The NCAA and the nation’s five largest conferences announced Thursday evening that they have agreed to pay nearly $2.8 billion to settle a host of antitrust claims, a monumental decision that paves the way for a groundbreaking model for sharing revenue that could send millions of dollars directly. for athletes beginning in the fall 2025 semester.
NCAA President Charlie Baker, along with the commissioners of the Atlantic Coast Conference, Big Ten, Big 12, Pac-12 and Southeastern Conference, released a joint statement saying they had agreed to settlement terms. They called the move “an important step in the ongoing reform of college sports that will benefit student-athletes and provide clarity to college athletics across all divisions for years to come.”
The terms were not disclosed, although some details have emerged in recent weeks. They mark the end of the NCAA’s fundamental amateurism model, which dates back to its founding in 1906. The days of NCAA punishment for athletes who rode in cars with boosters began to disappear three years ago when the organization lifted the restrictions on endorsement deals, backed by so-called name, image and likeness money.
The deal must still be approved by the federal judge overseeing the case and plaintiffs will have the opportunity to opt out or challenge the terms of the agreement. If it stays that way, it will herald the dawn of a new era in college sports, where athletes are compensated more like professionals and schools can compete for talent with the help of direct payments.
“There’s no doubt about that. It’s a huge leap forward,” said Tom McMillen, the former Maryland basketball player and congressman who has led an association of collegiate athletic directors for the past eight years.
Now, it’s not far-fetched to look ahead to seasons where star quarterbacks or top players on college basketball teams not only cash in on big NIL deals but also have six-figure college paychecks in the bank to play.
“This groundbreaking settlement will bring college sports into the 21st century, with college athletes finally able to receive their fair share of the billions of dollars in revenue they generate for their schools,” said Steve Berman, one of the plaintiffs’ lead attorneys. . “Our customers are the foundation of the NCAA’s multi-billion dollar business and can finally be fairly and equitably compensated for their extraordinary athletic talents.”
Many details remain to be determined, but the agreement 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 from monetizing its 2016 endorsement and sponsorship deals.
“Even if only because of overwhelming legal pressure, the NCAA, conferences and schools agree that college athletes should be paid,” said Ramogi Huma, a former UCLA football player and longtime advocate for college athletes. “And from there, there’s no going back. That is really groundbreaking.”
Some of the money will come from NCAA reserve funds and insurance, but while the lawsuit specifically targeted five conferences made up of 69 schools (including Notre Dame), dozens of other NCAA member schools will receive smaller payouts from the NCAA to cover the gigantic disease. payout.
Schools in the Big Ten, Big 12, ACC and SEC are likely to bear the brunt of the settlement in the future, with an estimated cost of approximately $300 million each over ten years, most of which would be paid directly to the athletes paid.
“The settlement, while undesirable in many ways and promising only temporary stability, is necessary to prevent the bankruptcy of college athletics,” said Notre Dame President John I Jenkins.
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 per year, but as revenues rise, that could also increase the cap.
Athletes in all sports would be eligible for payments and schools would be given the freedom to decide how that money is distributed among sports programs. Scholarship limits per sport will be replaced by roster limitations.
Whether the new compensation model falls under the Title IX Gender Equity Act is unknown, as is whether schools will be able to bring NIL activities in-house, as they hope, and the booster-run collectives that have emerged in recent years. to squeeze out. pay athletes. Both topics could lead to more lawsuits.
The federal class action lawsuit at the center of the settlement, House v. NCAA, was scheduled to go to trial in January. The complaint, filed by former Arizona State swimmer Grant House and Sedona Prince, a former Oregon and current TCU basketball player, said the NCAA, along with the five wealthiest conferences, improperly prohibited athletes from earning endorsement money.
The lawsuit also argued that athletes were entitled to a share of the billions of dollars the NCAA and those conferences earn from media rights deals with television networks.
Amid political and public pressure, and faced with the prospect of another lawsuit that some in college sports say could amount to as much as $20 billion in damages, NCAA and conference officials conceded what has long been a core principle of the enterprise: that schools do not directly pay the athletes to play outside of a scholarship.
That principle has been dented countless times over the past decade. Notably, the Supreme Court ruled unanimously against the NCAA in 2021 in a case related to education-related benefits.
The narrow focus of the Alston case did not collapse the collegiate sports system, but its strong rebuke of the NCAA model of amateurism opened the door to more lawsuits. Judge Brett Kavanaugh, a former Yale athlete, put it bluntly: “The bottom line is that the NCAA and its member colleges suppress the compensation of student athletes who collectively generate billions of dollars in revenue for colleges each year.”
The settlement is expected to cover two other antitrust lawsuits facing the NCAA and major conferences that challenge athlete compensation rules. Hubbard vs. the NCAA and Carter vs. the NCAA are also currently before judges in the Northern District of California.
A fourth case, Fontenot vs. NCAA, creates a potential complication because it remains before a Colorado court after a judge denied a request to combine the case with Carter. Whether Fontenot will be part of the settlement is unknown, which is important because the NCAA and its conferences don’t want to be on the hook for even more damages if they lose in court.
“We will continue to litigate our case in Colorado and look forward to hearing about the terms of a settlement offer once they are actually released and brought to trial,” said George Zelcs, an attorney for the plaintiffs in Fontenot. .
The resolution agreed in the settlement is a milestone, 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 has been in office for 14 months, proposed creating a new level of Division I athletics in which the most resourced schools would pay at least half of their athletes $30,000 a year must pay. That suggestion, along with many other possibilities, remains up for debate.
The settlement does not make all the problems facing college sports go away. There is still the question of whether athletes should be considered employees of their schools, something Baker and other athletic leaders are fighting against.
Some form of federal legislation or antitrust relief is likely still needed to codify the terms of the settlement, protect the NCAA from future lawsuits and pre-empt state laws that seek to neutralize the organization’s authority. The NCAA continues to face lawsuits questioning its ability to govern itself, including enacting rules limiting multiple transfers.
“This settlement also provides a roadmap for college athletic leaders and Congress to ensure 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 get something done, but while several bills have been introduced, none have come to fruition.
Despite the unanswered questions, one thing is clear: Major college athletics are about to become more like professional sports than ever before.