This articel was upated on 5/30/2024.
College sports is experiencing one of its most transformative times to date. Just in the last three years, college sports fans have witnessed college athletes gain the right to profit from their name, image, and likeness (NIL), major conference realignment, and a series of successful legal challenges of the NCAA's rules. However, the NCAA is currently facing arguably its most formidable challenge to date with case a known as House v. NCAA.
The plaintiffs sued the NCAA and the Power 5 conferences for lost opportunities to profit from NIL prior to July 1, 2021, for unshared broadcasting revenue, and for being denied opportunities to appear in video games. The financial stakes for the NCAA and the Power 5 Conferences are dire. If the case goes to trial, the NCAA stands to face up to $4.3 billion dollars in damages. The trial is scheduled for January of 2025, however, the settlement terms must be voted on by May 23rd.
Accordingly, the NCAA and the Power 5 conferences are working hard to negotiate a settlement. The settlement discussions are in relation to three different lawsuits currently against the NCAA and the Power 5 Conferences. The other two cases are Carter v. NCAA and Hubbard v. NCAA. Carter addresses the NCAA's pay-for-play rules and Hubbard addresses back Alston Award payments. The surprisingly public settlement discussions include billions of dollars in back damages, a new compensation model allowing schools to share as much as $22 million annually to the athletes in a capped system, and an overhaul of the NCAA's scholarship and roster structure.
The Proposed Settlement Terms
While the proposed settlement addresses many issues, here is a summary of some of the most notable points of the settlement proposal. The NCAA and the Power 5 conferences will be responsible for paying $2.776 billion for damages owed to athletes for the use of their NIL. This amount is to be paid over a 10-year period. The annual distribution that the NCAA makes to schools from the Men's March Madness tournament will be reduced by roughly one fifth during the 10-year period. The Power 5 Conferences are facing a possible reduction of $1-2 million per year in distribution. Schools will be permitted, but not required, to pay athletes as much as $22 million annually in a revenue sharing model.
In addition to the financial points of the settlement, other issues are addressed as well. For example, the settlement would provide economic incentives for the schools to bring NIL collectives in house. The court is expected to reaffirm the NCAA's remaining rules regarding compensation. The court's affirmation would help develop a new enforcement structure to address pay-for-play rules regarding booster led NIL collectives. Perhaps one of the most interesting points of the settlement is that the plaintiffs will agree to cooperate with the NCAA's effort to be granted an antitrust exemption from Congress. According to the plaintiffs' attorney Steve Berman, the plaintiffs will cooporate with the NCAA's lobbying efforts to get a limited antitrust exemption from Congress. The limited exemption would give the NCAA protection from the rules that are apart of the settlement. This is interesting as the athletes would essentially be agreeing to assist the NCAA in removing the vehicle that has restored and expanded basic rights to college athletes, such as NIL rights.
While the settlement addresses many issues, two of the most pressing issues regarding college athletics remain unsettled. Those issues are whether college athletes should be considered employees and whether college athletes should have the right to unionize as the cases involved in the settlement do not address those issues. However, if the NCAA is ultimately granted an antitrust exemption from Congress, the association would be free to create rules addressing those issues. The settlement does require the NCAA and Power 5 Conferences to make sizeable payments. However, it is still less than what could be required if the case goes to trial. The outcome of the trial could potentially bankrupt the NCAA and the leagues.
Not All of the NCAA's Members are on Board with the Proposed Settlement Terms
It is important to remember that only the NCAA and the Power 5 Conferences were subject to this lawsuit. However, the implications of the proposed settlement stands to affect all of the NCAA's members. Due to this, the proposed settlement has been met with opposition by some of the association's members. Big East commissioner, Val Ackerman expressed opposition to the settlement proposal regarding the plan to pay back damages. The Big East stands to pay as much as $70 million over the 10 year period. Furthermore, the liability of the 22 non-FBS conferences appear disproportionately high considering the biggest beneficiaries of the settlement will be FBS schools football players.
While the proposed settlement is being met with opposition from members of the NCAA's membership, it still seems that the NCAA plans to move forward with the settlement vote on Thursday. Regardless of the outcome of the vote, the decision will have implications on the future of college sports. It appears that the NCAA and the Power 5 conferences are inching towards a settlement as the Big 12 presidents and chancellors voted unanimously in favor of the settlement terms.
College and high school athletes have been granted the right to profit from their name, image, and likeness! Yayyyyyy!!! College and high school athletes can now enter NIL Deals. This is an exciting opportunity for college and high school athletes. However, there are certain topics that college and high school athletes and their parents need to know before entering any NIL Deal. Download by free NIL Contract Checklist for 5 contract terms to know! For more on college athletes' name, image, and likeness rights follow me on Twitter @esquire_coach and on Instagram and TikTok @the_esquirecoach. To receive updates from The Esquire Coach Blog directly to your email please subscribe below.