NCAA Settlement of NIL Delinquent Payments Meets Resistance

The NCAA finds itself in another legal battle over compensation for student athletes after multiple parties filed objections to a proposed multibillion-dollar settlement in three antitrust cases against the governing body and its conferences, which is currently being heard by a federal judge in California.

The backlash has raised concerns about a number of issues with the deal, including whether it undervalues ​​student-athletes, discriminates against female athletes or creates another illegal cap on athlete salaries and money that would go to lawyers.

Under the proposed settlement, Division I schools and conferences would help fund $2.8 billion in compensation owed to thousands of former and current student-athletes over 10 years. The Power conferences would cover most of that amount, although smaller leagues and universities have tried to challenge the terms (more on that later).

The settlement also states that Division-I schools will be able to pay their student-athletes directly for the use of their NIL and will be subject to a per-school cap that will increase over time based on revenue. Contracts with outside entities will still be allowed, but the NCAA will have more oversight over them. Scholarship caps will also be eliminated and replaced with roster size limits.

One set of arguments against the settlement, made by lawyers involved in a similar lawsuit seeking compensation for student-athletes in Colorado, argued that the NCAA undervalued the claims made by the student-athletes. Representing all Division I athletes from any sport since 2020, the plaintiffs are essentially seeking a pay-for-play system in which schools can pay their athletes for their athletic services (which is different from using their name, image and likeness) and value the claims at $24.3 billion based on an economist’s estimate. They cited those damages in their filing last week.

Another argument raised by attorneys representing six female rowers was that the NCAA’s “failure to promote women’s sports has eroded the value of female athletes’ NILs over the decades.” Based on the settlement’s economic model, which included NILs, broadcast, and media contracts, the football and basketball players are expected to receive a significant portion of the awards.

Both sides have argued that the proposed NIL payment cap is unlawful. Lawyers involved in the Colorado case argued that the cap could not be enforced without first holding collective bargaining, which would include negotiations with student-athletes. Lawyers representing the rowers have pointed out that the NCAA has repeatedly violated antitrust law by attempting to limit compensation for student-athletes.

The pushback from student-athlete attorneys comes after U.S. District Judge Claudia Wilken denied a motion by Houston Christian University, an FCS school in the Southland Conference, to intervene in the House v. NCAA lawsuit. The school found its interests were not represented in the settlement nor was it involved in the negotiations. HCU also warned that if it is forced to repay damages it says it never made to student-athletes, school officials could potentially face lawsuits and students could be deprived of resources necessary for their college education.

Wilken was unmoved, as she responded that HCU is a voluntarily Division-I school and can stop participating in Division-I sports if it chooses. She also said that HCU has had the opportunity to influence the House v. NCAA case since it began in 2020, though it did not, and doing so now would delay resolution of the dispute and derail settlement discussions.

If Wilken were to grant the motion, it would open the door for small universities and conferences across the country to oppose the proposed NCAA settlement. Some leaders from non-football leagues, including Big East Commissioner Val Ackerman, argued in May that their share of the bill was too high and that the power conferences should pay a larger share of the settlement, since most of the back pay goes to former power conference student-athletes anyway. Instead, they suggested that the power conferences pay 60 percent of the settlement, though their arguments fell on deaf ears.

It remains to be seen how Wilken will handle the documents filed by two parties representing thousands of former student-athletes.