NCAA probe takes on growing role of booster clubs

The University of Tennessee football program is being investigated by the NCAA for potential recruiting violations involving a booster group in a major escalation of efforts to curb the rapidly growing role of outside money in college sports, according to people familiar with the matter.

The investigation is focused in part on the so-called donor collective’s use of a private jet to fly a high-profile recruit — now the school’s starting quarterback — to campus while the university courted him.

It would be a violation of NCAA rules for an auxiliary to pay for quarterback Nico Iamaleave’s trip. The investigation came after the NCAA fined Tennessee for various recruiting violations and signaled the NCAA’s growing concern about the scale and influence of money that donor collectives inject into college sports.

The case could have profound implications for the direction of high-profile programs across the country, particularly in football, where outside money raised and paid to players by the collective has reshaped the economics of college athletics. News of the investigation into Tennessee’s athletic program was first published by Sports Illustrated.

Tennessee officials are deeply concerned that the investigation could result in a devastating blow to the school’s football program, according to a person familiar with the matter. The program is already on probation for past recruiting violations, and school officials are concerned the NCAA could take drastic measures, such as banning them from playing in the postseason and disqualifying players.

Faced with that possibility, the school has hired several law firms and is considering a range of legal options to prevent any fallout.

At the center of the investigation are donor collectives, which are organized groups of alumni and other boosters who donate money to support teams. They have become a major and growing force in college sports in recent years by taking advantage of a new system set up to allow players to benefit from endorsements known as name similarity contracts, or NILs.

Collectives are increasingly agreeing to pay athletes amounts that are competitive with what professionals earn. Iamaleava, the Tennessee quarterback, has an agreement with the school team it could be worth $8 million. After playing a limited role most of last season, he became the team’s starter in the Citrus Bowl on New Year’s Day, leading Tennessee to a 35-0 victory over Iowa.

At many Division I schools, teams, while not technically affiliated with the universities they support, have become closely integrated in high school recruiting and, in an era when athletes can easily move from one school to another in search of better opportunities, in providing lucrative jobs for star retention.

The NCAA has set rules for these groups, including a ban on explicitly offering cash to attract recruits, saying any deals can only be made after an athlete commits to a school. But the NCAA has also been hamstrung by court losses, eroding its power to regulate collegiates. Until recently, there was little evidence that it even worked for them.

As a result, top college sports programs, especially in football and basketball, have become an almost unfettered market, where coaches openly encourage alumni and other sponsors to stay competitive by donating money.

Some schools have become increasingly emboldened, enlisting their state lawmakers to fight the NCAA when it tries to set rules.

The most recent example occurred in December, when attorneys general in seven states — including Tennessee — filed an antitrust lawsuit against the NCAA, calling any restriction on transfer eligibility a restraint of trade. The Ministry of Justice joined the lawsuit this month.

NCAA President Charlie Baker has asked Congress for an antitrust exemption. He testified on Capitol Hill that these lawsuits — along with recently passed state laws targeting NIL rules — have made it nearly impossible for the organization to manage its members.

The New York Times counted at least 140 teams that work at schools with big football and basketball programs. Collectives now account for about 80 percent of all name, image and likeness payments to athletes, far more than all commercial brands for which the system was designed.

In looking into Tennessee’s football program, the NCAA is investigating a team that supports one of the nation’s wealthiest and most visible collectives, an incentive-funded group called the Volunteer Club. That group is closely related to a marketing agency called Spyre Sports Group: the two entities share the same top officials and the same address in Knoxville, Tenn.

Last year, the website On3.com, which tracks collectives, called the Volunteer Club “the leading team in the country” after the group said it raised $13.5 million for Tennessee athletes.

The biggest prize was Mr. Iamaleava, a 6-foot-6 quarterback from Long Beach, Calif., who was the fourth-ranked recruit in his class.

“The nice word used is ‘collective’. But make no mistake: this is a war chest,” Hunter Baddour, top officer of both Spyre Sports and the Volunteer Club, it was said on the 2022 podcast. “We’re raising funds, building a NIL war chest, where Tennessee will be as competitive as anyone in the country.”

As his team grew, Tennessee thrived on the field. After a long dismal stretch, the Volunteers posted a 9-4 record last year, and the team finished the season ranked in the top 20.

Mr. Baddour also organized a lobbying group for this new industry, the Collective Association, which allegedly urged the NCAA to share some of its extensive television revenue with collectives.

Mr. Baddour and James Clawson, the Volunteer Club’s other top officials, did not respond to requests for comment Tuesday.

The NIL rules that came into effect in 2021 allowed players to be paid for endorsements, but still prohibited students from being paid to play. But collectives have effectively found a way around that limitation.

They signed athletes to huge contracts for small amounts of work — sometimes just one social media post a month — to keep them happy and playing at the school of their choice.

Last July, the NCAA fined Tennessee $8 million and placed its athletic program on probation for five years after it found “repeated and massive violations” about banning coaches from using cash to recruit players. Those offenses happened before the system of names, images and characters: instead, coaches paid footballers the old-fashioned way, in cash.

Since the collegiates emerged in late 2021, the NCAA has announced two cases in which it fined schools for paying boosters for names, images and likenesses. Last year it was imposed mild punishments at the University of Miami after the booster posted photos of himself courting potential transfer students for the women’s basketball team.

This month, however, the NCAA imposed stiffer penalties — including a fine and two years of probation — against Florida State after the football coach there drove a prospective transfer student to a club meeting. The team then offered the player $15,000 a month to sign with Florida State, the NCAA said. The player declined the offer and remained at his original school.

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