Appearing before the U.S. Supreme Court in the spring of 2021, NCAA lawyers argued vehemently against providing each college athlete with extra cash each year.
Amount: $5,980.
Three years later, in a landmark deal that changed the game for major college athletics, the organization left behind outdated rules, shook off longstanding amateurism arguments and pushed the industry into an era of direct compensation to athletes.
That amount is expected to result in more than $15 billion in new funds being paid to athletes over the 10-year term of the contract.
The NCAA Board of Governors voted Wednesday night in favor of settling three antitrust lawsuits — House, Hubbard and Carter — approving terms that include roughly $2.8 billion in damages, a future athlete revenue-sharing model that could cost the major conferences more than $1 billion annually, and other potential changes to the association’s governance, enforcement and scholarship systems.
Though expected for weeks, the vote is a historic moment, a groundbreaking and seismic change for an organization that has fought direct player pay for decades despite making billions of dollars from its major powers in football and men’s basketball. The result of nine months of negotiations between plaintiffs lawyers, NCAA President Charlie Baker and conference commissioners, the hope is that it will usher in a new era for the industry and bring stability to the current unruly recruiting environment.
The university sports world, which had been in a predicament between amateurism and professionalism, is gaining momentum, albeit not by its own will. Reluctantly relegated to this semi-professional world by state laws and court systems, the industry still clings to some semblance of amateurism. The new model is expected to still prohibit pay-for-play and sponsorship payments.
But college leaders believe the agreement avoids future legal battles, ties the major leagues to the NCAA for at least the next decade and brings more regulation to the player-recruiting environment.
“This is going to be the biggest change in the history of college sports. That’s it,” said Gabe Feldman, a sports law professor at Tulane University and a leading expert on NCAA litigation. “There have been big changes and incremental changes. The NIL era opened up a lot of possibilities, but letting players share revenue with their schools is not only a breakthrough, but something the NCAA has insisted on for a century.” It would be contrary to that.”
What the new model means for athletes and how much it will cost schools
While the NCAA vote is an important step, the process is far from over.
Two of the five powerhouse conferences (each also named as a defendant in the House suit) have not yet approved the deal. The SEC and Pac-12 are scheduled to vote on the president and chancellor on Thursday, where it is expected to be adopted. The Big 12 and ACC voted on Tuesday, and the Big Ten on Wednesday.
The Pac-12 must vote to remain as originally constituted despite its impending dissolution, and new members won’t officially join the new league until July.
Even after all parties vote, it could take months before a final settlement is reached. The agreement must be approved by a judge and could be challenged by individual plaintiffs, but experts say it could take at least five months.
But in less than 14 months, at the start of the fall 2025 semester, the industry’s new model will be in place that will allow (but not require) schools to share revenue with athletes up to a certain sub-salary cap. .
Revenue-sharing agreements with players would be classified as NIL contracts, in which schools would fund the use of players’ names, images and likenesses and broadcasts — a concept at the center of the House lawsuit. Payment methods other than NIL are also options.
While many questions remain about the new system, each institution would be allowed to share up to $22 million per year with athletes. The figure is still very much in flux, but is derived from 22% of the power conference’s average revenue. The cap includes exceptions, including $5 million in Alston-related funding and additional scholarships that would count toward the total.
The new model is expected to eliminate scholarship limits and implement enrollment caps, a move aimed at avoiding further legal battles but potentially costing schools millions of dollars in extra financial aid at a time of heavy recruiting.
Ultimately, the cost will be high: $200-300 million per school over the 10-year settlement agreement, or about $15 billion for all the big league schools combined. That figure assumes the schools meet revenue-sharing caps each year and expand scholarships by at least $3-5 million.
For many school administrators, there’s sticker shock as they dig up extra cash in unconventional ways, such as private equity and leveraging capital. The $30 million annual amount and $20 million in total scholarships represents about 40-45% of the average budget for an athletic department at a public school in the ACC, Big Ten, SEC or Big 12.
But without a settlement, university leaders risk new court losses, $20 billion in damages and bankruptcy, according to documents obtained by Yahoo Sports.
Apart from the new financial situation, other changes are also coming.
Rules enforcement will never go away
The settlement model is expected to include new enforcement and governance structures, at least for power-conference schools, that would allow individual schools to write and enforce their own rules. Those details may not be finalized for several months.
For administrators, the enforcement landscape is a key factor: The settlement does not eliminate booster-driven collectives, but it does encourage schools to incorporate them within their university athletic departments, primarily through stronger enforcement bodies, which potentially operate outside the NCAA and gain power through the settlement itself.
As part of the settlement, the judge is expected to “reaffirm” existing NCAA compensation rules, specifically the prohibition on payments to boosters for transactions that aren’t “true NIL,” according to legal documents outlining the agreement, but few details about the enforcement authority have been released.
The proposed settlement will also include a 10-year “release” from antitrust claims from current, former and future athletes as part of a new plaintiff “representation” system. In a Yahoo Sports article last week, plaintiffs’ attorney Steve Berman cited such a concept, saying the settlement includes elements to allow each new class of athletes to participate in the revenue-sharing structure. He said it was built in.
Reconciliation is not perfect. It does not protect the NCAA and conferences from future lawsuits brought by state attorneys general, does not pre-empt a state’s NIL or revenue-sharing laws, and does not provide practical guidance regarding the application of Title IX in such compensation models. It does not constitute a judgment.
The document notes that Title IX “remains applicable at the campus level,” and that this situation allows schools to continue to use outside third parties to pay players to avoid federal liability. There is a possibility of evading the law.
Jeffrey Kessler, another plaintiff’s attorney in the case, believes Title IX issues will ultimately be resolved in court.
“The court will decide,” he told Yahoo Sports. “It doesn’t affect us. If we reach a settlement, we will negotiate a system for players to be compensated. The extent to which Title IX applies will be determined. [by the courts]”
Opposition to this historic settlement
The vote from the board came after a contentious approval process within the NCAA’s 32-conference Division I. Angered by the funding model used to pay nearly $2.8 billion in back damages, the 22 non-FBS conferences rallied in an effort to block the move. Despite the opposition, the NCAA board approved the funding model on Tuesday, with five of the 21 voting members not supporting the plan. Following approval, the item was sent to the board, which met for more than an hour on Wednesday before voting.
Under the approved framework, the NCAA will pay 41% ($1.1 billion) of damages and schools will pay 59% ($1.65 billion) over a 10-year recovery period. The problem is the school’s burden. The Electric Power Conference will pay approximately $664 million in damages. The remaining 27 non-power conferences will pay $990 million, a split that has angered non-power league officials.
Power conference leaders and NCAA executives, who have been deeply involved in negotiations since August, insist they only presented financial plans and settlement terms to low-profit leagues two weeks ago. One committee member described the process as “not healthy.”
Opposition to the agreement is growing.
Leaders of players’ associations and college athlete advocacy groups have publicly criticized the settlement as a short-term solution and have called on university officials to explore a collective bargaining framework that gives athletes a voice and a longer-term solution.
Meanwhile, NCAA and conference leaders are expected to continue lobbying for congressional action to codify the terms of the settlement and to preempt state laws and protect against the implementation of the employment model.
There is also another problem with this.
A hearing in another ongoing antitrust case in Colorado, Fontenot v. NCAA, is scheduled for Thursday. The lawsuit seeks to pay college athletes billions of dollars in televised compensation. The House settlement is expected to consolidate the two antitrust cases, Hubbard and Carter, with the exception of Fontenot. The House, Hubbard and Carter firms are led by the same legal team. The Fontenot litigation is being led by two law firms: Colin Tillery and Olson Grimsley Kawanabe Hinchcliffe & Murray.
The hearing is expected to center around the possibility of consolidating the cases. While lawyers for the House case hope it will be consolidated with the Carter case, Fontenot’s lawyers filed legal motions Tuesday with a clear message: They do not want the cases consolidated. It would be ideal for the NCAA to consolidate all four lawsuits to prevent future legal challenges.
