Cincinnati Is Testing the Limits of Liquidated Damages in Federal Court in NIL Case
(Editor’s Note: What follows is an exclusive article from Sports Litigation Alert written by Landis Barber is an attorney at Safran Law Offices. The Alert publishes 24 times a year, and subscribers have access to a searchable archive of 6,000 case summaries and articles.)
The University of Cincinnati has filed a breach of contract action in the United States District Court for the Southern District of Ohio against its former starting quarterback, Brendan Sorsby. The complaint is the institution’s attempt at enforcing the $1 million liquidated damages provision contained in its 18-month name, image, and likeness (NIL) agreement with Sorsby. In doing so, the suit presents a legal question that has arisen multiple times in the NIL era of college athletics yet remains unresolved.
Putting it in simple terms, the question is: when a student-athlete transfers during the term of an NIL contract, will courts treat the liquidated damages clause as valid, or as an unenforceable penalty? So far, we have seen cases arise but resolved before a court could issue a ruling.
According to the complaint, the NIL agreement took effect on July 1, 2025, and ran through December 15, 2026. Under its terms, the university acquired a license to use Sorsby’s NIL rights in promotional materials and activities across two football seasons. The complaint states that both parties anticipated that the value of Sorsby’s NIL would increase over time as his performance and public visibility grew. As noted by Boise State professor Sam Ehrlich, “One thing that jumps off the page is Cincinnati categorizing the value lost based on his value as a ‘university representative,’ not as a football player. Beats pay-for-play allegations.”
As to the alleged breach, the agreement included a transfer provision. In short, if Sorsby transferred to another university during the term, he agreed to pay the university “as liquidated damages and not as a penalty” the sum of $1,000,000 within 30 days of departure.
Cincinnati alleges that Sorsby ceased participating in team activities in December 2025, entered the transfer portal in early January 2026, and signed a new NIL agreement with Texas Tech University. According to reports, the new deal carries a value between $4 million and $6 million.
The university contends that the $1 million figure represented a good-faith estimate of anticipated harm at the time of contracting and further asserts that the subsequent deal with Texas Tech University indicates the reasonableness of the agreed sum.
Here, it is undisputed that Sorsby transferred. Thus, the issue is whether the $1 million liquidated damages clause is enforceable under Ohio law.
Ohio courts have long recognized that parties may agree in advance to a fixed sum as compensation for breach, provided that the amount reflects a reasonable forecast of anticipated damages. The Supreme Court of Ohio articulated a test in Samson Sales, Inc. v. Honeywell, Inc., 12 Ohio St.3d 27, 465 N.E.2d 392 (1984). Under Samson’s three-part test, a liquidated damages clause will be enforced if (1) the damages would be uncertain as to amount and difficult to prove, (2) the contract as a whole is not manifestly unconscionable, unreasonable, or disproportionate, and (3) the contract reflects the parties’ intent that damages in the amount stated should follow from breach. See Samson, 12 Ohio St.3d 27, 465 N.E.2d 392, syllabus.
The Eleventh District Court of Appeals utilized the Samson framework in Kent State Univ. v. Ford, 2015-Ohio-41, 26 N.E. 3d 868 (Ohio Ct. App. 2015), providing an inside look at how the court may view the liquidated damages clause in this case.
In Kent State, the university sued its former head basketball coach after he resigned before the end of his contract to accept a position at another university. According to the agreement, if the coach breached the contract, the coach was required to pay an amount equal to his base and supplemental salary multiplied by the number of years remaining. After finding that the clause was enforceable, the trial court awarded $1.2 million, and the appellate court affirmed the ruling.
Applying the Samson test, the court found that damages from the loss of a university coach were difficult to quantify, noting that evidence included potential declines in ticket sales, recruiting effectiveness, donor engagement, and community engagement. Thus, the court emphasized that such harms often defy precise calculation.
The court also relied on Vanderbilt Univ. v. DiNardo, 174 F.3d 751 (6th Cir. 1999), where the United States Court of Appeals for the Sixth Circuit upheld a liquidated damages clause in Vanderbilt University’s contract with former football coach Gerry DiNardo. In DiNardo, the court recognized that the loss of a coach could affect alumni relations, public support, and revenue streams in ways that are not easily measurable.
Turning back to Kent State, the appellate court concluded that the coach had negotiated the contract with counsel, understood the clause, and attempted to modify it. Since the parties intended to include the provision, the court rejected the argument that the university needed to prove actual damages, holding that a valid liquidated damages clause substitutes for proof of actual loss.
Sorsby raises similar questions as Kent State. Although Cincinnati has not attached the NIL agreement as an exhibit to the complaint, Cincinnati presents arguments that are similar to the prior precedent, alleging that Sorsby would “continue to grow and succeed as a quarterback” and that he “could become a significant source of goodwill to promote the University’s brand and visibility.” By arguing the intangible harms that result from breaching the contract, Cincinnati may satisfy the first Samson factor and show that damages were difficult to ascertain.
The second Samson factor may warrant closer scrutiny. The court must determine whether $1 million represented a rational forecast of probable harm as of July 2025, not January 2026. Because the contract has not been made public, it is unclear how the parties arrived at that figure. In Kent State, the formula was straightforward since it was salary multiplied by remaining years. Here, Cincinnati alleges that the number is tied to the promotional value of Sorsby’s NIL over the two-season contract term. Without an easy formula, the court may look more in-depth at how the parties arrived at the $1 million figure.
On the other hand, the third Samson factor appears straightforward. The clause expressly states that the amount constitutes liquidated damages and not a penalty, which is language that Ohio courts treat as relevant, though not dispositive. Evidence that Sorsby negotiated the agreement through a professional agent will weigh in favor of enforcement, consistent with Kent State, which noted that sophisticated negotiation is a sign of the parties’ intent.
Does Sorsby’s deal with Texas Tech University really matter? Maybe. The parties specifically agreed in the contract that his NIL value was expected to increase over time, and that breaching the contract before its expiration would cause substantial – but hard to quantify – future damages to the university. His new deal value supports the parties’ expectation of increasing NIL value over time. On the other hand, Ohio law focuses on the parties’ expectations at the time of contracting. How will a court applying Samson enforce a liquidated damages clause when the market later changed, as anticipated by the parties?
If this case proceeds, its implications will extend beyond Cincinnati and Sorsby. NIL agreements remain relatively new, and courts have not addressed the enforceability of a liquidated damages clause in an NIL agreement. The Southern District of Ohio’s ruling, if it occurs, will happen at a time when universities, agents, and athletes are all adjusting with the times.
Therefore, even without a decision, athletes should carefully review liquidated damages provisions before signing agreements. However, a decision invalidating the clause as a penalty will force universities to reconsider the structure of their agreements, which could include abandoning multi-year terms, adopting more transparent damages formulas, or strengthening buyout provisions.
Kent State gives us a roadmap for how the court may look at this case. While we wait for a ruling, if any, the rest of college athletics will be on the edge of their seat, hoping for clarification on the way forward.
Landis Barber is an attorney at Safran Law Offices in Raleigh, North Carolina, where he focuses on civil litigation, construction law, and sports and entertainment matters. He advises clients ranging from universities to private companies on contracts, transactions, and risk management.