NCAA approves deal that will change the face of college sports — paying student-athletes

Big changes could be coming for college athletes: They may soon start getting paid.

A tentative settlement announced Thursday by the NCAA and the nation’s top five conferences in a series of antitrust lawsuits could result in millions of dollars being paid directly to athletes as early as the fall of 2025.

NCAA President Charlie Baker, in a joint statement Thursday night with the commissioners of the ACC, Big Ten, Big 12, Pac-12 and SEC, said the roughly $2.8 billion settlement, to be paid to 14,000 former and current student-athletes over the next decade, is “an important step in the continuing reform of college sports, benefiting student-athletes and bringing transparency to college sports in all divisions for years to come.”

The agreement must be signed off on by the federal judge overseeing the case, but if approved it would mark a major shift in college sports, where students play for pay rather than just scholarships, exposure and opportunity.

“This landmark settlement brings college sports into the 21st century and ensures that college athletes will finally receive their fair share of the billions of dollars in revenue they bring to their schools,” said Steve Berman, one of the lead attorneys for the plaintiffs. “Our clients are the foundation of the NCAA’s multi-billion dollar business and will finally be able to receive compensation for their extraordinary athletic abilities in a fair and equitable manner.”

The NCAA and power conferences called the settlement a “road map” that they said will enable this uniquely American institution to provide unparalleled opportunities for millions of students and begin writing “the next chapter in college sports.”

The lawsuit, scheduled to go to trial early next year, was brought by former and current college athletes who claim the NCAA and the five wealthiest conferences are unfairly barring athletes from receiving sponsorship revenue. Former Arizona State swimmer Grant House and University of Oregon and now TCU basketball player Sedona Prince also argue in the lawsuit that athletes are entitled to a cut of the billions of dollars the NCAA and those conferences make from media rights deals with television networks.

Michael McCann, legal analyst and sports reporter for Sportico, told NBC News that the lawsuit has two elements that “take away from amateurism. The first deals with how players should be paid for lost past earnings, including money they could have made from name, image and likeness rights.”

“Going forward, universities and conferences will choose to pay players, share revenue and directly compensate them, which of course would be a significant departure from the traditions of college sports,” McCann said, adding that many would say the change was necessary. “At least at some universities, players will have a direct benefit.”

Terms of the deal were not disclosed, but some details have emerged in the past few weeks. It signals the end of 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 when the organization lifted restrictions on so-called name, image and likeness sponsorship deals three years ago.

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 the money will come from the NCAA’s reserve fund and insurance, but even though the lawsuit specifically targets five conferences made up of 69 schools (including Notre Dame), dozens of other NCAA member schools will receive smaller distributions from the NCAA to cover this 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, meaning all 12 current schools will share responsibility, though only Washington State and Oregon State will remain 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.

McCann said the back wages would be disproportionately paid to some sports, such as football and basketball.

“I think the powerhouse football schools will probably participate because they want to compete and college football generates a lot of revenue so they want to get the best players,” he said.

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.

“There could be all kinds of disruptions,” McCann said of potential disruptions.

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.

towards that direction

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, Baker, a former Massachusetts governor who has been in office for 14 months, proposed creating new tiers 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.

“This settlement also serves as a roadmap for college athletics leaders and Congress to ensure this uniquely American institution continues to provide unparalleled opportunities for millions of students,” the joint statement said. “Everyone at 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 collaboratively with a diverse group of student-athlete leaders to write the next chapter in college athletics.”

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.