The NIL Presumption: Is the Newest NCAA Measure a Boon for Enforcement or the Next Front for Legal Challenge?

This article was originally published by the Sports Business Journal on March 8, 2023 and is republished here with permission.

The Name, Image, and Likeness (“NIL”) era of college sports has brought headlines, rumors, and dollar signs, but little in the way of NCAA enforcement. The NCAA’s seeming reluctance to take action against perceived violators of its revamped NIL rules has divided opinion—the NCAA is either frozen in fear of potential litigation or is just waiting for the right case and time to make a disciplinary move. On October 28, the NCAA’s Division I Board of Directors quietly adopted a new bylaw that could add significant teeth to its regulatory efforts. Will it usher in a new era of NCAA enforcement activity, or is the NIL toothpaste out of the tube? 

An Empty Tool Belt

In June 2021, the NCAA adopted an “Interim NIL Policy” which, for the first time, allowed student-athletes to benefit commercially from licensing their NIL without forfeiting their college athletic eligibility.  Since then, the NCAA has disseminated several rounds of policy guidance, generally prioritizing two golden rules: (1) no payments to induce student-athletes to attend specific schools; and (2) no payments to student-athletes for athletic performance. 

The NCAA quickly found that creating NIL rules and enforcing NIL rules are entirely different matters. In particular, determining whether an improper “inducement” has occurred is a necessarily subjective question. Without subpoena power or the human resources to police the hundreds of NIL contracts performed each day, the NCAA has been constrained to piece together the evidentiary record needed to establish an NIL rule violation. The NCAA also likely feels further constrained by the Supreme Court’s decision in NCAA v. Alston (particularly Justice Kavanaugh’s blistering concurrence), which has exposed the NCAA’s regulatory structure to antitrust scrutiny and caused it to self-limit any activity that could be considered a heavy-handed restraint on trade. As a result, in the nearly two years of permissible NIL activity, the NCAA has done little to no public enforcement of its NIL regulations (having issued only last week its first ruling in an NIL infractions case). Are things about to change?

A New Standard

On October 28, 2022, the NCAA Division I Board adopted Bylaw 19.7.3 (effective on January 1, 2023), which changed the evidentiary standard that the NCAA would use to evaluate alleged NIL infractions. Rather than imposing the burden of proof on NCAA investigators, the new rule allows NCAA disciplinary panels to “presume a violation occurred if circumstantial information suggests that one or more parties engaged in impermissible conduct.” In practical terms, the burden of proof falls on the implicated school or individual to prove that no violation occurred in any given NIL transaction.

The guilty-until-proven-innocent standard, colloquially referred to as the “NIL Presumption,” stands to make it easier for the NCAA to conduct investigations and enforce its NIL rules. At its heart, the NIL Presumption is an evidentiary tool—and one that the NCAA desperately needed.  

Prior to implementing the NIL Presumption, NCAA investigators were nearly powerless to engage with the subjects of their investigations. Without subpoena power, witnesses were unwilling to testify or turn over evidence to NCAA investigators. By flipping the evidentiary burden to the accused, the NIL Presumption necessarily requires disclosures from the targets of NCAA investigations—i.e. the accused must present evidence in order to rebut the presumption of their guilt.   In furtherance of that aim, NCAA Bylaw 19.2.1 also imposes non-appealable penalties on institutions and individuals who do not instruct their lawyers or representatives to cooperate with NCAA investigations.

Taken together, the NIL Presumption is a powerful weapon—it compels the disclosure of evidence while lowering the standard of evidence required for a conviction. Still, assessing guilt based on circumstantial evidence could create more problems than it solves, and potentially expose the NCAA to legal challenges.

At What Cost?

The NIL Presumption might usher in the NIL enforcement era, but some fear that the NCAA’s cure could be worse than the disease. Aside from the practical issues associated with relying on circumstantial evidence in the rumor-laden and rivalrous world of college sports, the NIL Presumption could expose the NCAA to significant legal challenges.

First, the NIL Presumption may violate due process protections afforded by the U.S. Constitution. The Fourteenth Amendments generally prohibit government action that would deprive individuals of their rights without first providing notice and an opportunity to be heard. A “guilty until proven innocent” standard imposed by any government-owned entity would almost certainly violate the due process clause, but the U.S. Supreme Court’s 1988 ruling in Tarkanian v. NCAA (which deemed the NCAA a private institution, despite being comprised of both public and private institutions) likely insulates the organization from such constitutional scrutiny. Should the Tarkanian standard be revisited by the Supreme Court, however, the NIL Presumption could eventually be in peril.

With respect to potential antitrust liability, Supreme Court precedent is far less favorable for the NCAA. In NCAA v. Alston, the Court ruled that certain NCAA regulations restricting student-athlete compensation violated federal antitrust law, and denied that the NCAA was entitled to any judicial deference in the application of antitrust law standards. Justice Kavanaugh’s concurrence went further: he argued that the NCAA’s business model – built upon regulations that restrict compensation to student-athletes – would be “flatly illegal in any other industry in America.” In so doing, he practically invited further antitrust challenges to various NCAA restrictions on student-athlete compensation.

Section I of the Sherman Antitrust Act makes it illegal for competing businesses to work together to unreasonably restrain trade. For years, antitrust legal challenges have eroded NCAA rules prohibiting or limiting student-athletes from earning compensation, including through their NIL.  Many have surmised that the NCAA has so far refrained from NIL enforcement out of a fear of what antitrust litigation might bring.  Perhaps the sentiment has changed.  Indeed, by lowering the evidentiary threshold for guilt, the NIL Presumption arguably goes further in restraining commercial opportunities for student-athletes, therefore exacerbating the NCAA’s antitrust vulnerability.  

Final Thoughts

The NIL Presumption is an aggressive tool meant to rein in the “wild west” atmosphere of the NIL environment.  It has captured the attention of NIL stakeholders, but could very well prove a poisoned chalice for the NCAA in any legal battles that might follow its application. This approach carries great—even existential—litigation risk, but perhaps the NCAA sees the risk of continued regulatory inaction as equally destructive.