The NCAA and the nation’s five largest conferences announced Thursday evening that they had agreed to pay nearly $2.8 billion to settle a host of antitrust claimsa monumental decision that paves the way for a revolutionary revenue sharing model that could begin distributing millions of dollars directly to athletes as early as the fall 2025 semester.
NCAA President Charlie Baker, along with commissioners from the Atlantic Coast Conference, Big Ten, Big 12, Pac-12 and Southeastern Conference, issued a joint statement saying they had agreed to terms of payment. They called the decision “an important step in the ongoing reform of college sports that will benefit student-athletes and bring clarity to college sports across all divisions for years to come.”
Terms were not disclosed, although some details have emerged in recent weeks. They mark the end of the NCAA’s fundamental model of amateurism that dates back to its founding in 1906. Indeed, the days when the NCAA punished athletes driving cars equipped with boosters began to disappear three years ago when the ‘organization lifting restrictions on sponsorship deals backed by money known as name, image and likeness.
The agreement must still be approved by the federal judge overseeing the case, and the plaintiffs will have the opportunity to opt out or challenge the terms of the agreement. If so, it will mark the start of a new era in college sports where athletes are paid more like professionals and schools can compete for talent using direct payments.
” There is no doubt. It’s a huge step forward,” said Tom McMillen, a former Maryland basketball player and congressman who has led an association of collegiate athletic directors for the past eight years.
Now, it’s not a stretch to envision seasons where star quarterbacks or top prospects on college basketball teams not only cash in big NIL deals, but also have six-figure school payouts in the bank to play.
“This historic settlement will bring college sports into the 21st century, with college athletes finally able to receive a fair share of the billions of dollars in revenue they generate for their schools,” said Steve Berman, a leading lawyer for the plaintiffs. . “Our clients are the foundation of the NCAA’s multi-billion dollar business and can finally be compensated fairly and fairly for their extraordinary athletic talents.”
There is a host of details remain to be determined, but the deal calls for the NCAA and conferences to pay $2.77 billion over 10 years to more than 14,000 former and current college athletes who say now-defunct rules prevented them from making money from to sponsorship and sponsorship agreements dating back to 2016.
“Even if it’s just because of overwhelming legal pressure, the NCAA, conferences and schools agree that college athletes should be paid,” said Ramogi Huma, a former football player at UCLA and a longtime advocate for college athletes. “And there’s no going back from there.” It’s truly revolutionary.
Some of the money will come from the NCAA’s reserve funds and insurance, but even though the lawsuit specifically targeted five conferences comprising 69 schools (including Notre Dame), dozens of other NCAA member schools will see smaller distributions from the NCAA to cover the mammoth payout.
Schools in the Big Ten, Big 12, ACC and SEC will likely end up bearing the brunt of the settlement going forward, at an estimated cost of around $300 million each over 10 years, the majority of which would be paid directly to athletes.
“The settlement, while undesirable in many respects and promising only temporary stability, is necessary to avoid what would be the bankruptcy of college athletics,” said Notre Dame President Rev. John I. Jenkins. .
PAYING ATHLETES
Under the new compensation model, each school will be allowed, but not required, to set aside up to $21 million in revenue to share with athletes annually, although the cap could increase as revenue increases.
Athletes in all sports would be eligible for payments and schools would have the freedom to decide how that money would be distributed among sports programs. Scholarship limits per sport will be replaced by membership restrictions.
It is unclear whether the new compensation model is subject to the Title IX gender equity law, nor whether schools will be able to implement NIL activities internally as they hope and eliminate the recall collectives that have arisen in recent years. to pay the athletes. Both of these topics could lead to more prosecutions.
THE CASE
The federal class action at the center of the settlement, House vs. the NCAA, was to be tried in January. The complaint, filed by Grant House, a former Arizona State swimmer, and Sedona Prince, a former Oregon basketball player and current TCU basketball player, states that the NCAA, as well that the five richest conferences, wrongly barred athletes from making money.
The suit also argued that athletes were entitled to a portion of the billions of dollars the NCAA and those conferences earned through media rights deals with television networks.
Under political and public pressure, and facing the prospect of another legal loss that some college athletes say could reach $20 billion in damages, NCAA and conference officials have conceded on what has long been a core tenet of the business: that schools don’t pay athletes to play beyond a scholarship.
This principle has been undermined several times over the past decade. Notably, the Supreme Court unanimously ruled against the NCAA in 2021 in a case related to education-related benefits.
The narrow scope of the Alston case did not collapse the college sports system, but the strong rebuke of the NCAA’s model of amateurism opened the door to more lawsuits. Justice Brett Kavanaugh, a former Yale athlete, put it bluntly: “The bottom line is that the NCAA and its member colleges eliminate compensation for student-athletes who collectively generate billions of dollars in revenue for colleges every year. »
OTHER CASES
The regulation should cover two other antitrust cases facing the NCAA and major conferences that are challenging athlete compensation rules. Hubbard v. NCAA and Carter v. NCAA are also currently before judges in the Northern District of California.
A fourth case, Fontenot v. NCAA, creates a potential complication because it remains in a Colorado court after a judge. refused a request to combine it with Carter. It is unclear whether Fontenot will be part of the settlement and that is important because the NCAA and its conferences do not want to have to pay more damages if they lose in court.
“We will continue to make our case in Colorado and look forward to hearing the terms of a proposed settlement once they are actually released and presented in court,” said George Zelcs, attorney for the plaintiffs in Fontenot. . .
COLLEGE ATHLETICS REVIEW
The solution agreed in the settlement is historic, but not surprising. College sports have been moving in this direction for years, with athletes receiving more and more monetary benefits and rights that they say are long overdue.
In December, Baker, the former governor of Massachusetts who had been in office for 14 months, proposed creating a new level of Division I athletics where schools with the most resources would be required to pay at least half of their athletes $30,000 per year. This suggestion, along with many other possibilities, remains under discussion.
The settlement does not make all of the problems facing college sports go away. The question remains whether athletes should be reputable employees from their schools, something that Baker and other college sports leaders fight against.
Some type of federal legislation or antitrust exemption is likely still needed to codify the terms of the settlement, protect the NCAA from future litigation and preempt state laws that attempt to neutralize the organization’s authority. As is, the NCAA still faces lawsuits which call into question its ability to govern itself, in particular by establishing rules limiting multiple transfers.
“This agreement also provides a road map for college athletic leaders and Congress to ensure that this unique American institution can continue to provide unparalleled opportunities to millions of students,” the joint statement said. “The entire Division I made today’s progress possible, and we all have work to do to implement the terms of the agreement as the legal process continues. We look forward to working with our various student-athlete leadership groups to write the next chapter of college sports.
Federal lawmakers have indicated they would like to see something done, but even if several bills have been tablednone went anywhere.
Despite the unanswered questions, one thing is clear: Major college athletics are poised to become more like a professional sport than ever before.
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