College Athletics, the Transfer Portal and NIL

As many of you know, I have been a passionate basketball fan for many years. My oldest daughter went to UNC-Chapel Hill, and we lived in North Carolina for 10 years. It was hard not to be a fan of one of the North Carolina schools.

Recently, there have been a number of articles written discussing the status of the transfer portal on colleges and universities. One cannot discuss that without also discussing NIL. NIL allows a college athlete to earn money from their Name, Image and Likeness.

Both of these have changed college athletics. Some think for the better, while some think for the worst. Whichever, the “horse is out of the barn” and this is the new reality.

Recently, the Kentucky basketball coach moved on to Arkansas and all of the current Kentucky basketball players have either graduated, transferred or entered the NBA draft. They now have to start with a new coach and no players.

Duke University also has a similar predicament. Seven of their players have either transferred or opted for the NBA draft.

I decided to take a more in-depth look at how this has occurred and what might be next. I was surprised as to what I found. The following summarizes what I discovered, “good and bad!”

The National Association of Collegiate Athletics (NCAA) is the Granddaddy of college athletics. It has three divisions, Division 1, 2 and 3. Simplistically, Division 1 is made up of the largest enrollment schools, who have a large athletic budget and have the most athletic scholarships. Division 2 schools are smaller in enrollment and have smaller athletic budgets, but can still issue athletic scholarships. Division 3 schools are the smallest, and do not issue athletic scholarships. They do however, issue grants and award need based scholarships.

Division 1 schools play for National Championships and Football Bowl appearances. Division 1 schools are divided into 2 sub-divisions in football. There is the Football Bowl Sub-Division (FBS) and the Football Championship Sub-Division (FCS).

The FBS division is for the larger, well- funded, schools, who are bowl eligible. In this division there is a 4 team playoff for the National Championship. This will be increased in 2024 to a 12 team playoff.

The FCS has a 24 team playoff.

Division 1-FBS schools are permitted to issue up to 85 full athletic scholarships in football, while FCS schools are limited to 63.

I found that there are three other organization’s whose school’s athletic department might be a member of, in lieu of the NCAA. They are the National Association of Inter-collegiate Athletics (NAIA), the National Junior College Athletic Association (NJCAA) and the National Christian College Athletic Association (NCCAA). These are generally smaller, less well funded institutions.

The number of schools in each association approximate the following:

NCAA – 350

NAIA – 250

NJCAA – 500

NCCAA – 100

As to the NCAA schools, the Transfer Portal and NIL are the two issues that have had a profound effect on colleges and universities and their athletic programs.

The Transfer Portal was launched by the NCAA in 2018, with specific times that a college athlete could apply to transfer to another school. As an example, for fall sports, there is a 45 day transfer window after the individual sports championship team selections. For football, that period begins when participants in bowl games are announced. In basketball, it begins after the release of the NCAA brackets for the championship.

An athlete who was transferring was required to sit out for 1 year before they were eligible to play. This was referred to as “red shirting.” In April of 2021, a change was made that allowed Division 1 athletics to transfer, without sitting out for a year. The athlete had 5 years to complete their college eligibility. An additional year was added during Covid.

In April 2024, Division 1 athletes could transfer and play immediately, no matter how many times they had transferred. Previously, they could transfer and play immediately, if it was their first transfer. If it was their second, or greater transfer, they had to redshirt a year with each transfer.

The NCAA indicated that this change was to prioritize long term academic success for a student-athletic. Personally, I question that justification.

In a 2018 study, by the National Student Clearinghouse , they estimated that 39% of all undergraduate students transfer at least once. They believe that student athletes transfer less than their peers.

In 2022, 31,000 Division 1 student athletes entered the transfer portal. This represents approximately 6% of all student athletes .It should be noted that a student athlete must meet the admission standards of the institution that they are transferring to. This can be difficult. In many cases, not all of their credits will transfer or they fail to meet the standards. In most cases, graduation is also delayed.

Obviously, transfers create issues for both the team that one left and the team that one transferred to. This was exacerbated by the introduction of NIL in June 2021. In June 2021, the U.S. Supreme Court, in NCAA vs. Alston, ruled that the NCAA could not limit “education” related payments to student athletics. As a result, the NCAA , effective July 1, 2021 issued an interim policy that permitted student athletes to have “professional service providers,” agents, to represent them, and that they had a right to earn money from the use of their name, image and likeness, using the legal principal of “right of publicity.” The NCAA delegated this to the states for their approval, on a state by state basis. They also permitted high school student athletics to participate if their state permitted it through the high school or sports association of the high schools.

In May of 2022, the NCAA indicated that “play for pay” was still not authorized and that “Booster” involvement if recruiting was still not approved. Collectives are defined as a Booster organization, connected to the college or university. A collective is still not authorized to pay NIL to a student athlete.

The IRS defines a collective, as an organization, structurally independent of a school, but funding NIL for a student athlete.

The NCAA would like to see a nationwide policy, but that would require Federal Legislation. That doesn’t appear to be coming any time soon.

In April 2024, the legislature of Virginia passed sweeping NIL legislation that was signed by the Governor. It expands college and university support for the student athlete and prevents the NCAA from acting against the legislature.

The new law allows collectives to pay student-athletes directly for the use of their NIL. It also allows colleges and universities, athletic foundations, and collectives to identify, negotiate and assist in NIL opportunities. It also empowers, colleges and universities, to set policies for their athletics.

The law also prohibits NIL for products/services such as alcohol, adult entertainment, illegal drugs, marijuana, gambling, smoking/vaping , steroids, etc.

Many believe that this law will allow Virginia a competitive advantage for transfers. Also, this could become a model for other states.

It has been reported that many student-athletes earn in the millions from NIL. One five star student athlete, in the recruiting class of 2023, is reported to have NIL arrangements worth over $8 million. Another student athletic just purchased a Lamborghini vehicle. The cost can be over $200,000. It has been reported that another student-athlete just attended his first in person college class in 2 years.

What is this doing to college athletic programs? Many coaches believe that this is not for the best. It makes recruiting harder and can create animosity among players on a team.

Also, there is little continuity in athletic programs. A coach has a new team each year. Where are academics in all of this? In the three NCAA divisions, there are almost 500,000 participants. Football and basketball represents most of these numbers. However, the National Football League only has 32 teams with 53 active members and 14 practice team members for a total of 67 players. For the entire league, there are 2,144 active players. The National Basketball League has 30 teams, with 15 allowed per team for a league total of 450 members.

The NCAA indicates that the graduation rate for student athletes in Division 1 is 69% in 6 years versus a student body rate of 70% in 6 years. Division 2 is 88% for student athletes against 60% for all students and in Division 3, 88% for student athletes against 70% for all students.

The women’s rate is considered 3 to 7% higher than men.

I find it difficult to accept these student athlete graduation numbers. Maybe they are correct but my “gut” says differently. There are professional soccer teams, baseball teams, as well as other professional sports teams, but that tip of the pyramid is small. The chance of becoming a professional athlete is slim to none, compared to the general population participating in sports. An education is a necessity. The Transfer Portal and NIL have made that even more difficult today.

Jess Sweely

Madison, VA.

April 25, 2024