The NCAA and the nation’s top five conferences agreed to pay roughly $2.8 billion to settle multiple antitrust lawsuits, a landmark decision that could lay the groundwork for a groundbreaking revenue-sharing model that could result in millions of dollars being paid directly to athletes starting as early as the fall semester of 2025.
University leaders in the Pac-12 Conference voted to approve the proposal on Thursday, making the conference the last conference to approve it, according to a person with direct knowledge of the results.
Southeastern Conference presidents and chancellors unanimously approved the deal early Thursday, another person familiar with the decision told The Associated Press, who spoke on condition of anonymity because a formal announcement between the Pac-12, SEC, Big Ten, Big 12, Atlantic Coast Conference and the NCAA was still being prepared.
Other groups voted for approval earlier this week, ahead of a Thursday deadline set by plaintiffs’ lawyers.
The agreement must be approved by the federal judge overseeing the case and could be challenged, but if it goes through, it would usher in a new era in college sports in which players will be compensated more like professional players and schools will be able to use direct payments to attract talent.
Details of the plan signal an end to the amateurism model that has been the backbone of the NCAA since its founding in 1906. Indeed, the days of the NCAA disciplining players for driving cars provided by sponsors began to fade three years ago when the agency lifted restrictions on sponsorship deals backed by so-called name, image and likeness fees.
It’s not unrealistic these days to expect a college basketball team’s star quarterback or top prospect to have a season where he or she not only earns money on a big NIL contract, but also has $100,000 in their bank account to play for.
While many details remain to be finalized, 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college athletes who claim they were denied income from sponsorship and endorsement deals since 2016 because of the now-repealed rule.
Some of that money will come from the NCAA’s reserve fund and insurance, but even though the lawsuit specifically targets five conferences with 69 schools (including Notre Dame), dozens of other NCAA member schools will receive smaller distributions from the NCAA to cover the huge payout.
Schools in the Big Ten, Big 12, Atlantic Coast and Southeastern Conferences will each pay about $300 million in settlement payments over 10 years, the bulk of which will be paid out to players in the future.
The Pac-12 is also part of the settlement, and all 12 schools will share the responsibility, although Washington State and Oregon State will be the only schools remaining in the league by this fall after 10 other schools dropped out.
Rewarding athletes
Under the new compensation model, schools would be allowed but not required to share up to $21 million in annual revenue with players, though any increase in revenue could lead to an increase in the cap.
Athletes in all sports would be eligible for scholarships, and schools would have the freedom to decide how to distribute those funds among their sports programs. Scholarship limits by sport would be replaced with enrollment limits.
It’s unclear whether the new compensation model would fall under Title IX gender equality laws, and it’s also unclear whether schools will be able to bring NIL activities in-house as they hope and eliminate the sponsorship groups that have proliferated in recent years as a way to compensate players — both issues that could lead to further litigation.
Case
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 University swimmer Grant House and University of Oregon and now TCU basketball player Sedona Prince, alleges that the NCAA, along with the five wealthiest conferences, unfairly barred athletes from earning sponsorship money.
The lawsuit also argues that athletes are entitled to a share of the billions of dollars the NCAA and its conferences make in media rights deals with television networks.
Amid political and public pressure, and facing the possibility of new legal losses that some in college sports say could cost them as much as $20 billion in damages, NCAA and conference officials acknowledged what has long been a core principle of the business: schools do not pay athletes directly for playing, beyond their scholarships.
This principle has already been violated many times over the past decade.
Notably, in 2021 the Supreme Court unanimously ruled against the NCAA in a case regarding education-related benefits. While the narrow focus of the Alston case did not destroy the college sports system, its strong condemnation of the NCAA’s amateur model opened the door for further litigation. Justice Brett Kavanaugh, a former Yale athlete, bluntly stated: “At the end of the day, the NCAA and its member universities are suppressing student-athlete compensation, which collectively generates billions of dollars in revenue for universities each year.”
Other cases
The settlement is expected to also cover two other antitrust lawsuits challenging athlete compensation rules facing the NCAA and the major conferences: Hubbard v. NCAA and Carter v. NCAA, both of which are currently before a judge in the Northern District of California.
A fourth case, Fontenot v. NCAA, is pending in a Colorado court after a judge rejected a request to merge with Carter, creating potential complications. It’s unclear whether Fontenot will be part of the settlement, but it’s a key issue because the NCAA and its conferences don’t want to be saddled with further damages if they lose in court.
“We will continue our litigation in Colorado and look forward to hearing the terms of the settlement once it is actually announced and filed in court,” said Fontenot plaintiffs’ attorney George Zerkes.
Reforming university sports
The settlement reached in the settlement is groundbreaking, but not surprising: College sports has been moving in this direction for years, with players increasingly receiving long-awaited financial benefits and rights.
In December, former Massachusetts governor and NCAA president Charlie Baker, who has been in office for 14 months, proposed creating a new tier for Division I athletics that would require the richest schools to pay at least half their athletes $30,000 a year. The proposal, along with a number of other possibilities, is still under discussion.
The settlement doesn’t solve all of the problems facing college sports: Questions remain about whether athletes should be considered employees of their universities, something Baker and other college sports leaders oppose.
Some sort of federal or antitrust exemption would still likely be needed to codify the terms of the settlement, protect the NCAA from future lawsuits and thwart state laws that seek to cripple the organization’s power. As it stands, the NCAA faces lawsuits that call into question its ability to govern itself, including by imposing rules limiting multiple transfers.
Federal lawmakers have signaled they want to get something done, but although several bills have been introduced, none have progressed.
Despite the unanswered questions, one thing is clear: major college sports will look more like professional sports than ever before.
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Follow Ralph D. Russo https://twitter.com/ralphDrussoAP You can listen at http://www.appodcasts.com.
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