When a party to a contract fails to fulfill its contractual obligations, the non-breaching party often can seek damages or restitution. However, in the world of name, image, and likeness (NIL), it may not be so simple. Contracts between collectives and players present a unique relationship that may not have a clear legal remedy.
Arkansas NIL collective Arkansas EDGE recently sent demand letters to former University of Arkansas quarterback Madden Iamaleava requesting payment of $200,000 for his alleged breach of a contract with the collective.
Iamaleava, who enrolled at Arkansas in January 2025, signed a one-year contract with Arkansas EDGE for use of his NIL that was valued at around $500,000. The contract included a buyout clause requiring Iamaleava to repay 50% of any remaining value on the contract if Iamaleava left before the one-year mark. Last month, Iamaleava's older brother Nico, a high-profile quarterback at the University of Tennessee, transferred to UCLA. Days later–just four months into his contract with Arkansas EDGE–Madden left Arkansas and is expected to follow his older brother to UCLA.
Arkansas EDGE claims Iamaleava owes the collective half of the remaining value of his $400,000 contract as a result of his departure from the university, but the Arkansas EDGE claim is in tension with one of the NIL's most important rules: contracts cannot be pay-for-play.
If Iamaleava has yet to set foot on the football field and Arkansas EDGE has yet to meaningfully leverage his NIL in any promotional activity, how will the collective show that the remaining value of Iamaleava's contract is $400,000? More importantly, how will it show that $200,000 is a reasonable estimate of the damages it will suffer as a result of Iamaleava's breach?
In most cases, for a liquidated damages clause to be valid, a plaintiff must show that the damages sought are reasonable and not punitive. Therefore, to be successful in court, Arkansas EDGE will likely need to prove that Iamaleava's departure caused damages in some non-speculative amount based on the collective's inability to market Iamaleava.
There is a pending settlement in the House v. NCAA antitrust lawsuit that, if approved, will allow schools to enter into direct NIL contracts with their student-athletes. Those contracts, as well as contracts with outside NIL collectives, will continue to be required to follow the NCAA's rule prohibiting pay-for-play NIL contracts. This rule makes it difficult for schools and collectives like Arkansas EDGE to allege a breach of contract when an athlete changes schools if the contract was not supposed to be dependent on the athlete's participation on a sports team to begin with.
The college athletics community has its eyes on the result of this dispute. If a lawsuit is filed, it would be the first of its kind where a collective, with the support of a university, has pursued litigation seeking buyout damages from a transferring player for breach of a NIL contract.
And the dispute may only be the beginning of a long road. With thousands of athletes entering the transfer portal every year, the clash between schools/collectives and athletes is inevitable. If the case does not settle and heads toward litigation, the outcome between Iamaleava and Arkansas EDGE could set a precedent for how these types of disputes are resolved in the future.
Venable Sports Law Group will continue to track this issue and others related to NIL and college athletics. Please reach out to the authors or members of this group if you need legal support.