In a historic move, the NCAA and power conferences are on the brink of significant change. This week, a vote on the proposed terms of the House v. NCAA settlement is expected, which could revolutionize how college athletes are compensated – schools would be able to share millions of dollars with their athletes in the future and create a nearly $3 billion fund to pay former athletes for past damages.
The historic settlement would also end at least three major federal antitrust lawsuits against the NCAA and its schools and would resolve a number of high-priority legal challenges facing the college sports industry. While the case could potentially put several issues to bed, there are dozens of unanswered questions and potential implications set to arise from the ruling.
Potential Settlement Details
Although many details of the case are not finalized yet, it is clear that the settlement comes in two parts: (1) paying back Divison 1 athletes who have been denied earning name, image, and likeness (NIL) compensation before the NCAA changed its policy in the summer of 2021, and (2) a future compensation model featuring revenue sharing with athletes.
The first component of the settlement will amount to nearly $3 billion in back pay owed to athletes over the four years preceding the NCAA allowing athletes to earn compensation from their NIL. The amount would be paid over the next 10 years, and a majority of this money would be generated by limiting the funds it distributes to Divison 1 schools annually.
The second part of the settlement is more impactful to the future of college athletics: the power conference schools would agree to a forward-looking revenue-sharing structure that would enable schools to distribute up to $20 million annually to athletes. The model would begin with the 2025-26 season and could evolve over time, potentially increasing the gap between high-revenue sports and other collegiate athletics.
Settlement Support
Not everyone in college athletics agrees that settling is the best course of action. The topic has sparked intense debate among conference presidents and athletic directors over the past year. Approving any settlement likely requires a majority or supermajority vote from a league’s board of university presidents, which could be a significant hurdle.
Over the past year, however, a majority of those in college athletics have come to view a settlement as the only viable option. The SEC and Big Ten even formed a joint advisory board specifically to explore a new model. So, why is a settlement such a viable option?
1. Legal Protection
The settlement would likely offer the NCAA and power conferences protection from further lawsuits for 8-10 years – this is crucial as the NCAA has consistently lost antitrust cases, including the 2021 Supreme Court decision in the Alston case, which ruled that the NCAA’s rules restricting certain education-related benefits for student-athletes violated federal antitrust laws.
2. Consolidation of Cases
The settlement is expected to address other active cases such as Hubbard v. NCAA, which seeks back payment for Alston revenues not paid to athletes, and Carter v. NCAA, which accuses the NCAA and Power Five of violating antitrust laws by preventing individual schools from offering more than the grant in aid. Both lawsuits were brought against the NCAA and power conferences by Jeffrey Kessler, who also leads the House plaintiff team. A settlement could potentially resolve all the cases simultaneously.
3. Cost Avoidance
Settling avoids the risk of significantly higher costs. If the NCAA and power conferences fight the case in court and lose, they could face triple damages.
Settlement Opposition
While many in the college athletics world support the settlement, there are several main arguments made by those against it.
1. Temporary Protection
Any settlement offers only short-term protection from further lawsuits and requires Congressional action for a long-term permanent solution. The NCAA and power conferences have spent years lobbying for federal legislation to manage athlete compensation, but no bill has progressed to full House or Senate committee discussion. A settlement aims to spur congressional action, but its success is uncertain.
2. NIL Arms Race
The settlement may not end the NIL-fueled arms race in college sports, where booster-led groups donate millions to support their teams, because schools cannot directly pay athletes. At well-funded programs, NIL collectives may continue to operate, providing additional cash beyond what schools can offer. If schools buy athletes’ NIL rights, outside NIL could be eliminated, but it’s unclear how many athletes would agree to this arrangement.
A separate case, brought by attorneys general in Virginia and Tennessee, which has temporarily legalized NIL-related inducements from third parties like collectives, complicates the matter further.
3. Player Movement
The settlement alone may not reduce the current rate of player movement. The NCAA recently wanted to change its transfer policies to allow athletes to transfer freely without penalty, aligning with a court injunction.
4. Employee Status
Several active cases could eventually classify athletes as employees. The settlement’s impact on these cases is unclear, causing anxiety for administrators who want to avoid this outcome at all costs.
Potential Implications
One glaring question that arises from the settlement is Title IX compliance. It’s easy to assume that athletes participating in a sport that earns the most revenue (generally football and men’s basketball) will earn more of a share of revenue than those participating in sports. However, Title IX, a federal law that prohibits sex-based discrimination in schools, binds schools. Athletic departments are required by law to provide the same opportunities for women athletes as they do for men – this potentially complicates the allocation process. Additionally, the financial adjustments to accommodate these payments could lead to cuts in other areas, such as administrative positions or non-revenue sports.
Another significant change would involve eliminating existing scholarship caps in favor of roster limits. Currently, college sports utilize scholarship limits – for example, Division 1 baseball is limited to 11.7 scholarships, while its rosters generally end with around 40 players. In implementing uniform roster caps, schools would be allowed to give out 20 baseball scholarships if they chose to. Capping rosters in lieu of scholarships could have serious implications – with smaller roster sizes and more scholarships, the viability of walk-ons, especially for teams with dozens of them, could be at risk. While formalizing roster caps is not part of the settlement, the decision will be left for college sports leaders to decide in the upcoming months.
While the House v. NCAA settlement marks a critical juncture in the evolution of college sports, marking a significant step towards fairness and recognition for athletes, it also introduces new challenges and questions. As the landscape shifts, stakeholders must navigate these complexities to ensure a fair and sustainable future for collegiate athletics.
Resources:
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