State vs. Settlement: Tennessee’s New NIL Law Breaks from NCAA Agreement

A new law in Tennessee empowers schools to directly facilitate NIL deals—potentially defying the NCAA and proposed House settlement.

The State of Tennessee just made a bold move in the ongoing battle over NIL—and it could shake up how schools across the country approach athlete compensation.

After recently signing a new law (Senate Bill No. 536) into effect, which was approved on May 1, 2025, the Volunteer State has put its universities back in the driver’s seat when it comes to NIL deals.

The state law says schools can now directly facilitate and support NIL compensation for their athletes—even through third-party collectives or affiliated foundations. That’s a significant shift from the NCAA’s current gray area, where schools are expected to keep some distance.

So what’s the catch? Basically, this law dares the NCAA to try to stop them.

Here are the key takeaways:

• Tennessee schools can directly arrange and provide NIL deals to athletes unless they’re explicitly blocked by federal law or a binding court order.
• The NCAA can’t punish schools in Tennessee (i.e., Tennessee, Vanderbilt, or Memphis) for participating in NIL activities that are legal under state law.
• Athletes can’t lose eligibility over NIL income, and their scholarships won’t be impacted by it either.
• The law protects schools from lawsuits for their involvement in NIL deals and shields internal NIL records from open records requests—meaning it’ll be harder for the public to see where the money’s going.
• Private colleges (like Vanderbilt) can opt out of parts of the law if they agree with the NCAA to follow its rules instead.

As Tennessee pushes the envelope, it directly challenges the pending House v. NCAA settlement—a landmark agreement designed to fundamentally reshape college sports.

Unless Congress acts quickly, the NCAA’s already shaky landscape will continue to deteriorate, leaving states to create their own rules and further fuel an NIL arms race.

Georgia head coach Kirby Smart issued a stark warning this week: Without uniform national guidelines, universities could soon find themselves forced into painful decisions, including cutting non-revenue sports. Traditionally, Olympic and smaller sports programs rely heavily on revenue from football and basketball to survive. But if schools must increasingly funnel resources into ever-escalating NIL payouts to compete for talent, sports like wrestling, swimming, and track and field will be first on the chopping block.

It isn’t just finances at stake, either. The very integrity of college athletics hangs precariously in the balance. NIL, while empowering athletes, has opened doors to bidding wars and questionable recruiting tactics. Without Congress stepping in, these pressures threaten the fairness, transparency, and legitimacy that have defined collegiate athletics for generations.

In short, Tennessee’s new law isn’t just a local policy shift—it’s an alarm bell signaling a potentially chaotic future. The future of college athletics—and the many student-athletes whose sports may hang in the balance—depends on swift and decisive action from lawmakers on Capitol Hill.