NCAA Announces $2.8 Billion Settlement for Athletes in Antitrust Litigation

The NCAA and Power Five conferences entered into a settlement agreement (the “Settlement”) last week to resolve ongoing antitrust proceedings. The settlement requires the NCAA and Power Five conferences to pay nearly $2.8 billion over the next 10 years to current and former student-athletes who are barred from receiving any income from sponsorship and endorsement deals.

While the exact terms of the Settlement were not disclosed, the Settlement also establishes a framework for Power Five conferences to share revenue directly with their student-athletes. Under the proposed framework, the NCAA would allow schools to contribute up to $21 million annually to pay student-athletes; however, the upper limit may increase as revenues continue to increase. Student-athletes in all sports would be eligible for these payments, and schools can decide how to divide the money among teams and athletes. Instead of scholarship limits in each sport, there would now be limits on player composition. Before the settlement takes effect, it must first be approved by a federal judge, but if approved, schools would be able to pay student-athletes directly, a practice strictly prohibited by the NCAA since its inception.

The settlement aims to resolve a class-action lawsuit that was scheduled to go to court in January. The class action lawsuit was brought by former and current student-athletes who allege that the NCAA and Power Five conferences improperly prohibited student-athletes from receiving compensation. The Settlement is also expected to cover two other antitrust cases currently pending before the NCAA in the Northern District of California.

Importantly, the Settlement Agreement does not resolve all outstanding disputes with the NCAA. Many aspects of the relationship between the NCAA and student-athletes remain unresolved. There are other antitrust lawsuits pending against the NCAA that are not covered by the Settlement, including a lawsuit filed by the attorneys general of Tennessee and Virginia. Additionally, the Settlement Agreement does not resolve the lawsuit alleging that the athlete is considered a school employee. If student-athletes If classified as workers, they could be entitled to the minimum wage, unionization and other employment rights.

The Proposed Settlement also leaves many questions unanswered. It is unclear what impact Title IX will have on the new compensation system outlined in the Settlement. It is also unclear where NIL’s supportive collectives will fit into the new compensation system, or whether universities will seek to bring all NIL activities into their fold. Although uniform federal legislation governing college sports and NIL would help clarify these issues, there is currently no effort in Congress to pass such legislation.

The landscape of college athletics continues to evolve.