The National Collegiate Athletic Association (NCAA) faces a new legal challenge as seven U.S. states have filed a federal lawsuit alleging the NCAA’s student-athlete transfer eligibility rule violates U.S. antitrust law.

Transfer Eligibility Rule

NCAA rules currently permit undergraduate college athletes to transfer once with immediate eligibility to compete at their new university. However, subsequent transfers require the athlete to sit out a year of competition, unless the NCAA grants the athlete a discretionary waiver. Waiver requests are evaluated on a case-by-case basis and are granted infrequently.

The rule ostensibly aims to safeguard the amateur nature of college sports by dissuading universities from “poaching” each other’s athletes. In practice, it discourages athletes from transferring between schools.

Antitrust Allegations

In the new lawsuit, the state attorneys general of Ohio, Colorado, Illinois, New York, North Carolina, Tennessee, and West Virginia argue that the transfer eligibility rule violates Section 1 of the Sherman Antitrust Act, which prohibits agreements that unreasonably restrain market competition.

The state attorneys general argue that the transfer rule effectively constitutes an illegal agreement between the NCAA’s member schools to artificially restrain college athletes’ ability to participate in the market for their labor. Additionally, they assert that, by discouraging athletes from finding ideal matches with schools and imposing a one-year eligibility loss on those who transfer, the rule harms the future earning potential of college athletes.

The attorneys general seek a permanent injunction blocking enforcement of the transfer rule.

Growing Opposition to NCAA’s Policies

This lawsuit is the latest in a barrage of legal attacks against the NCAA. In 2021, the U.S. Supreme Court ruled that NCAA rules restricting education-related compensation and benefits for athletes violated the Sherman Act. Other lawsuits brought on behalf of athletes against the NCAA are pending.

The lawsuit signifies a new willingness by elected officials of both political parties to champion their states’ student-athletes against the NCAA. Shortly before joining the lawsuit, North Carolina Attorney General Josh Stein, a Democrat, penned a letter to the NCAA opposing its denial of a transfer waiver for University of North Carolina football player Devontez “Tez” Walker. The NCAA later reversed its decision and granted Walker a waiver. Similarly, Virginia Attorney General Jason Miyares, a Republican, plans to write the NCAA objecting to its denial of a waiver for Virginia Commonwealth University basketball transfer Joe Bamisile. Virginia has not yet joined the federal lawsuit.

While the outcome of the suit filed by the state attorneys general is uncertain, one thing is clear: there is a noticeable surge in bipartisan opposition and judicial skepticism toward the NCAA’s policies governing college student-athletes. The NCAA faces considerable pressure to enact significant policy changes, pointing toward an imminent transformation in the landscape of college athletics.

Please contact the Collegiate & Professional Sports industry group with any questions.