Noncompetes might be dying. What does that mean for college sports?

Good morning, and thanks for spending part of your day with Extra Points. It’s been a big few days in off-the-field stories…so let’s get into it.

So what happens if the FTC actually just killed noncompetes?

Earlier this week, the Federal Trade Commission, not an agency we’re in the habit of mentioning here on a sports business newsletter, announced a final rule that will ban virtually all noncompete agreements in employment contracts. Existing noncompete contracts with “senior executives” can remain, but once the FTC’s ruling goes into effect, existing worker noncompetes will no longer be enforceable.

In the broader college sports industry, this is a big deal, but maybe not exactly how you might think.

Based on my professional experience in reading a gazillion of these contracts, explicit non-competes are not super common in coaching or senior college administrator gigs, although they do sometimes exist. The mechanism that is meant to prevent coaches from leaving for direct competitors at the drop of the hat is the buyout, a tool that would still be legal under this FTC ruling. Lower level athletic department employees often work without formal contracts,

But elsewhere in the sports world, these arrangements are pretty common. Every single media job I’ve ever had, (or have been formally offered) included noncompete language, with some extending more than a year after I would hypothetically leave a position. For personnel that work in industries that serve and support college athletics, like athletic apparel, NIL education and software, multimedia rights, gambling education and more, noncompetes are common, even among junior employees. These contract clauses are also very much a thing in professional sports administration, gambling companies, and more.

If all of those restrictive covenants are suddenly unenforceable, I’d imagine you’ll see pressure to improve wages/working conditions, as well as new contractual “sticks” to prevent employees (and institutional knowledge) from walking out the door to competitors.

But there’s a legitimate chance this ruling is never actually put into place. The US Chamber of Commerce has already announced they plan to sue, claiming the FTC has exceeded its constitutional authority. Given the conservative bent of the current Supreme Court and many district courts, I think the odds that some judge somewhere will claim this act violates Section 8 of the Constitution are pretty high. Where the case eventually ends is outside the prognostication powers of this humble didn’t-go-to-law-school newsletter.

But in the short term, I can absolutely see the ruling giving major college sports business-adjacent firms a reason to maaaaaybe not depend on that non-compete being ironclad. Good news if you’re a reporter, college sports SaaS developer or sales manager. Probably bad news if you’re an executive.

Hey, speaking of lawsuits,

If you’re interested in public records based reporting, you’ll really want to upgrade to our premium membership

Beyond claiming that the documents aren’t public records because they’re contracts between two private entities, the ACC is also claiming that the documents contain trade secrets that would harm the conference. While every state’s open records laws are different, it isn’t uncommon for there to be exceptions to allow institutions to protect trade secrets.

To be fair to the state of Florida and Florida State fans everywhere, it’s not uncommon for public schools to explicitly try to evade public records laws by keeping sensitive records exclusively in the hands of a conference office, or by making sure all conference correspondence is done away from official phones, emails or record-keeping systems.

In 2019, Florida State set up their athletic department as a Direct-Support Organization (DSO), which essentially protects much of the department’s activity from pesky open records requests (Florida and UCF have done the same). If the university and their backers are somehow moved by the spirit to push for substantially more open access to athletic department documents…wonderful! They can start with their own campus.

And that goes for the State of Florida too. 

If the state prevails, it’s entirely possible that media rights contracts involving other in-state institutions, like the Big 12, AAC, CUSA, ASUN and more, could become public, along with other previously sealed vendor agreements. That’s great news for reporters like me, sports business researchers, public transparency and nosy fans. Maaaaybe not ideal for anybody trying to negotiate an expensive media rights broadcast agreement.

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