Reached an NCAA antitrust settlement for $2.7 billion

The NCAA Board of Governors and power conferences have approved a historic $2.7 billion settlement with lawyers representing college athletes in three antitrust cases:House v. NCAA, Carter v. NCAA AND Hubbard v. NCAA-According to Related press. The parties themselves set a deadline of May 23 and have now met it.

If approved by a federal court and overcome potential legal challenges, the settlement would pay athletes the earnings they could have earned for commercial use of their name, image and likeness, video gaming and broadcasting if NCAA rules allowed such payments. The deal also calls for restructuring college sports so that conferences can share revenues with players.

Additionally, the settlement includes a salary cap system under which individual universities that join the program will be able to pay players a total annual amount of up to $21 million. The $21 million figure could increase based on revenue in a setup similar to that used by the NFL and NBA. This could mean university teams hiring salary cap experts and CEO-level people to oversee payments.

The settlement is not a “finalized agreement” and it will likely be months before U.S. District Judge Claudia Wilken hears the final version. The parties have agreed to the terms of the settlement, which set out the parameters – but not all the details – of the contract. The agreement calls for compensation of approximately $2.7 billion, which will be funded by the NCAA and colleges through a combination of direct salaries and withholding payments that would go to colleges. Some of that money, probably 25-35%, will go to the players’ lawyers, as Wilken agreed.

Approximately 14,500 players are expected to be compensated in various dollar amounts. Many details, including the fees each school must pay, the impact on school numbers and the role of the NIL, will need to be negotiated in the coming months. Expect analysis on the implications of immigration law and the focus on Title IX, including whether conference payments – which, unlike school payments, have not yet been found to trigger Title IX liability – change the legal analysis.

Class members will be able to opt out and pursue their own lawsuits against the NCAA and conferences. Once approved by Wilken, the settlement could be appealed to the U.S. Court of Appeals for the Ninth Circuit and potentially to the U.S. Supreme Court. How Sportico discussed in detail Wednesday, there are many ways athletes and schools can legally challenge the settlement or its implementation. The new world in which college athletes are paid as professionals may not happen for several years, although fall 2025 is a possibility.

An approved settlement would also not set a precedent – it would just be a contract. And because the terms of the settlement were not negotiated with the union, the settlement will not insulate the NCAA from other antitrust lawsuits. A system that includes income sharing, salary caps and other wage restrictions that are not determined through collective bargaining is vulnerable to antitrust challenges.

To this point, the settlement only resolves three antitrust cases. It does not resolve future or ongoing antitrust proceedings against the NCAA.

On Thursday, U.S. District Judge Charlotte Sweeney ruled in a separate and very similar case Fontenot v. NCAA, is not currently part of the settlement. The case raises familiar arguments, namely that colleges are conspiring under NCAA rules to deny athletes compensation they would receive if the market operated without NCAA restrictions. However, it is located in a different jurisdiction, Colorado.

Fontenot could be added to the settlement if and when the settlement is approved by Wilken, but her continued presence underscores the limited universe in which House settlement works. If the NCAA and member schools decide they are buying a get-out-of-judgment card in a settlement, the legal system will have disappointing news to report.

The settlement also would not resolve ongoing and future legal efforts to recognize college athletes as employees of their school, conference and the NCAA and potentially unionize them.

NCAA President Charlie Baker is likely counting on the settlement to show good faith by lobbying Congress for a federal law. The NCAA is seeking a limited exemption from antitrust laws so that player compensation rules can be adopted without collective bargaining and a declaration that college athletes are not employees. So far, these efforts have been unsuccessful.