What the recent antitrust settlement means for the NCAA

Are you surprised by the NCAA’s decision?

The NCAA has a history of persistently taking cases to the Supreme Court, and lost the last one 9-0, so perhaps it was reading the tea leaves. There are concerns that much of the judicial system has turned against the original definition of a student-athlete who is primarily an amateur athlete.

I believe the NCAA was planning on continuing the lawsuit, but they were hampered by the fact that if they lose – and of course there will be an appeal and such – because it’s a violation of antitrust law. In that case, the damages are three-fold. So it’s possible that I could see damages ranging from $14 to $20 billion. The settlement differs from the judge’s lawsuit in that the settlement allowed the NCAA to repay the amount over 10 years. If they lost in court in January, $20 billion would be needed immediately.

The origins of student-athletes included in the settlement date back to 2016. Why is this a starting date and not 2000 or 1990?

In terms of antitrust law, this is the furthest you can go.

The NCAA agreed to pay $2.75 billion in damages over 10 years. Where will the money come from?

This is where it gets a little bit into the weeds. It’s not just the NCAA that’s going to pay, although the NCAA will cover some of that through its insurance. They plan to take a portion of the annual March Madness payouts that they give to the conferences, as their conference earnings, to pay that out for the next 10 years.

This is a bigger deal for some conferences than for others. You might be surprised to learn that the bigger problem is the 22 conferences that make less money, so NCAA revenue means more to them. They also don’t have access to the $1.2 billion in new media revenue from the College Football Playoff that the Power 5 and Power 4 conferences have, so that’s where tensions rise.

Is it accurate to say that the NCAA will now pay athletes?

Going forward, each of the Power 5 conferences—soon to be the Power 4—has agreed to contribute about 22%, or $20 million annually for at least the next decade, to provide “revenue sharing” with some or all of the athletes in those particular conferences. The NCAA continues to argue adamantly that these payments are not salaries or employment-related bonuses; rather, they view them as “revenue sharing” arrangements. When the various conference and national media agreements are finally renegotiated, the $20 million figure will likely increase.

Will the revenue be made available to all student-athletes in all sports, or only to high-money sports such as football and basketball?

We don’t have a definitive answer on this for several reasons. First, because we need to actually determine what each school’s annual payments to this class are. But secondly, you have Title IX, and Title IX may require it to be divided equally between male and female athletes. There is no clarity yet from the government or the Office for Civil Rights or any of these people. So it’s unclear how it will be broken down.

Do you think the settlement will stand?

The referee must check the parameters. He can move it forward or send it back and say, “I want you to explain this or that to me,” so we’re still in quite an uncertain phase. However, it seems quite clear that these schools have agreed to this and should prepare for it.

If this deal goes through, what will the NCAA do? What will their role be?

They are very good at running championships – and that is an important quality. Everyone wants to see which teams are the best. The challenge, however, has been that the NCAA has become accustomed to setting standards in order to create what they call a “level playing field.” It’s been a repeated mantra in college athletics for 60 years. The problem is that this appears to be a direct violation of US antitrust law.