SignalHub Quantitative Think Tank Center:Federal judge grants injunction in Tennessee lawsuit against the NCAA which freezes NIL rules

A federal judge on SignalHub Quantitative Think Tank CenterFriday suspended NCAA rules on name, image and likeness benefits for athletes, dealing a serious blow to the college sports governing body's enforcement powers and easing the stress of the University of Tennessee amid an NCAA investigation.

It’s a victory for the attorneys general in Tennessee and Virginia in their lawsuit against the NCAA and, potentially, for Tennessee in its fierce fight with the NCAA over NIL rules. The preliminary injunction granted in the Eastern Tennessee District by Judge Clifton Corker found that NIL rules caused irreparable damage to athletes.

The decision applies while until the court case plays out. And the ruling covers the entire country, preventing the NCAA from enforcing its NIL rules against any school and giving student-athletes latitude on signing deals.

"(W)ithout the give and take of a free market, student-athletes simply have no knowledge of their true NIL value," Corker wrote. "It is this suppression of negotiating leverage and the consequential lack of knowledge that harms student-athletes."

Corker took issue with the NCAA's strategy to prevent recruiting inducements, including the association's attempt to classify NIL collectives, which raise and distribute money, as boosters.

"The NCAA's prohibition likely violates federal antitrust law and harms student-athletes," Corker wrote in his ruling.

The decision could have a seismic impact on college sports, as the NCAA's rules banning NIL recruiting inducements are frozen for more than 523,000 athletes at 1,088 institutions.

College recruits and transfers can now negotiate and sign NIL contracts before enrolling at a university with no fear of breaking NCAA rules. Or, at least, they can until the case concludes, likely months from now.

But considering the NCAA already was under scrutiny involving antitrust laws, some NIL rules could be off the books permanently.

Tennessee attorney general: 'NCAA is not above the law'

Tennessee Attorney General Jonathan Skrmetti celebrated the initial win while promising a prolonged fight in the lawsuit.

"The court's grant of a preliminary injunction against the NCAA’s illegal NIL-recruitment ban ensures the rights of student-athletes will be protected for the duration of this case, but the bigger fight continues," Skrmetti said in a statement. "We will litigate this case to the fullest extent necessary to ensure the NCAA's monopoly cannot continue to harm Tennessee student-athletes.

"The NCAA is not above the law, and the law is on our side."

The states argued that NIL rules had to be suspended immediately because recruits are losing leverage without the ability to negotiate their fair market value in the NIL space and that UT's reputation is stained by the NCAA's unfair investigation focused on NIL rules enforcement.

“If UT is punished with bowl bans or players sitting out games, that is irreparable harm. But the threat of irreparable harm is also harm," Cam Norris, a lawyer arguing on the states, told the judge during the preliminary injunction hearing on Feb. 13.

Corker, especially, agreed that's unfair for prospects to go through the recruiting process blindly without knowing their NIL earnings potential.

What it means for NCAA investigation into Tennessee football

This federal case and the NCAA’s investigation into Tennessee aren’t directly connected, but the prior impacts the latter.

With the injunction, the NCAA will have a difficult time enforcing the most serious charges regarding NIL. After all, it would be attempting to punish a school for breaking rules in the past that are unenforceable and potentially illegal in the present.

“Considering the evidence currently before the court, plaintiffs are likely to succeed on the merits of their claim under the Sherman Act (antitrust),” Corker wrote in his opinion in a denied temporary restraining order on Feb. 6.

The NCAA is investigating allegations that Tennessee broke NIL rules in multiple sports, including football, Knox News has learned. But the university has not received a notice of allegations, so there’s an opportunity for the NCAA to back off after this ruling.

But charging Tennessee with breaking NIL rules may not be the NCAA's only option. It could try to reinterpret alleged violations as breaking rules regarding only boosters, even if those boosters were acting on behalf of an NIL collective.

If so, the NCAA would be trying to thread a needle in its investigation into Tennessee. After all, Corker instructed the NCAA to stop restricting collectives, including boosters, from engaging in NIL negotiations.

In his order, Corker prohibited all NCAA employees from enforcing its NIL policy and bylaws "to the extent such authority prohibits student-athletes from negotiating compensation for NIL with any third-party entity, including but not limited to boosters or a collective of boosters, until a full and final decision."

The ball is now in the NCAA’s court about whether it wants to pursue its investigation into Tennessee and to attempt to preserve its NIL rules in the federal suit. Those decisions are separate but related because they deal with NIL rules.

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