College Basketball GM State of the Union

Part I: Multiyear Contracts & Buyouts

Hello everyone, and thanks for being here. I haven’t posted much lately. With the school year approaching, I’ve been focused on designing new ways to teach my upcoming classes in sports law and sports sociology — and, candidly, spending more time listening and less time writing.

Over the past few weeks, I’ve had off-the-record conversations with GMs, agents, and industry insiders across the college basketball landscape, many of whom I had no prior relationship with.

While I often sit in my ivory tower thinking about roster construction, contract structures, and recruiting strategy, it’s helpful to be reminded of the gap between what sounds good in theory and what’s truly actionable in practice. That gap is where athletic departments are being forced to operate.

This series, the College Basketball GM State of the Union, is my attempt to map that terrain. Over the coming installments, I’ll summarize where the market is moving, highlight the strategies schools are deploying, and offer recommendations for how athletic departments can best adapt.

Multiyear Contracts & Buyouts

Multiyear contracts are one of the most under-discussed experiments in college basketball. Some schools are exploring ways to utilize their revenue-sharing contracts to lock athletes into multi-season deals with buyouts, bringing college terms closer to the predictability of professional deals. On paper, it is a high-upside strategy for institutions looking to hedge against the volatility of the transfer portal and for finding team-friendly deals in a free-market for athlete payment. In practice, it’s a legal and PR minefield.

In recent guidance, the NCAA has expressly allowed multiyear deals and signaled support for athlete buyouts. Revenue-sharing contracts have ostensibly made these arrangements easier to structure, yet according to many basketball programs, interest remains minimal. The main deterrent is perceived enforceability: while players can agree to multiyear terms and buyouts, there’s little clarity on the mechanisms that ensure follow-through. Few schools want to be a test case when a deal and, ultimately, a relationship fall apart.

Unlike professional basketball, the NCAA lacks a governance infrastructure to regulate player movement. Courts have stripped the NCAA of any ability to tether athletic eligibility to enrollment status. In European basketball, by contrast, FIBA oversees contracts through its own arbitration tribunal and mandates a Letter of Clearance before a player can change teams. That system gives real weight to contractual provisions when both sides sign on and can effectively bind athletes to teams that hold their rights and levy penalties for players, teams, and agents who do not honor the commitments of their contracts.

Outside of a closed system like the FIBA’s Basketball Arbitral Tribunal, buyouts are not a guaranteed legal remedy. For player transfers outside of FIBA, courts in Europe have found expensive buyout provisions to violate standards of contractual fairness and, in turn, jeopardize the ability for clubs to recoup investment in developing youth players.

If a player transfers between two FIBA organizations, there is no issue; the buyout provision is overseen and often upheld by FIBA oversight, and penalties can be imposed.¹ This is something the NCAA does not yet have, and enforcement of buyout payments would have to run through the courts or non-NCAA-led arbitration — and in either case, remain subject to state and federal contract law.

So, what can buyouts actually look like in the NCAA context? According to U.S. jurisprudence, liquidated damages (fancy legal jargon for a buyout) can be enforced only if it is a reasonable estimate of damages to the non-breaching party and not done with the intent to be punitive.

While it is indeterminate how courts will handle college athlete buyouts, we have seen litigation over buyouts within the coaching context before. In Vanderbilt University v. DiNardo (6th Cir. 1999), head football coach Gerry DiNardo contested the legality of a roughly $280,000 buyout for his early termination to take the same position at LSU.

The Sixth Circuit Court of Appeals sided with Vanderbilt, stating that the buyout provision was not a punitive measure. The language of the court presented a tolerance for a wide latitude of liquidated damages within athletics contracts:

Vanderbilt offered the two-year contract extension to DiNardo well over a year before his original contract expired. Both parties understood that the extension was to provide stability to the program, which helped in recruiting players and retaining assistant coaches. Thus, undisputed evidence, and reasonable inferences therefrom, establish that both parties understood and agreed that DiNardo's resignation would result in Vanderbilt suffering damage beyond the cost of hiring a replacement coach…

University may actually benefit from a coaching change (as DiNardo suggests) matters little, as we measure the reasonableness of the liquidated damage provision at the time the parties entered the contract, not when the breach occurred, Kimbrough & Co., 939 S.W.2d at 108, and we hardly think the parties entered the contract anticipating that DiNardo's resignation would benefit Vanderbilt.

The stipulated damage amount is reasonable in relation to the amount of damages that could be expected to result from the breach. As we stated, the parties understood that Vanderbilt would suffer damage should DiNardo prematurely terminate his contract, and that these actual damages would be difficult to measure.

Given the nebulous and hard-to-forecast financial losses schools face, such as public reputation, ticket sales, missed recruiting opportunities, and donations, a buyout penalty does not need to be perfect. A U.S. court would likely enforce a non-punitive and well-constructed buyout provision within an athlete’s rev-share contract under the same line of reasoning that the Sixth Circuit applied to Coach DiNardo’s buyout.

Getting an agent/player to agree to a buyout is a separate challenge, and even with a buyout in place, the ability to “own a player’s rights” does not yet exist at the collegiate level like it does in the pros.

There is little practical enforceability of multiyear deals from the side of the college athlete. However, that is no different than any professional sport. While professional athletes commonly sign multiyear deals, those same players can force management to rework contract terms every offseason at the threat of holding out or demanding a release/trade — take one look at the NFL offseason this year and you will see James Cook, Trey Hendrickson, Cameron Heyward, Micah Parsons, and Terry McLaurin all engaged in this practice.

While it is unusual for fans, coaches, and administrators to see similar systems play out for 18 and 19-year-olds, effectively, those are the economic and legal realities of star athletes who yield a skillset that grants them tremendous leverage in salary negotiations.

In college sports, the optics of any contractual disagreement can be dangerous. The media fallout from a school suing an athlete for breach of contract could damage the program’s brand and strain relationships with future players and agents.

That risk came into focus earlier this year when Wisconsin accused Miami of tampering after cornerback Xavier Lucas de-enrolled from UW and enrolled at Miami, sidestepping the transfer portal entirely. Wisconsin filed a lawsuit against Miami for tortious interference. Still, as far as Lucas is concerned, the NCAA confirmed his move complied with its eligibility rules, making other schools wary of testing similar clauses.

The critical takeaway is that Lucas’s alleged breach of a multiyear commitment demonstrates the structural limits of revenue-sharing deals. These agreements cannot guarantee the rights of a player to be controlled for any set term, because athletes can de-enroll and face no eligibility penalty. As the NCAA told ESPN in response to the situation,

“NCAA rules do not prevent a student-athlete from unenrolling from an institution, enrolling at a new institution, and competing immediately.”

Depending on contractual details, Lucas may still be liable for a buyout. But as far as the ability to play is concerned, schools cannot lawfully impose anything resembling a non-compete to their non-employee athletes.

Multiyear deals expose schools to potential holdouts if players believe their performance justifies a higher compensation rate, especially in a rapidly changing market. Tennessee quarterback Nico Iamaleava served as a cautionary tale of how team-friendly deals can quickly sour in the current climate.

After Darien Mensah and Carson Beck signed significantly higher compensation packages this offseason, Iamaleava (earning roughly $2.4 million annually) sought a new deal in the $4 million range to keep up with a booming QB market. When Tennessee declined to amend his contract, he skipped spring practice, entered the transfer portal, and headed to UCLA.

Star players hold massive leverage. For schools, the surest way to maintain theirs is by avoiding long-term commitments.

Low- and mid-major programs have even less appetite for multiyear contracts. Low-major schools are hindered by limited infrastructure and unpredictable budgets. At this level, finances can swing year to year based on ticket sales, donor contributions, and revenue from “buy games,” making multiyear obligations impractical.

Mid-majors benefit from greater budget forecasting and have the ability to provide multiyear deals, provided they understand their role in the larger ecosystem. For many players, a multi-year contract at a mid-major could hinder their ability to earn big in a very finite window of college compensation, increasing the risk of a holdout or an unwillingness to agree to a multiyear contract.

No low- or mid-major program I spoke with indicated any current plans to implement multiyear commitments; some power conference schools have used multiyear contracts in a limited capacity that is a part of a broader roster-building strategy. Most often, high-major schools are leveraging multi-year contracts as an act of good faith towards high-school recruits to offset the recruiting pitches that mid-major institutions can provide.

Without collegiate playing time, recruits outside of the top echelon of high school rankings have little market value. Spending a year at a mid-major is an attractive option that allows athletes to prove themselves and quickly increase their value on the transfer market, where they could earn a hefty payday through a competitive transfer portal bidding process. At lesser-resourced schools, freshmen often have far more opportunities to step into minutes and usage immediately.

High-major schools can remain competitive in attracting prep recruits even if they can’t guarantee playing time through the use of multiyear deals. Teams are willing to take a flyer on players they project well to gain depth on a team-friendly deal, ultimately allowing greater spending towards high-priority prep prospects or high-level transfers expected to provide more on-court impact.

A multiyear deal from a high-major gives an athlete a guaranteed two-year cushion to find a role on the team and develop. Coaches can bolster roster continuity with a relatively low-cost investment that has significant upside, even with the potential of a reconstructed contract after an exceptional first season. In Part II, Winning on the Margins, we will dive more into how, contrary to mainstream belief, high school recruiting is still a MASSIVE component of competitive strategy at every level of college basketball.

1. A significant footnote. For players who leave European systems to play in the NCAA, a non-FIBA enterprise, it presents a devastating risk of European clubs losing out on significant financial investment in developing a youth athlete. With payment in college basketball far beyond what European teams can provide teenage talent, and a risk of unenforceability of a buyout outside of FIBA jurisdiction, this has been rapidly changing how European clubs are thinking about their business structure, and some clubs have begun sunsetting their youth programs. I wrote about it more a while back: here.

Noah Henderson is the Director of the Sport Management Program and a Clinical Instructor at Loyola University Chicago’s Quinlan School of Business. His work explores the intersection of law, economics, and the social consequences of college athletics, particularly in the areas of name, image, and likeness (NIL), athlete labor rights, and sports gambling.

Henderson helped amend Illinois’ NIL legislation and played a direct role in establishing early frameworks that facilitated the legal payment of college athletes at Student Athlete NIL. He continues to advise athletic departments, brands, and sports agents nationwide on NIL policy, legal compliance, and best practices.

He contributed extensively to Sports Illustrated’s NIL Daily, where his reporting and commentary helped shape public understanding of the evolving business of college athletics. His insights have been featured by ESPN, NPR, CNN, PBS, Sportico, the Chicago Tribune, and others.

Henderson holds a Juris Doctor from the University of Illinois College of Law and a degree in Economics from Saint Joseph’s University, where he was a four-year letter winner on the golf team.