NCAA settles shocking antitrust lawsuit that covers athlete pay

Thousands of former college athletes will be eligible for payments ranging from a few dollars to more than a million under a $2.78 billion antitrust settlement reached by the NCAA and five major conferences. The agreement also clears the way for schools to pay athletes directly while also trying to regulate payments from sponsors.

Details of the sweeping plan were filed Friday in federal court in the Northern District of California, a little more than two months after the framework for the agreement was announced.

The deal still needs to be approved by a judge.

“College athletes will finally be able to share in the billions of dollars their compelling stories and dynamic performances have generated for their schools, conferences and the NCAA,” the filing reads. “This is nothing short of a seismic shift in college sports after more than four years of hard-fought victories in this matter.”

The full term sheet includes guidelines for sport-specific roster limits that will replace scholarship limits; how the new financial payments will be monitored and enforced to ensure schools comply; how third-party payments to athletes will be regulated; and how nearly $3 billion in damages will be paid to plaintiffs over the next 10 years.

These payouts will vary significantly and depend on the sport played, the time, the duration of the competition and the conference in which the athlete participated.

While Division I athletes in all sports will be eligible to seek compensation, the bulk of the compensation is expected to go to football and basketball players from the top conferences because those leagues and teams generate the majority of revenue from billion-dollar media rights contracts.

The agreement includes three antitrust cases — including a class action lawsuit known as House vs. NCAA — challenging NCAA pay rules dating back to 2016.

The plaintiffs claim that NCAA rules have deprived thousands of athletes of the opportunity to earn millions of dollars through the use of their names, images and likenesses.

In 2021, the NCAA lifted its ban on athletes cashing in on their fame through sponsorships and endorsement deals.

The agreement does not rule on whether student athletes should be considered employees, but it does include language suggesting the agreement could be changed if “a change in law or circumstances makes collective bargaining possible.”

The NCAA and college sports leaders continue to ask Congress for help in passing federal legislation that would supersede state laws and allow associations and conferences to govern themselves without fear of future antitrust litigation.

“This settlement is an important step forward for student-athletes and college sports, but it does not resolve all issues,” the commissioners of the Atlantic Coast Conference, Big Ten, Big 12, Pac-12, Southeastern Conference and NCAA President Charlie Baker said in a joint statement. “The need for federal legislation to provide solutions remains. If Congress does not act, the progress made through the settlement could be significantly limited by state laws and ongoing litigation.”

While such relief is still unlikely in the near future — especially with the presidential election just months away — college sports leaders hope the settlement will provide certainty for schools and finally put an end to the relentless legal attacks on an outdated model of amateurism.

Paying athletes

The NCAA and conferences have agreed to change their rules to allow a groundbreaking compensation system that will allow schools to share up to $21 million in athletic revenue with their athletes annually, starting in 2025.

That figure comes from 22 percent of the average revenue schools generate from major conferences through media rights deals, ticketing and other sources.

The agreement will create an auditing system that will allow plaintiffs to monitor sports revenues, which are expected to increase in coming years as new media rights agreements for the conference and the College Football Playoff take effect.

It is estimated that athletes will receive between $1.5 and $2 billion annually.

All athletes will be eligible for the new financial benefits, but each school will be able to decide how the money is distributed among individual sports.

How exactly Title IX’s gender equity rules apply is still unclear and will require federal clarification. How schools comply with Title IX will be the responsibility of each institution.

Scholarships and attendance records

Replacing scholarship caps with player caps could mean even more opportunities for Division I athletic scholarships.

Most significantly, major college football teams will now be allowed to have 105 players on scholarships instead of the current 85, although schools will no longer be required to award full scholarships to every player.

Partial scholarships have been used in some sports for years, but will now be allowed in all sports.

Roster limits for baseball (34), softball (25) and volleyball (18) teams will also allow for significant increases in the number of scholarships schools can award in those sports, though schools will not be required to meet the limit.

NIL Transactions and Supervision

NCAA rules were recently changed to allow schools to have more involvement in providing NIL opportunities for college athletes, but they will still be able to contract with outside entities.

A new voluntary system for reporting transactions over $600 is set to go into effect next month.

NCAA creates public database to help athletes assess fair market value

Under the agreement, Booster-funded NIL collectives have become a common way to compensate athletes, but such deals will now be subject to review through an arbitration process to determine whether they serve a “valid business purpose.”

Violations may result in ineligibility penalties for athletes and sanctions for schools.

Damage payments

The plaintiffs in the Chamber case are responsible for paying the damages. Friday’s motion included a table breaking down the categories of eligible athletes along with four different types of payments they could receive.

According to the plaintiffs, approximately 19,000 Power Conference football and basketball players will be eligible to receive an average of $91,000, with media compensation ranging from $15,000 to $280,000 for name, image and likeness use alone.

Some of those same athletes could also receive tens of thousands of dollars more for lost opportunities to earn NIL money while studying and what the plaintiffs claim is pay-for-play. Plaintiffs’ attorneys say several athletes will be eligible to receive more than $1 million.

Next steps

Plaintiffs’ attorneys say they will file a motion for preliminary approval and — if approved — a public website will be launched in about two months where former college athletes can determine how much compensation they are entitled to.

However, the settlement will still take several months to be finally approved.

Athletes who are members of the plaintiffs’ class will have the opportunity to object to the settlement and ask to be disqualified. One school, Houston Christian, has already filed an objection — although a judge denied its motion to intervene.