The recent settlement in the House v. NCAA case has profound implications for college sports, athletes, and the institutions involved. The agreement between the NCAA and the Power Five conferences—ACC, Big 12, Big Ten, Pac-12, and SEC—sidestepped a potential $4 billion in treble damages and settled for $2.8 billion. Here are ten critical takeaways from this landmark settlement.

1. Financial Compensation for Former Athletes

Former Division I athletes from June 15, 2016, to November 3, 2023, can benefit from this settlement. These athletes could have earned from their Name, Image, and Likeness (NIL), video games, and broadcasts if NCAA policies allowed it. They will share $2.8 billion, though 25-35% of this amount will go to plaintiffs' attorneys.

2. Distribution of the Settlement Funds

The settlement funds will be distributed based on a formula developed by a sports economist. This formula considers both an equal split among athletes who opt into the class and individual market value, which may be determined by factors like career stats or player ratings.

3. Who Pays the Settlement?

The NCAA will cover $1.1 billion, with the Power Five conferences paying around $1.65 billion. The remaining $990 million will be covered by other Division I conferences. This funding will come from withholding payments and direct contributions, primarily affecting revenue from major events like March Madness.

4. Impact on Current and Future Athletes

Athletic departments will now be able to share up to $21-22 million annually per school, based on 22% of the average Power Five school's revenues. This figure is expected to grow over the next decade as college sports revenues increase.

5. Adjustments to Athletic Budgets

Schools will need to reassess their budgets to accommodate these payments. This could mean delaying facility upgrades, reducing travel expenses, and reconsidering support for non-revenue sports. Some schools might look to private equity for solutions.

6. Continued Role of NIL Collectives

NIL collectives will continue to play a crucial role. These organizations could help schools exceed the settlement cap and maintain a competitive edge. The Collective Association, representing over 30 collectives, views this as a positive development for college athletes.

7. Removal of Scholarship Caps

The settlement removes NCAA scholarship caps, potentially allowing schools to offer full scholarships to more athletes. This could significantly impact sports where scholarships are often divided among many players, like baseball.

8. Title IX Considerations

There's an ongoing debate about whether Title IX will apply to the revenue sharing established by this settlement. Some experts argue it does, while others believe it doesn't, considering the nature of the payments. This ambiguity will likely prompt schools to proceed cautiously.

9. International Athletes and Revenue Sharing

International athletes might face challenges under current student visa regulations, which generally restrict NIL activities. However, former athletes receiving settlement funds may have an easier time, as these payments are considered passive income.

10. Future Legal and Financial Implications

While this settlement resolves specific cases, it doesn't shield the NCAA from future litigation. New antitrust cases could arise if the revenue-sharing cap is seen as a restraint on pay. Additionally, athletes who aren't covered under this settlement period may still seek legal recourse.

Conclusion

The House v. NCAA settlement is a significant step towards more equitable compensation for college athletes, but it also opens new challenges and considerations for institutions. As the implementation unfolds, schools, athletes, and legal experts will navigate this new landscape together.

Saluja Law continues to monitor and analyze significant legal developments in the sports industry. For more information or legal advice, please contact us at 304.755.1101 or [email protected]