Higher Education Institutions face certain contract risks associated with pursuing enforcement of NIL contracts.
On January 20, 2026, Duke University filed a lawsuit against its own quarterback. Darian Mensah, who had committed to return to Duke for the 2026 season in December, unexpectedly entered the NCAA transfer portal on Jan. 16—just hours before the portal window closed.
The lawsuit centers on Mensah’s multi-year name, image, and likeness (NIL) contract, valued at approximately $8 million, running through Dec. 31, 2026. Duke argues that this contract grants it exclusive rights to his NIL within the context of higher education and football and asserts that Mensah’s attempt to transfer constitutes a breach, causing irreparable harm. Duke sought an injunction and restraining order to prevent him from leaving and enrolling elsewhere, particularly with Miami, which is widely assumed to be his preferred destination.
A judge denied Duke’s request to block Mensah from entering the transfer portal and recused himself due to personal ties to Duke athletics. Arbitration is required under the contract, and the dispute will continue through formal processes. Meanwhile, Mensah remains in the portal, but the legal battle complicates his ability to move to another program.
Elevated Contract Enforcement Costs & Legal Exposure
The Mensah lawsuit demonstrates how NIL contracts now function like binding employment agreements. When athletes attempt to transfer, schools may feel compelled to litigate or pursue injunctions to enforce these deals. This could lead to high legal expenses, unpredictable court outcomes and administrative burden. Frequent litigation can also force institutions to expand legal, compliance and arbitration support structures.
Mitigation strategies for contract enforcement costs & legal exposure:
- Standardized NIL Contract Templates: Use consistent contract structures vetted through internal and external counsel to reduce ambiguity and litigation triggers.
- Include Clear Dispute Resolution Protocols: Ensure arbitration clauses are explicit, time-bound, and define interim remedies, reducing the need for emergency injunctions.
- Create a Centralized NIL Legal/Compliance Function: A standing team reduces reactive legal costs and speeds issue resolution
Financial Risk Linked to NIL Contract Dependence
High value NIL deals create financial liabilities and increased exposure when athletes breach or contest terms. If courts limit enforceability, schools risk losing the value of their investments in marketing, branding, local sponsorships and donor-funded NIL pools. Conversely, if schools escalate litigation, they incur expenses without guaranteed recoveries.
Mitigation strategies for financial risks:
- Performance or Tenure Based Compensation Tiers: Pay a portion of NIL compensation only after defined milestones (season completion, academic standing, etc.), reducing sunk cost risk.
- Add Buyback or Reimbursement Clauses: Where legally permissible, include repayment triggers for early departure.
- NIL Insurance Policies: Insure high value contracts against breach or non-performance.
- Diversify Marketing Investments: Spread NIL promotional efforts across multiple athletes to avoid over reliance on a single star.
Precedent Risk: Future Athletes Following Suit
If athletes can successfully exit NIL contracts via the portal, similar cases may appear. Institutions may face a wave of renegotiation demands, mid-contract transfer threats or strategic portal entries designed to force better terms. Athletic departments must reassess contract structures, increasing drafting complexity and administrative overhead.
Mitigating precedent risk:
- Strengthen Contractual Clarity: Avoid vague language—clearly define obligations related to enrollment, participation, representation, and NIL licensing.
- Introduce Transfer-Proof Structures: Clauses that travel with the athlete (e.g., requiring fulfillment of promotional commitments regardless of school) can reduce incentives to breach.
- Regular Contract Audits: Annually review template agreements against evolving case law and NCAA/state regulations.
- Collaborate Across Conferences: Push for shared NIL standards within the ACC, Big Ten, SEC, etc., reducing incentives for athletes to seek more favorable contractual loopholes at other institutions.
About Schneider Downs Higher Education Services
The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.
