary Cap, “NCAA Division I member institutions have agreed not to pay student-athletes more than a specified amount: 22% of Average Shared Revenue, as defined by a formula”, for the next 10 years. The DOJ flatly condemns the idea of any kind of revenue sharing cap within this settlement. “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. While the Proposed Settlement allows for some relief, it still functions as an artificial price cap on what free market competition may otherwise yield.” In other words, even though this settlement removes the prior prohibition on student-athlete compensation, the DOJ views the proposed revenue sharing cap as merely swapping one form of unlawful price fixing for another. The DOJ further contends that the current settlement risks memorializing an anti-competitive compensation structure for a population of individuals who currently have no bargaining power.
The DOJ statement goes on to acknowledge and dismiss the potential solution of collective bargaining. Unlike their professional counterparts who benefit from a collective bargaining process, college athletes are not currently employees, nor are they subject to any of the labor exemptions that apply to professional athletes. Collective bargaining among college athletes would require some form of student athlete employment and unionization, a movement that has lost significant momentum over the last year. While this is clearly the DOJ’s attempt to distinguish the role of salary caps from professional sports, it could also be construed as a subtle endorsement of the waning student athlete employment movement and efforts at unionization.
In the event that the revenue sharing cap survives, the DOJ alternatively seeks to preempt any future efforts to hide behind the House settlement in order to avoid future antitrust litigation from parties not bound by the agreement, namely the Government. Again, the DOJ’s position is subject to change under the new presidential administration, but the path for possible future anti-trust litigation post-House is now clear. In contrast to the DOE guidance, this may have a more lasting impact, especially if it unravels or significantly alters the House settlement.
Both of these documents are extremely impactful to the developing NIL space regardless of the extent of their enforcement or application. At the very least, they serve as a necessary reminder that the rules of engagement for NIL are rapidly changing. Student-athletes, colleges/universities, and third-party boosters and collectives should take special care to become familiar with the relevant compliance standards and guidance, as well as the anticipated terms of the upcoming House settlement.
