CNN
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College athletes could soon receive dramatically different paychecks.
At issue is a lawsuit called House of Representatives v. National Collegiate Athletic Association (NCAA), a class-action lawsuit seeking to change name, image, and likeness (NIL) endorsement contracts and how college athletes receive compensation. It is. Broadcast revenue share.
The NCAA could have to pay up to $20 billion if it loses the lawsuit, and the settlement could include $2.7 billion in unpaid damages as well as changes to how student-athletes are paid.
The NCAA and the conference will reportedly meet in the coming days to decide on the terms of the settlement.
The House v. NCAA lawsuit was filed in 2020 in the U.S. District Court for the Northern District of California in the Oakland District against the NCAA and the Power Five Conferences (Pac-12, Big Ten, Big 12, Southeastern Coast, and Atlantic Coast) by two college athletes, Grant House and Sedona Prince.
The lawsuit focuses on an eight-year, $8.8 billion extension the NCAA signed for live broadcasts of the March Madness basketball tournament, as well as past damages for payments that the lawsuit says were wrongfully withheld. They are seeking compensation.
College sports is big business, with big amounts of money coming in and out.
Football and basketball at Division I schools, the top of the three tiers of college sports, generated $7.9 billion in revenue during the last fiscal year, according to data compiled by the Department of Education.
Division I sports overall generated about $17.5 billion in revenue in 2022, according to a report by the NCAA, college sports’ governing body.
The NIL agreement stems from a 2021 NCAA policy change that allowed student-athletes to benefit from sponsorship opportunities.
The move comes after California passed a law giving athletes the right to receive sponsorship payments in 2019, starting a national trend, followed by a landmark U.S. Supreme Court decision in 2021 that said student-athletes could receive education-related payments, forever changing the face of college sports.
But the college athletes who joined the House lawsuit argue that the current NIL rules and an “anti-competitive” college system hurt their opportunities to make money.
The lawsuit also alleges that the current system “undermines schools’ efforts to openly compete for talented college freshmen. Schools can be severely punished for violating these rules.”
As college athletes, Iowa State basketball player Caitlin Clark and University of Southern California football player Caleb Williams have appeared in commercials for major national brands such as State Farm and Wendy’s, but the class action lawsuit alleges that current regulations have not caused widespread harm. He says it’s “obvious.”
“Many college athletes create significant value in their NILs and, absent the restrictions on challenge, would receive compensation for their use on the open market,” the complaint states.
Michael Reeves/Getty Images
Grant House will compete in the Men’s 200 Butterfly C Final at the TYR Pro Swim Series Westmont on March 8, 2024 at FMC Natatorium.
The lawsuit alleges that the NCAA limits the amount of money student-athletes can earn outside of work.
For example, the lawsuit alleges that one of the NCAA rules that governs the jobs athletes can hold in college requires that student-athletes be compensated for the value or usefulness they receive to (outside) employers through promotions. It is specifically prohibited to receive such information for any purpose.” Reputation, fame, or personal favor gained through athletic ability. ”
“The harm is compounded by the fact that only a small percentage of college athletes end up playing professionally. And while this fact is often touted as a justification for the NCAA not compensating them, it also highlights that for most student-athletes, the college years are when NIL is most valuable.”
In 2021, the Supreme Court unanimously ruled that NCAA rules banning compensation for student-athletes violate antitrust laws, clearing the way for increased compensation for student-athletes.
But two years later, commissioners of major college conferences said the Supreme Court’s decision could set in motion a complex series of state laws that undermine college sports and ultimately lead to the demise of sports programs across the country.
The prevalence of transfer policies in college has given athletes the freedom to switch teams more regularly and not have to lose a year of eligibility after changing programs.
Commissioners say the increased use of transfer portals by players is a problem for college sports, especially for student-athletes pursuing academic degrees.
They said college boosters are using the current patchwork of laws to help recruit top athletes with the promise of big salaries, to the detriment of universities in other states that are forced to play by different rules.
CNN has reached out to the NCAA and the five conferences named as defendants for comment.
The National Association of Collegiate Athletic Directors declined to comment when reached by CNN.
Chris Jones/USA Today Sports via Reuters
Sedona Prince (right) drives to the basket during the TCU Horned Frogs game against the Baylor Lady Bears.
If they lose in court, the defendants could be forced to pay $20 billion and the NCAA could be forced to file for bankruptcy, according to a document circulated among presidents and executives of major conferences obtained by Yahoo Sports. It is said that there is. The report did not say who wrote the document.
The plaintiffs argue that if they lose in court, the players will be released from the NIL system. “This means that if we win, there will be a complete free market for NIL, including broadcast fees,” plaintiffs’ attorney Jeffrey Kessler told The Athletic.
Kessler declined to comment when asked by CNN, saying, “Negotiations are ongoing.”
The settlement could reportedly be in the range of $2.7 billion in damages for unpaid NIL wages, plus would include a system that would allow universities in top conferences to distribute about $20 million per year directly to players.
According to ESPN, the NCAA will pay damages and each conference will implement a revenue-sharing system in the future.
According to ESPN, the ACC and Big 12 voted to approve the settlement on Tuesday.
The potential settlement comes against the backdrop of a gradually changing attitude toward college athletes getting paid.
Earlier this year, members of the Dartmouth College men’s basketball team became the first college athletes to vote to join a union, marking a significant milestone in the rapidly changing business of college sports.