NCAA Permanently Ends Transfer Restrictions in Settlement with DOJ

One week after the NCAA and Power 5 Conferences agreed to allow revenue sharing for collegiate athletes, the NCAA agrees to remove yet another fundamental element of collegiate sports

Mar 2, 2024; Morgantown, West Virginia, USA; West Virginia Mountaineers head coach Josh Eilert honors West Virginia Mountaineers guard Noah Farrakhan (1) before the game for scoring his 1,000th point earlier this week at WVU Coliseum. Mandatory Credit: Ben Queen-USA TODAY Sports / Ben Queen-USA TODAY Sports

This week, the United States Department of Justice (DOJ) and the NCAA reached a settlement regarding student-athlete transfer restrictions. The DOJ and NCAA have agreed to permanently enjoin any rule restricting or penalizing the free transfer of student-athletes between schools, on the basis that the longstanding behavior of the NCAA was in violation of United States antitrust law.

The settlement stems from an antitrust lawsuit brought by West Virginia basketball players RaeQuan Battle and Noah Farrakhan, challenging the NCAA’s one time penalty free transfer limit. Battle had previously played for the University of Washington and Montana State and Farrakhan reached West Virginia after stints at Eastern Carolina and Eastern Michigan.  Quickly, the challenge was noticed nationwide and attorney generals from Ohio, Virginia, Colorado, Illinois, Minnesota, Mississippi, New York, North Carolina, Tennessee, West Virginia, and Washington D.C inserted themselves into the lawsuit against the NCAA.   

In December of 2023, the plaintiffs were successful in securing a preliminary injunction against the NCAA and athletes nationwide received court-ordered immunity from any NCAA punishment stemming from transfer rules through the pendency of litigation. Battle, Farrakhan, and others similarly situated athletes across the country were entitled to suit up for the 2023-24 season.

Roughly one month after the issuance of the preliminary injunction, the plaintiffs received more great news as the federal government, via the DOJ, joined the case. This action by the DOJ is rare and indicated a strong federal interest in the case and brought tremendous resources and legitimacy to the plaintiffs.

Now, less than half a year later, the case has been settled and the NCAA has permanently relinquished its authority to govern transfer behavior: enshrining the current preliminary injunction into perpetuity. While not yet official, as a 60-day public comment period must commence before the settlement can be ordered as a final judgement, the permanent change to NCAA authority appears certain. 

While many celebrate the settlement as a victory for the earning power and autonomy of student athletes, others share concerns regarding the negative externalities of such deregulation. The new NCAA transfer policy (or lack thereof) when paired in conjunction with the recent implementation of NIL Collective “pay-for-play” contracts, creates a system parallel to the concept of free agency in professional sports. However, since the contracts are not governed by a Collective Bargaining Agreement, collegiate players are able to enter this proxy free agency market via the transfer portal at the conclusion of every season. This has already led to massive turnover in college sports and has the potential to impact graduation rates, expose athletes to questionable NIL solicitation (like Jaden Rashada), and impact competitive parity.  

This settlement comes only a week after the NCAA approved a separate settlement in the House v. NCAA case, where it once again has agreed to relinquish its longstanding restrictions, in this case, rules forbidding direct payment from schools to athletes for their athletic prowess. That settlement is still being finalized and remains to be approved by the judge presiding over the case.

Over the last two weeks, the NCAA has appeared willing to wave the white flag over fundamental sticking points that the governing body of collegiate athletics has refused to modify for decades. Mounting pressure from the rising valuation of media rights deals and ultimately the revenue that the NCAA, member conferences, and institutions make off the labor of student-athletes reached a critical mass that forced courts to rethink their posture on how the model of collegiate athletics should be structured. While Congress continues to bicker, the Federal Courts continue to be the only tried and true method of implementing change in college sports.