The NCAA is investigating the University of Tennessee football program for a possible recruiting violation involving a funding group, leading to a significant escalation in efforts to curb the rapidly growing role of outside money in college sports, according to people familiar with the case .
The investigation focuses in part on the use of a private jet by a so-called donor collective to fly a high-profile recruit — now the school's starting quarterback — to campus while the university was courting him.
It would be a violation of NCAA rules for the booster group to pay for quarterback Nico Iamaleava's trip. The investigation comes after the NCAA penalized Tennessee for various recruiting violations and signals the NCAA's growing concern about the extent and influence of money poured into college sports by donor collectives.
The case could have profound implications for the direction of high-profile programs across the country, particularly in football, where outside money raised by collectives and paid out to players has transformed the economics of college athletics. The investigation into Tennessee's athletic program was first reported 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 briefed on the matter. The program is already on probation for past recruiting violations, and school officials fear the NCAA could take drastic action, such as banning the team from postseason play and disqualifying players.
Given this possibility, the school has retained several law firms and is considering a number of legal options to address any potential consequences.
The focus of the investigation is donor collectives, which are organized groups of alumni and other supporters 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 that allows players to benefit from endorsement deals known as name-image likeness deals, or NIL
Collectives are increasingly ensuring that athletes receive salaries that are in no way inferior to those of professionals. Iamaleava, Tennessee's quarterback, has a deal with the school that may be worth $8 million. After playing a limited role for most of last season, he became the team's starter in the Citrus Bowl on New Year's Day and led Tennessee to a 35-0 victory over Iowa.
At many Division I schools, collectives are closely integrated into recruiting upperclassmen, although they are not technically affiliated with the universities they support, providing lucrative deals to retain star players.
The NCAA has set rules for these groups, including prohibiting them from explicitly offering cash to lure recruits and saying deals can't be done until an athlete commits to a school. But the NCAA has also been hampered by court losses that undermine its power to regulate collectives. Until recently, there was little evidence that they were being monitored at all.
As a result, high-profile college sports programs, particularly in football and basketball, have become a nearly unfettered market, with coaches openly asking alumni and other supporters to remain competitive through monetary donations.
Some schools have become increasingly bold, calling on their state lawmakers to push back against the NCAA when it tries to set rules.
The most recent example came in December, when attorneys general in seven states – including Tennessee – filed an antitrust lawsuit against the NCAA, calling any transfer eligibility restrictions a restraint of trade. The Justice Department joined the lawsuit this month.
NCAA President Charlie Baker has asked Congress for an antitrust exemption. He testified on Capitol Hill that those lawsuits — along with recently enacted state laws targeting NIL rules — made it nearly impossible for the organization to govern its members.
The New York Times has counted at least 140 collectives operating at schools with major football and basketball programs. Collectives now account for around 80 percent of all name, image and likeness payments to athletes, far more than all the commercial brands for which the system was developed.
In investigating Tennessee's football program, the NCAA is examining a team backed by one of the richest and most outspoken collectives in the country, a grant-funded group called the Volunteer Club. This group is closely tied to a marketing agency called Spyre Sports Group: the two companies share the same top officials and the same address in Knoxville, Tennessee.
Last year, the website On3.com, which tracks collectives, called the Volunteer Club the “leading collective in the country” after the group said it raised $13.5 million for Tennessee athletes.
The biggest prize went to Mr. Iamaleava, a 6-foot-2 quarterback from Long Beach, Calif., who was the fourth-ranked recruit in his class.
“The nice word used here is 'collective'. But make no mistake: This is a war chest,” Hunter Baddour, a top official at Spyre Sports and the Volunteer Club, said in a podcast in 2022. “We are fundraising and creating a NIL war chest where Tennessee will be the same way be competitive like anyone else in the country.”
As its collective grew, Tennessee improved on the field. After a long, dark stretch, the Volunteers posted a 9-4 record last year and finished the season ranked in the top 20.
Mr. Baddour also founded a lobbying group for this new industry, the Collective Association, which has reportedly called on the NCAA to share some of its extensive television revenue with collectives.
Mr. Baddour and James Clawson, the Volunteer Club's other top official, did not respond to requests for comment on Tuesday.
The NIL rules, which came into effect in 2021, allowed players to be paid for endorsements but still banned students from being paid to play. But collectives have effectively found a way around this limitation.
They signed athletes to huge contracts for tiny amounts of work — sometimes as little as 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 finding “repeated and serious violations” of the ban on coaches using cash to recruit players. These violations occurred before the name, image and likeness system: Instead, coaches paid football players the old-fashioned way, in cash.
Since collectives were formed in late 2021, the NCAA has announced two cases in which it penalized schools for name, image and likeness payments from sponsors. Last year, it handed down lenient penalties to the University of Miami after a patron posted photos of himself courting potential transfer students for the women's basketball team.
This month, however, the NCAA imposed more severe penalties — including a fine and two years of probation — on Florida State after a football coach there drove a potential transfer student to a meeting with a collective. The collective then offered the player $15,000 a month to sign with Florida State, the NCAA said. The player declined the offer and stayed at his original school.
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