Landmark Settlement in NCAA NIL Litigation: Federal Judge Approves Settlement Over NIL Recruiting Rules

Quick Hits

• A federal district court in Tennessee recently approved a settlement permanently enjoining the NCAA’s Recruiting Ban.
• The NCAA will no longer enforce NIL recruiting rules.
• The NCAA has committed to publicizing any new proposed rules related to NIL opportunities (on a dedicated webpage) for the next five years—at least thirty days prior to any vote on final approval.
• The settlement does not prevent the NCAA from its ability to adopt reasonable rules that prohibit compensation that is not for a student-athlete’s or prospective athlete’s NIL.

Background

The lawsuit was initiated in January 2024 by the states of Tennessee and Virginia, with Florida, New York, and the District of Columbia joining the suit in May of the same year. The lawsuit challenged the NCAA’s bylaw that prevented student-athletes from learning about or negotiating potential NIL compensation from third parties during the recruiting process. This rule was seen as a significant barrier for student-athletes when deciding whether to commit to or transfer to a particular university.

In February 2024, the court granted a preliminary injunction blocking the NCAA from enforcing the bylaw while the lawsuit was ongoing. The court found a strong likelihood that the prohibition violated federal antitrust laws and caused harm to student-athletes. The parties involved in the lawsuit subsequently filed a joint request for the judge to approve the settlement on March 17, 2025.

The Settlement and Its Implications

The court signed off on the settlement agreement, which not only resolves the current litigation but also imposes a permanent ban on similar NIL recruiting restrictions in the future. As part of the agreement, the NCAA will no longer enforce NIL recruiting bylaws. Further, the NCAA has committed to publicizing any new proposed bylaws related to NIL opportunities on a dedicated public website for the next five years, at least thirty days prior to any vote on final approval. That public website is required to give users the option to subscribe to receive automatic updates when new information appears on the webpage.

Key Takeaways

By eliminating the NIL recruiting rules and ensuring transparency in future changes, the settlement agreement provides clarity to member schools and collectives that were concerned about compliance with the NIL Recruiting Ban. Member schools are still prohibited from engaging in NIL discussions with prospective student-athletes or potential transfer student-athletes or compensating student-athletes for NIL; however, third-party entities—including boosters or collectives of boosters—are allowed to engage in such activity due to the permanent injunction.

Ogletree Deakins’ Higher Education Practice Group and Sports and Entertainment Industry Group will continue to monitor developments and will publish updates on the Higher Education, Sports and Entertainment, and State Developments blogs as additional information becomes available.

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