Press Release

By: Josh Goldberg, Esq.

The transfer portal has become a free agency bonanza. As the college football regular season wrapped up in early December and bowl games played out, the fall transfer portal window opened from Dec. 4, 2023, to Jan. 2, 2024, with college athletes seeking out new opportunities – and sometimes seeking out the highest bidder. When the National Collegiate Athletic Association (NCAA) implemented its one-time transfer exception nearly three years ago in April 2021, it allowed college athletes to transfer and have immediate eligibility the first time they transferred, which the NCAA provided college athletes with freedom of movement unlike they’ve ever had before.

Previously, college athletes who transferred had to sit out an entire season. While the transfer exception is only a one-time exception, there are other ways college athletes can transfer and obtain immediate eligibility. Quarterback JT Daniels was able to transfer from the University of Southern California to the University of Georgia, to West Virginia University, and then to Rice University without having to sit out a season. When Daniels first transferred from USC to Georgia in 2020, the one-time transfer exception was not in place, and yet, the NCAA granted Daniels a special circumstances waiver and granted him immediate eligibility. Since the transfer rules only apply to undergraduate transfers, Daniels was able to graduate from Georgia and become immediately eligible to transfer and play at West Virginia. After playing for West Virginia for a year, he transferred again as a graduate transfer and was immediately eligible to play at Rice this past season.

Critics of the current transfer portal guidelines have proposed reinstating the prior rule which required transfers to sit out a year.

In all the history of college football, head coaches would leave their college programs for a new job opportunity, seeking better pay, more competition, and a better location to live, among other factors. Many of these college coaches would leave the program high and dry before the bowl game – leaving players with an interim head coach and a roster of assistant coaches (many of whom would also be gone the following season). Because of this, the NCAA allows college athletes to also receive an extra 30-day window to enter the transfer portal when there is a head coaching change (i.e., a coach is fired, resigns, retires, etc.), such as what you’re seeing right now with Alabama’s former head football coach Nick Saban retiring and many Alabama players now entering the transfer portal.

In October 2023, the NCAA approved new rules regarding the transfer portal, in which the transfer portal window was reduced from 60 days to 45 total days and spread out over two windows of time. While the first window closed in early January, there will be an additional 15-day window for players to enter the transfer portal from April 15-30.

With the spring college semester underway and teams eyeing the 2024 football season, a lot can still play out to cause volatility in the college football ecosystem. Depending on graduate transfers, roster construction, additional high school prospects signing with colleges on Feb. 7, 2024, on National Signing Day, and of course Name, Image, and Likeness (“NIL”) deals, more players may enter their name in the April transfer portal window. If a college athlete is not happy with their NIL income, the transfer portal has become leverage for a player to seek out more NIL money at a different institution or attempt to renegotiate with their current school (not actually the school, but usually the school’s affiliated collective).

While the transfer portal has heard the ire of college sports fans over the past few years, everything really changed when NIL took over college sports on July 1, 2021. NIL was never intended to provide a salary for college athletes. The true essence of NIL is no different than a traditional marketing, brand, or endorsement deal. However, NIL has changed the dynamics of college sports, and now NIL benefits are getting pushed through collectives, donors, and boosters – all of whom are essentially acting as general managers for their associated universities and are de facto employers.

Now, when a freshman isn’t happy about their play time, they can enter their name in the transfer portal. Many college athletes are not taking the time to learn and develop behind upperclassmen. For top-tier college athletes who enter the transfer portal, it’s akin to a free agency bidding war – one in which there is no salary cap. College athletes in the transfer portal will take official visits to multiple colleges and go on recruiting visits like they did as high schoolers. For some college athletes, remaining in college or transferring schools can be more lucrative than turning professional.

Last week, the NCAA issued “unprecedented” sanctions on Florida State University in which an FSU assistant football coach “violated NCAA rules when he facilitated an impermissible recruiting contact between a transfer prospect and a booster, according to an agreement released by the Division I Committee on Infractions.” Although the transfer prospect did not enroll at FSU, it is alleged the booster offered the prospect a NIL deal through an affiliated collective for approximately $15,000 per month during his first year at the school.

It doesn’t take a genius or a lawyer to point out that this is likely happening at many colleges across the country, yet it’s surprising the NCAA has singled out FSU when it has been very selective in not enforcing its NIL policies elsewhere.

Further, many college athletes are receiving bad advice about entering the transfer portal with inexperienced agents – many of whom are not properly licensed – soliciting offers and bids from other colleges and shopping players as if it’s free agency. Many players do not have proper representation, are not reading the fine print of the collective contracts they are signing, and do not fully understand the rights they are signing away. Even worse, many players are agreeing to verbal offers to transfer to certain schools and are not signing anything in writing. There have been several instances of college athletes not receiving what was verbally promised to them. Although it is against NCAA rules for an institution or an entity closely associated with an institution (a collective) to compensate and offer a college athlete a NIL deal to enroll or transfer, it would be bad advice for anyone to transfer based on an oral promise for NIL consideration with no documentation. For (1), the entity/person who provided the offer can backtrack on it if there’s no proof in writing and; (2) once a player is enrolled in a new institution and a deal is not signed in place, the athlete has lost a ton of leverage.

What are the solutions to the transfer portal?

1. Registration – The NCAA needs to require and properly enforce anyone representing a college athlete to be registered with the NCAA, each state the agent engages in (as required by state law), as well as each school.
2. Transparency – While the transfer portal is a private database, it should be made public so that all athletes entering their names in the portal can see who else is in the database and make a more informed decision.
3. Protections and Regulations – College athletes should be able to enter their names in the transfer portal without risking losing their scholarship. Further, if a college athlete declares for a professional sports draft, they should maintain their scholarship and retain the ability to go back to college at a later time to complete their degree.
4. Institutional Involvement – As it stands right now, colleges cannot facilitate NIL deals for prospective college athletes or those enrolled at the school. Schools should be allowed to facilitate NIL deals, which would cut out third-party collectives, although there may still be a reality in which collectives can continue to exist.
5. Employment – There needs to be a distinction between employment and NIL. If institutions are going to get involved in facilitating NIL deals, these deals cannot mask an employment contract/compensation. It doesn’t make sense for the NCAA to implement a “standard NIL contract” when brand and marketing deals differ all of the time. If college athletes were to be considered employees, institutions and college athletes could collectively bargain for specific rights such as restrictions and limitations on the transfer portal. However, as it stands right now if the NCAA were to try to impose restrictions on the transfer portal rules, the NCAA may find itself in a new antitrust lawsuit, in which the NCAA’s old transfer restrictions may be considered an unreasonable restraint on trade.
6. Education – Institutions need to provide better education and resources to student-athletes about NIL, finances, and taxes.

The post The Transfer Portal Has Changed the Dynamic of College Sports appeared first on Greenspoon Marder LLP.