NCAA Memo Provides Standard of Review for NIL Violations

The NCAA has circulated a memorandum to its Division I member schools that includes a standard of review for violations related to NIL activities (H/T to @WinterSportLaw who tweeted the memo). The memorandum also lists several factors for determining whether an NIL violation has occurred and provides additional information on the related infractions process.

Standard of Review

The memorandum states that when available information supports that the behaviors leading up to, surrounding, and/or related to an NIL agreement or activity were contrary to NCAA Division I legislation and/or the interim NIL policy, the NCAA’s enforcement staff and Division I Committee on Infractions shall presume a violation occurred.

Once it is presumed an NIL violation has occurred, the burden then shifts to the institution to “clearly demonstrate” that all behaviors complied with NCAA legislation and the interim policy.

The standard of review and burden-shifting analysis included in the memorandum is essentially a reiteration of statements in the NCAA’s press release announcing updated NIL guidance for institutions in October 2022:

Factors for Determining NIL Violations

The memorandum also outlined several factors for determining whether an NIL violation has occurred, including, but not limited to, impermissible contacts, offers, and benefits.

Impermissible Contacts. An impermissible contact is deemed to occur when an institutional staff member directly or indirectly contacts a prospect who is not in the NCAA Transfer Portal to discuss NIL opportunities. An impermissible contact is also deemed to occur when a representative of the institution’s athletic interests (e.g., booster, collective) contacts a prospect or their family about potential NIL opportunities before the prospect signs with an institution.

Impermissible Offers. The memorandum provides several examples of impermissible offers:

• An institutional staff member in any way offers, communicates, and/or guarantees an NIL opportunity to a prospect, their family or representatives during their recruitment.

• A representative of the institution’s athletics interests announces and/or enters (whether verbally or in writing) into an NIL agreement with a prospect prior to their enrollment at the institution.

• An NIL agreement requires a prospect to be in the locale (i.e., city, ZIP code) of the institution prior to enrollment in order to fulfill the terms of the agreement (e.g., local appearances).

• A collective and/or its representatives engage in recruiting activities and/or the promotion of specific prospects prior to their commitment to the institution.

Impermissible Benefits. An impermissible benefit is deemed to occur when an institutional staff member, booster or other institutional representative solicits, facilitates and/or provides additional NIL opportunities in order to secure a student-athlete’s continued enrollment at the institution.

Infractions Process

The memorandum concludes by discussing the infractions process for a potential NIL violation. The memorandum discusses how the NCAA’s enforcement staff has the authority to conduct either a (1) limited/expedited investigation or (2) issue a Letter of Inquiry (“LOI”) to an institution. After reviewing the information obtained through the investigation and/or the institution’s responses to an LOI, the enforcement staff will allege an NIL violation unless it concludes that the institution rebuts the presumption that a violation has occurred. If the institution agrees a violation has occurred, the institution and enforcement staff may submit a summary disposition or negotiated resolution for approval by the Committee on Infractions. If the institution and enforcement do not agree as to whether a violation has occurred, the case will proceed to a contested hearing

Key Takeaway

The NCAA’s memorandum is intended to crack down on the use of NIL payments as recruiting inducements or disguised “pay-for-play” deals. However, the NCAA has yet to actually enforce its NIL rules. Coaches and administrators have been calling for the NCAA to enforce its rules for months as boosters and collectives continue to commit recruiting violations and use the guise of NIL to lure top high-school recruits and target players in the Transfer Portal through “pay-for-play” deals. But, this new memorandum may be a warning sign for institutions and collectives to get their act together as the standard of review places a heavy burden on institutions to clearly demonstrate that all behaviors with respect to an NIL agreement or activity complied with NCAA rules.

Ryan Whelpley is an Associate at Morse in Waltham, Massachusetts, where he is a member of the firm’s Corporate Practice Group. He is a graduate of Albany Law School and Union College. At Union, Ryan was a member and three-year captain of the Men’s Basketball Team. You can connect with him via Twitter and LinkedIn.