A new era in college sports officially began Friday when a judge approved a long-anticipated settlement that will rewrite the rules around Division I athletes’ relationship to their colleges.
The House v. NCAA settlement ends three antitrust cases that challenged the National Collegiate Athletic Association’s amateurism principles and sought back pay for athletes who missed out on payments that were, until recently, prohibited. The NCAA will pay the athletes $2.8 billion, a figure that all Division I colleges will contribute to over the next 10 years. The settlement also puts in place caps on the number of players that each team can field and eliminates limits to the number of scholarships athletic departments can give out.
Colleges have known most of the details of the settlement for more than a year. But it was up to Claudia Wilken of the U.S. District Court in Oakland, Calif., to make it official.
This spring, Wilken lodged an objection that threatened to upend the deal. In anticipation of the settlement, teams with more players than the new caps would allow had started telling students they would not have a spot next year. Testimony from some of those students persuaded Wilken to push colleges to grandfather in current students. In response, lawyers agreed that colleges could invite back the players who had been cut and that those players would not count toward the roster caps. That agreement seems to have satisfied Wilken.
The most significant component of the new settlement is that it allows colleges to share revenue with their athletes and to pay them for their name, image, and likeness (NIL). Each participating college can share up to $20.5 million per year with athletes — a figure that will go up each year for the 10 years that the deal is in effect.
Colleges that were in the five most powerful conferences when the cases were filed — the Atlantic Coast Conference, the Big Ten Conference, the Big 12 Conference, the Pac-12, and the Southeastern Conference — were defendants in these cases and are therefore bound by the terms of the settlement. (All but two Pac-12 institutions have left that conference for other conferences listed here. The Pac-12 has reconstituted with new colleges that are not defendants.)
But any Division I college can opt in to the settlement’s terms and share revenue with their athletes. Colleges that do so must agree to all of the settlement’s terms, including the roster caps. Worried that they will fall behind their peers who can suddenly pay athletes, many Division I colleges have said they will opt in.
Leaders in college sports have looked to the settlement to deliver a degree of stability that’s been absent from the chaotic dawn of the NIL era, which has been defined by litigation and unenforceable rules. “Approving the agreement reached by the NCAA, the defendant conferences and student-athletes in the settlement opens a pathway to begin stabilizing college sports,” wrote Charlie Baker, the NCAA’s president, on Friday night.
Players will still be able to sign NIL deals with outside organizations. The settlement creates a clearinghouse that will regulate those NIL deals that exceed $600. Reportedly, software created by Deloitte will determine the appropriate range an organization can pay a specific player without incurring a penalty.
This entity will be part of the College Sports Commission, a new organization that will be operated by the four power conferences, Yahoo Sports reported. The organization is tasked with enforcing all aspects of the new settlement agreement, a potentially challenging endeavour since some state laws may conflict with the terms of the agreement.
“The only way this system will provide stability is if the schools actually abide by the decisions of this enforcement arm,” said Gabe Feldman, a sports-law professor at Tulane University. “The question is, what happens if a state tries to enforce its law? Can this new entity survive?”
This potential conflict is one of many that could play out in the wake of the House settlement’s approval. The settlement could face Title IX challenges, antitrust challenges, or other legal threats.
“It might get worse before it gets better,” Feldman said of the general instability in college athletics.
