Duane Morris Sports Law

The University of Georgia, through the University’s athletic association (UGAA), is seeking damages totaling $390,000 against a former football player, Damon Wilson II, after he elected to transfer to Missouri following the 2024 season.  The demand stems from a clause in Wilson’s NIL contract that required him to forfeit the balance of his agreement if he transferred to another school.

Wilson signed a 14-month NIL deal in December 2024 through a third-party collective, reportedly worth $500,000 if he completed the full term. Payments were structured as monthly installments of $30,000, with two additional $40,000 bonuses contingent on compliance through future transfer-portal windows. The contract, however, also contained a liquidated-damages provision requiring that if Wilson left the team or entered the transfer portal, he would owe the remaining value of the contract in a lump sum. After reportedly receiving only one monthly payment before declaring his intent to transfer, the University—through its athletic association—has asserted that he now owes $390,000 under the exit clause.

This lawsuit carries outsized significance because it may become one of the first true test cases on the enforceability of buyout-style and liquidated-damages provisions in NIL agreements. To date, such clauses have been rare, largely untested, and clouded by uncertainty under traditional contract principles. A judicial decision upholding UGAA’s position could set a powerful precedent—effectively signaling to schools, collectives, and athletes nationwide that exit-fee mechanisms are viable and enforceable. Such a ruling could rapidly accelerate the adoption of buyout provisions across NIL contracts and fundamentally reshape the architecture of athlete compensation and mobility in the NIL era.

At the same time, the case squarely presents the question of whether the $390,000 figure represents a legitimate, good faith estimate of the collective’s anticipated losses or whether it crosses the line into an unenforceable penalty. Under longstanding contract law principles, liquidated-damages provisions are permissible only when they reasonably approximate the actual harm expected at the time of contracting. If a court concludes that the amount is disproportionate, punitive, or untethered to any measurable loss, the clause could be struck down as an impermissible penalty.  Such a ruling could have an immediate effect on NIL and revenue share agreements across the country, as many contain similar purported liquidated damages provisions.

Wilson’s case could ultimately help set the first meaningful precedent on whether liquidated-damages clauses can function as an effective and legally defensible substitute for traditional buyout fees. If courts bless this model, it may open the door to a new era in NIL contracting—one in which exit-fee structures become a standard tool for shaping athlete mobility, program stability, and the broader economics of college sports.

Over the past several weeks, there has been a surge of federal government activity aimed at reshaping the landscape of Name, Image, and Likeness (NIL) rights in college athletics. From executive action to competing congressional bills, lawmakers and regulators are moving quickly to impose structure on what has become a chaotic and state-by-state patchwork. These developments carry major implications for both student-athletes and the institutions that support them.

Executive Action Brings New Urgency to NIL Reform

On July 24, 2025, the federal government took its most assertive step yet in regulating the NIL landscape. A new executive order prohibits third-party pay-for-play arrangements masked as NIL deals, directs several federal agencies to begin developing a framework for college athletics, which includes clarifying the employment status of student-athletes, and requiring protections for scholarships and non-revenue sports. While it stops short of creating new law, the order reflects growing momentum toward reining in the patchwork of state NIL regimes and restoring a more standardized framework for college athletics.

The SCORE Act Gains Traction in Congress

Meanwhile, the Student Compensation and Opportunity through Rights and Endorsements (SCORE) Act continues to move forward in the U.S. House of Representatives. The proposed legislation would establish a national NIL standard, affirm that student-athletes are not employees, protect medical and academic resources, and provide liability shields to the NCAA and conferences under antitrust law, which is the only real way to protect the NCAA from continuous antitrust lawsuits. Supporters argue that the bill offers stability and clarity for athletes and institutions alike. However, critics caution that it could restrict athletes’ rights, especially in how it limits avenues for economic advancement and collective representation.

Athletes.org Advocates for a Different Path

In response, Athletes.org has backed an alternative federal bill—the College SPORTS Act—which focuses on athlete protections, health and safety standards, and preserving NIL rights without expanding employer-employee classifications. The legislation reinforces athletes’ ability to earn fair compensation through NIL deals while safeguarding against institutional retaliation. Unlike the SCORE Act, this proposal leans more heavily into athlete empowerment and transparency, reflecting a growing demand from current and former players for more robust legal protections and economic opportunities.

What This Means for Athletes and Universities

These developments are poised to reshape the legal and regulatory environment for universities and athletes alike. Institutions must prepare for potential changes in compliance obligations, athlete support standards, and NIL oversight. At the same time, athletes and their representatives should monitor the evolving legislative landscape to ensure their rights and opportunities are protected. Law firms advising in this space should remain agile—helping clients navigate shifting federal and state frameworks and aligning advocacy strategies with whatever direction NIL reform ultimately takes.

Just days after the House v. NCAA settlement was approved, the first appeal of the order was filed in the U.S. Court of Appeals for the Ninth Circuit based on Title IX concerns. On June 11, 2025, eight female athletes argued that women will not receive their fair share of the $2.8 billion in back-pay for athletes who were previously barred from profiting off their name, image, and likeness (NIL). This marks the first legal challenge to the landmark House settlement, but it is unlikely to be the last.

The appeal centers on the settlement’s “back-pay” provision, claiming that the proposed payment formula “would be a massive error causing irreparable harm to women’s sports.” While the provision compensates eligible student-athletes for earnings dating back to 2016, the amounts vary based on individual circumstances. According to the appellants, this approach results in female athletes receiving significantly less than their male counterparts—an alleged shortfall of roughly $1.1 billion out of the total $2.8 billion settlement fund. They contend this disparity violates Title IX’s mandate for gender equity. 

The appellants further argue that “[t]he settlement suggests schools would have paid male athletes over 90% of their revenue over the past six years as though Title IX didn’t apply.” Under Title IX, any college or university accepting federal funds is prohibited from sex-based discrimination. If schools or conferences acting on their behalf violate this standard, the appellants argue that the law has been breached. Simply put, schools can “either pay the athletes proportionately, or they can return all of their federal funds. But they can’t do both.”

For now, the court has stayed the back-pay portion of the settlement, delaying payments until the appeal is resolved. This appeal is likely to delay distribution of the settlement funds and could invite further challenges on similar Title IX grounds.

We will continue monitoring this case closely as it develops, given its significant implications for NIL rights and gender equity in collegiate sports.

On April 8, 2025, Judge M. Casey Rodgers of the U.S. District Court for the Northern District of Florida ruled that the majority of claims asserted in Jaden Rashada’s lawsuit against University of Florida (“UF”) head coach Billy Napier, former UF director of NIL and player engagement Marcus Castro-Walker, and well-known UF booster and President of Velocity Automotive Solutions LLC (“Velocity”), Hugh Hathcock, will survive the defendants’ motions to dismiss and proceed to discovery. The case centers on Rashada’s allegations of fraudulent inducement and related claims tied to a Name, Image, and Likeness (NIL) agreement with the University of Florida, facilitated by the defendants. While Rashada’s claims of tortious interference were dismissed, the court allowed his fraudulent misrepresentation, conspiracy to commit fraud, and negligent misrepresentation claims to move forward. As previously discussed in this blog, the lawsuit, filed by Rashada in May 2023, stems from a four-year, $13.85 million contract that influenced his decision to flip his commitment from Miami to Florida in November 2022.

More specifically, and with respect to the Court’s denial of defendants’ motion to dismiss fraud claims, the court found that Rashada had sufficiently alleged fraudulent inducement by the defendants. Specifically, the complaint detailed how the defendants, acting through their roles at Velocity, made false promises regarding NIL opportunities to secure Rashada’s commitment to UF. The Court noted that these promises were alleged to have been made without the intent to fulfill them, aiming instead to benefit UF’s football program and enhance Velocity’s reputation. The Court also rejected defendants’ argument that Rashada failed to plead fraud with particularity, as required by the Rule 9(b) heightened pleading standard for fraud claims. The Court held that the complaint alleged specific facts detailing the fraudulent scheme, including communications and actions taken by the defendants that misled Rashada, which satisfied Rule 9(b). The Court also upheld the claim that Velocity aided and abetted the fraudulent actions, finding that Velocity, through its executives—e.g., Hathcock—had knowledge of the fraudulent scheme and provided substantial assistance in its execution.​

Interestingly, the Court chose to essentially “punt” on the issue of sovereign immunity that defendants Napier and Castro-Walker raised in their motions to dismiss the complaint. Sovereign immunity, which protects state employees from lawsuits in certain circumstances, was raised by the defendants as a defense, but the Court ruled that it was premature to decide this matter at the motion to dismiss stage. The question of whether sovereign immunity applies to Napier and Castro-Walker will be explored further as the case progresses and is certainly an issue that all public institutions should be following closely.

Overall, this order is significant as it allows Rashada’s fraud-related claims to proceed, highlighting the Court’s recognition of the complexities involved in NIL agreements and the responsibilities of entities facilitating such arrangements. The decision underscores the importance of transparency and integrity in contractual negotiations within the collegiate sports arena. The Court’s ruling in Rashada v. Hathcock serves as a critical reminder of the legal obligations schools, coaches, boosters and collectives owe to student athletes in their NIL contractual relationships and negotiations. It remains to be seen if this case will actually proceed meaningfully through discovery or if a settlement is now imminent.