NCAA and student-athletes reach settlement in primary NIL class action lawsuit

The amateurism rule — an amorphous concept that the National Collegiate Athletic Association (NCAA) has historically relied on to prevent NCAA athletes from profiting from commercial exploitation of their identity, also known as name, image and likeness (NIL) — is officially dead .

On May 23, 2024, the NCAA Board of Governors voted to adopt a landmark antitrust class action settlement for more than $2.7 billion that will allow schools under the NCAA’s purview to pay athletes directly. The settlement resolves three ongoing federal antitrust cases, House v. NCAA, Hubbard v. NCAAAND Carter v. NCAA, which challenge the NCAA’s caps on the compensation and benefits players can receive for their athletic services and NIL. As part of the settlement, eligible NCAA athletes must agree not to sue the NCAA for other potential antitrust violations in ongoing or future cases. However, players can opt out of the settlement and join separate, ongoing antitrust cases that are currently pending, such as: Fontenot v. NCAAa federal court class action lawsuit in Colorado alleging that the NCAA limited athletes’ share of television rights revenues.

Terms of the settlement must be approved by federal judge Claudia Wilken, who currently chairs the commission House, HubbardAND Driver cases, and in particular previously ruled against the NCAA in two major NIL-related cases, O’Bannon v. NCAA AND Alston v. NCAA. If implemented, this transformative settlement would set the stage for a future revenue-sharing model between power conference schools and athletes and would require the NCAA to pay more than $2.7 billion in compensation to former and current athletes over ten years. While details are still being finalized, it appears the NCAA is responsible for 40% of the settlement, with the remaining 60% coming from limiting the NCAA’s revenue distribution to the 32 Division I conferences. This means the Power Five conferences (ACC, Big Ten, Big-12, Pac-12 and SEC) will pay 24% of the damages, the Group of Five conferences (ACC, CUSA, MAC, MWC and SBC) will pay 10%, the Football Championship Division ( consisting of 128 teams in 14 conferences) will pay 14%, and non-football conferences in Division I (e.g. AEC, Big East and MAAC conferences) will pay 12%.

Announcement of agreement between the NCAA and major conferences on a regulatory framework House, HubbardAND Driver cases is certainly important, but for now the details of the settlement and its impact on how schools should spend the money remain unchanged. Colleges, universities, athletic departments, university administrators, and sports management agencies should therefore be aware of the NCAA’s changing business model and be prepared to design new governance structures and revenue models that incorporate and comply with the terms of the settlement. This is especially true for smaller non-FBS Division I conferences, which may feel like the proposed funding plan places a disproportionate financial responsibility on them. Thus, the fate of non-revenue sports, which in most schools means all sports except football and men’s basketball, is currently unclear given the financial consequences of the settlement. However, it seems likely that non-revenue-generating sports will suffer, which could reduce the job market for coaches and other athletic department positions.

It will almost certainly be several months before any settlement is finalized and approved, and in the meantime, other NIL-related legal proceedings will continue. Even once the settlement is finalized, it will not necessarily save the NCAA, conferences, schools, coaches, collectives and others from ongoing or future litigation, but the details of the settlement could at least provide much-needed clarity on issues related to NIL enforcement, player employment status and unionization rights and Title IX implications related to the implementation of the new revenue sharing model.

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