College sports is clearly pointed toward a revolutionary path that could have some of the wealthiest schools directly paying athletes.
The proposed settlement of a federal class-action antitrust lawsuit that has been approved by the NCAA and major college conferences would cost billions and pave the way for college athletes to get a cut of the revenue that has been flowing to their schools for years.
A judge must still accept the proposal, which can also be challenged by individual plaintiffs, and there are many questions about how this will work and whether it can withstand future legal scrutiny. But college sports is clearly pointed toward a revolutionary path that could have some of the wealthiest schools directly paying athletes to participate.
House vs. NCAA is a class-action federal lawsuit seeking damages for athletes who were denied the opportunity, going back to 2016, to earn money from the use of their name, image or likeness (NIL). The plaintiffs, including former Arizona State swimmer Grant House, filed the lawsuit in 2020 and also asked the court to rule that NIL compensation should include billions of dollars in media rights fees that go to the NCAA and the five wealthiest conferences (Big Ten, Big 12, Pac-12, Atlantic Coast and Southeastern), mostly for football and basketball.
The presidential boards of the Big Ten, Big 12, ACC, SEC and Pac-12 all voted to approve the settlement this week as well as the NCAA Board of Governors. Lead attorneys on the House case include familiar NCAA foes Steve Berman and Jeffrey Kessler, who have previous victories in college athlete compensation cases on their records. They will now work with their plaintiff clients on next steps with the judge.
The settlement calls for the NCAA to pay nearly $2.8 billion in damages over 10 years, backed by insurance and withheld distributions that would have gone to 352 Division I member schools. Last year, NCAA revenue approached $1.3 billion and the association projects a steady rise in coming years, thanks mostly to increases baked into a television contract with CBS and Warner Bros. Discovery for the men’s basketball tournament. A new, eight-year deal with ESPN worth $920 million for the Division I women’s basketball tournament and other championship events takes effect in 2025.
The potential settlement could cost each school in the remaining power conferences (ACC, Big 12, Big Ten, SEC) about $300 million per year over 10 years, including as much as $21 million per year to pay a school’s athletes. Administrators have warned that could lead to cuts for the so-called non-revenue sports familiar to fans who watch the Olympics.
“It’s the Olympic sports that would be in jeopardy,” Alabama athletic director Greg Byrne said during a March discussion on Capitol Hill. “That’s men and women. If you look at the numbers for us at the University of Alabama, with our 19 sports outside of football and men’s basketball, we lost collectively almost $40 million.”
Presumably, the payments would start with the athletes in sports that produce most of the revenue: football and men’s basketball players. Women’s basketball is likely next in line, but athletes in all sports should expect to see some benefit — but probably not at all schools.
The proposal would allow schools to pay athletes, but not require it. Schools that don’t rake in millions in TV revenue could pass and rely on NIL deals brokered in part by booster-backed collectives. Though how and if those organizations fit in a new system is murky at best.
There are also questions about whether the federal gender equity law Title IX would require equal funding for male and female athletes.
Settling existing cases is only one step. A new system for compensating college athletes would be needed to avoid similar legal challenges in the future; for example, anything that looks like a cap on compensation by the major conferences could be ripe for another lawsuit.
The NCAA has been asking Congress for some kind of antitrust exemption or federal legislation for years, but the emphasis has shifted lately from regulating NIL compensation to keeping the athletes from being deemed employees.
A ruling from an NLRB regional director paved the way for members of the Dartmouth men’s basketball team to vote to join a union after being deemed employees, and many have advocated for collective bargaining as a solution to college sports’ antitrust exposure. It could take years to settle the are-athletes-employees question.
The House case is being heard in the Northern District of California by U.S. Judge Claudia Wilken, who has already ruled against the NCAA in other landmark antitrust lawsuits. Wilken must approve the settlement, which is expected to cover at least two other antitrust lawsuits facing the NCAA. Another suit against the NCAA in Colorado remains separate, but could eventually be looped into the settlement.
In the meantime, schools will be trying to plan how revenue-sharing might work as college athletics continues its seismic shift from amateurism to a vastly different model.
