NCAA, leagues sign $2.8 billion plan

The NCAA and the nation’s five largest conferences have agreed to pay nearly $2.8 billion to settle a series of antitrust claims. It’s a monumental decision that sets the stage for a groundbreaking revenue-sharing model that could begin funneling millions of dollars directly to athletes very soon. fall semester 2025

What you need to know

The Pac-12 was the last conference to sign off when university leaders voted to adopt the plan on Thursday, according to a person with direct knowledge of the decision

The deal still needs to be approved by the federal judge overseeing the case, but there could be challenges

Details of the plan signal the end of the NCAA’s basic model of amateurism, which dates to its founding in 1906

The agreement calls for the NCAA and conferences to pay $2.77 billion over 10 years to more than 14,000 former and current college athletes who say defunct rules prevented them from making money from sponsorship deals dating back to 2016.

Athletes in all sports will be eligible for the payments, and schools will have the freedom to decide how the money is distributed among sports programs

The deal still needs to be approved by the federal judge overseeing the case, so there could be challenges, but if the deal stands, it would mark the beginning of a new era in college sports, where athletes will be paid more like professionals and schools will be able to compete for talent through using direct payments.

“There is no doubt about it. This is a huge milestone,” said Tom McMillen, a former basketball player and congressman from Maryland who has led a group of collegiate athletic directors in recent years.

The Pac-12 was the last conference to sign when university leaders voted to adopt the plan on Thursday, according to a person with direct knowledge of the decision. Southeastern Conference school officials had unanimously approved the deal hours earlier, said a second person with knowledge of the decision. Both spoke to The Associated Press on the condition of anonymity because a coordinated announcement between the Pac-12, SEC, Big Ten, Big 12, Atlantic Coast Conference and NCAA was still being prepared. All met the Thursday deadline set by the plaintiffs’ attorneys.

Details of the plan signal the end of the NCAA’s basic model of amateurism, which dates back to its founding in 1906. Indeed, the days of NCAA penalties for athletes driving cars equipped with stimulants began to fade away three years ago when the organization removed restrictions on cash-backed sponsorship deals, so-called . name, image and likeness.

It’s no longer a stretch to look ahead to seasons in which the star point guard or star player on a college basketball team not only earns big NIL deals, but has a $100,000 college salary in the bank per game.

Many details remain to be finalized, but the agreement calls for the NCAA and conferences to pay $2.77 billion over 10 years to more than 14,000 former and current college athletes who say defunct rules prevented them from earning money from sponsorships and sponsorship agreements from 2016.

“Even though this happened solely because of overwhelming legal pressure, the NCAA, conferences and schools agree that college athletes should be paid,” said Ramogi Huma, a former UCLA football player and longtime advocate for college athletes. – And there is no turning back from there. This is truly groundbreaking.”

Some of the money will come from NCAA reserve funds and insurance, but even though the lawsuit specifically targeted five conferences involving 69 schools (including Notre Dame), dozens of other NCAA member schools will receive smaller amounts from the NCAA to cover the mammoth payout.

Schools in the Big Ten, Big 12, Atlantic Coast and Southeastern conferences will bear the brunt of the settlement, costing about $300 million each over 10 years, most of which will be paid to athletes in the future.

The Pac-12 is also part of the settlement, with all 12 schools sharing responsibility, even though Washington State and Oregon will be the only league members to leave by the fall after the other 10 schools leave.

Paying athletes

Under the new compensation model, each school would be allowed, but not required, to allocate up to $21 million in revenue annually to share with athletes, although there could be a cap as revenue increases.

Athletes in all sports will be eligible for the payments, and schools will have the freedom to decide how to divide the money among sports programs. Scholarship caps by sport will be replaced by squad caps.

It’s unclear whether the new compensation model falls under Title IX gender equity provisions and whether schools will be able, as expected, to bring NIL activities into their facilities and displace the collectives run by boosters that have sprung up over the past few years to pay athletes. Both topics could lead to more lawsuits.

Suitcase

The federal class action lawsuit underlying the settlement, House v. NCAA, was scheduled to go to trial in January. The complaint, brought by former Arizona State swimmer Grant House and Sedona Prince, a former Oregon State and current TCU basketball player, alleged that the NCAA, along with the five wealthiest conferences, improperly prevented athletes from earning money from endorsements.

The lawsuit also alleged that athletes were entitled to a share of the billions of dollars the NCAA earns from conferences through media rights agreements with television stations.

Facing political and public pressure and facing the prospect of another legal loss that some college sports officials say could amount to $20 billion in damages, NCAA and conference officials have agreed to what has long been a guiding principle of the enterprise: that schools not pay athletes directly for playing beyond the scholarship.

This principle has been questioned many times over the last decade.

Notably, the Supreme Court unanimously ruled against the NCAA in 2021 in an education-related benefits case. The narrow focus on the Alston case did not lead to the collapse of the college sports system, but a strong rebuke from the NCAA’s model of amateurism opened the door to more lawsuits. Judge Brett Kavanaugh, a former Yale athlete, put it bluntly: “The bottom line is that the NCAA and its member colleges are capping the pay of student-athletes who collectively generate billions of dollars in revenue for colleges each year.”

Other cases

The settlement is expected to cover two other antitrust cases pending before the NCAA and major conferences that challenge athlete compensation policies. The Hubbard v. NCAA and Carter v. NCAA cases are also currently pending before judges in the Northern District of California.

The fourth case, Fontenot v. NCAA, poses potential complications because it remains in court in Colorado after a judge denied a request to join her to Carter. It’s unclear whether Fontenot will become part of the settlement, but it matters because the NCAA and its conferences don’t want to be burdened with additional damages if they lose in court.

“We will continue to litigate our case in Colorado and look forward to hearing about the terms of the settlement offer once it is actually released and presented to the court,” said George Zelcs, plaintiffs’ attorney at Fontenot.

Renovation of college athletics

The solution agreed in the settlement is groundbreaking, but not surprising. College sports have been moving in this direction for years, with athletes receiving more and more monetary benefits and rights they believe they have long been entitled to.

In December, NCAA President Charlie Baker, a former Massachusetts governor who has been in office for 14 months, proposed creating a new Division I track and field class in which schools with the most resources would be required to pay at least half of their athletes $30,000 per appearance. year. This suggestion, along with many other possibilities, is still under discussion.

The settlement will not solve all the problems facing college sports. The question still remains whether athletes should be considered employees of their schools, something Baker and other college sports leaders are struggling to address.

Some type of federal legislation or antitrust exception will likely still be needed to codify the terms of the settlement, protect the NCAA from future litigation and preempt state laws that attempt to neutralize the organization’s power. As it stands, the NCAA continues to face lawsuits that challenge its ability to govern itself, including establishing rules limiting multiple transfers.

Federal lawmakers have indicated they would like to do something, but while several bills have been introduced, none have come to fruition.

Despite the unanswered questions, one thing is clear: college athletics will soon become a professional sport more than ever.