The long-advertised settlement in the private antitrust case House v. NCAA, is now public. The voluminous filing includes excruciatingly sparse detail on a complete overhaul of college sports in the U.S.
The antitrust consumer class action that gave rise to this ambitiously odd redesign puts an end to the illegal restrictions by the NCAA and five power conferences on how college athletes may be compensated. Not surprisingly, the main financial impact of the settlement will be on men’s Division I football and basketball. But it will reverberate throughout college sports, as is clear from critique and pushback over the last several weeks.
The House v. NCAA settlement compensates college athletes for illegally denied past proceeds from, for example, their name, image and likenesses. The centerpiece of the settlement, however, is injunctive relief, or preventing future harm.
This revolves around a player compensation model that includes no scholarship limits, name, image and likeness deals through academic institutions and third parties, salaries, vehicles and other benefits that could amount to millions of dollars for top players.
The settlement in House v. NCAA was hammered out without a trial in federal district court. Instead, defendants were strongly encouraged to settle. Upon obtaining this concession, the plaintiffs’ lawyers took a brush to an empty canvas — creating a grand design for college sports with sweeping and unintended effects.
In deciding whether to approve the settlement, the question for Judge Claudia Wilken of the Northern District of California will be: Is it fair, reasonable and adequate? The answer for most fans, athletes and institutions of higher education should be a hard no.
The problem is not so much that college athletes will be compensated. Rather, it is how they will be compensated. The settlement establishes a benefits pool, to which each member institution contributes revenues, subject to a cap.
Generally, revenue sharing of any type invites strategic maneuvering and joint decision-making by the sharers. Many are concerned that the settlement simply replaces the NCAA’s illegal, collusive agreement with another one, but among a different set of stakeholders.
The settlement’s rules for the pool also create incentives that assure money will flow only to the high-revenue sports in the most lucrative, well-resourced programs. This will create a new super league of professional college men’s football and basketball teams, operating in an insulated arena of competition. It will leave lesser schools in the proverbial dust, grappling with a different flavor of competition in the sub-league, while subsidizing the super-league benefits pool.
Many will say that college sports were heading in this direction anyway. But few would agree that the reverberation of the settlement throughout the U.S. college sports system is warranted.
For example, the settlement contains loosely specified connections between athletes and the process of actually obtaining a degree. Colleges less able to compete for players are likely to abandon non-revenue sports.
The existing conference structure will likely collapse, to the dismay of fans and athletic competition itself. Title IX is likely to suffer, as will the Olympic development program. Women’s sports, except for basketball, will be the big losers.
Judge Wilken should hit the pause button on the settlement in House v. NCAA. Remaking the model of college sports in the U.S. is not a job for parties with a financial interest in the size of the settlement. It is a job for Congress, through national legislation that also carefully considers state laws, the goals of education and amateurism in college sports.
But the settlement even has this problem covered, suggesting that legislation should simply “implement or codify” the terms of the settlement. That’s a lot of hubris that would be nipped in the bud by a judicial finding that the settlement overreaches.
Diana L. Moss is the Progressive Policy Institute's vice president and director of Competition Policy. She is a former president of the American Antitrust Institute.
