Compensation for college athletes ranges from small to millions

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 compliance by schools; how third-party payments to athletes will be regulated; and how nearly $3 billion in compensation will be distributed over the next 10 years.

These payouts will vary dramatically, depending on the sport played, when, for how long, and what conference the athlete competed in. While Division I athletes in all sports will be eligible for compensation, the bulk of the compensation will likely go to football and basketball players from the powerhouse conferences, since those leagues and teams generate the majority of their revenue from billion-dollar media deals.

The agreement includes three antitrust cases — including a class action lawsuit known as House vs. NCAA — challenging the NCAA’s compensation rules dating back to 2016. The plaintiffs argued that the NCAA rules deprived thousands of athletes of the opportunity to earn millions of dollars by using their names, images and likenesses.

In 2021, the NCAA lifted the ban on athletes earning money through sponsorships and deals with advertisers.

The agreement does not rule on whether college athletes should be considered employees, but it does include a provision that suggests the agreement could be changed if “a change in law or circumstances permits collective bargaining.”

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,” Atlantic Coast Conference, Big Ten, Big 12, Pac-12, SEC commissioner 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 still 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.

The NCAA and conferences will be able to establish rules to prevent schools from circumventing the limit.

That figure comes from taking 22% of the average revenue generated through media rights agreements, tickets and other sources by power conference schools. The agreement will create an auditing system that will allow plaintiffs to monitor athletic revenues, which are expected to increase in coming years as new media rights agreements take effect for the conferences and the College Football Playoff.

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 it wants to divide the money between sports. It’s still unclear exactly how Title IX’s gender equity rules apply, and that will require federal clarification. How schools comply with Title IX will be the responsibility of each institution.

SCHOLARSHIPS AND LETTERS

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.

NO OFFERS

NCAA rules have been changed to allow schools to have more input into providing NIL opportunities for college athletes, but they will still be able to contract with outside entities.

However, athletes will be required to report third-party transactions over $600 to an external clearing house.

The NCAA is also creating a public database that it hopes will allow athletes to assess fair market value.

Under the agreement, collective NIL agreements funded by sponsors have become a common way to compensate athletes, but such agreements 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.

PAYMENTS FOR DAMAGE

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 payouts ranging from $15,000 to $280,000, just for the use of their name, image and likeness.

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 will be able to see how much compensation they are entitled to.

Still, the settlement is still months away from final approval. Athletes who are members of the plaintiffs’ class will have the opportunity to challenge the settlement and ask to be disqualified. One school, Houston Christian, has already filed a challenge — although a judge denied its request to intervene.

“We are headed in the right direction, giving college athletes what they DESERVE and what they have earned, which is long overdue,” said Sedona Prince, a college basketball player currently at TCU and one of the plaintiffs in the House case. “We have a long way to go, and I pray that athletes will ask more questions and demand more answers from leaders in their schools, conferences and the NCAA.”