The NCAA and Power 5 have reached a historic agreement allowing schools to pay student-athletes

The NCAA has long required prospective Division I and II student-athletes to receive a certificate of amateurism – documentation that proves their amateur status and prohibits payment for appearances.

But a seismic shift in college athletics will reduce this century-old pillar to rubble.

The NCAA and Power 5 conferences reached a historic agreement Thursday to allow schools to pay players directly. The decision is part of a multibillion-dollar settlement to resolve three federal antitrust cases that challenged the NCAA’s long-standing model of amateurism and accused the NCAA of illegally preventing student-athletes from profiting from their names.

Under the terms of the agreement reached by the Board of Governors, the NCAA will pay more than $2.7 billion in compensation over the next decade to pre-NIL student-athletes dating back to 2016 and current student-athletes. The NCAA and its conferences also agreed to a revenue-sharing plan allowing each school to share more than $20 million annually with its student-athletes.

For the first time in the history of college sports, schools can pay student-athletes directly, the resolution includes a stipulation that student-athletes waive the right to sue the NCAA for antitrust violations.

According to CBS Sports, agreeing to the settlement protects the governing body from potential financial disaster – estimated at more than $4.2 billion if the cases went to court.

In the coming month, the NCAA and its conferences will present a more comprehensive settlement to Judge Claudia Wilken of the U.S. District Court for the Northern District of California, with Wilken presiding over all three antitrust lawsuits.

Wilken’s agreement at a preliminary hearing – likely in July – would give all Division I student-athletes months to review the terms and determine whether they want to object or opt out of the class-action settlement. The ESPN report states that pending Wilken’s approval, revenue sharing will begin in the fall of 2025.

Unlike NIL, which allows student-athletes to benefit from personal brands through endorsements and commercial ventures, the revenue-sharing plan provides a systematic distribution that ensures Division I student-athletes are fairly compensated regardless of their individual marketability.

However, NIL agreements are expected to remain in place in addition to a revenue-sharing arrangement, although they will not be as common as in the recent era of college athletics. Student-athletes will retain the opportunity to leverage NIL rights for brand partnerships, with some schools likely to gain exclusive rights to an athlete’s NIL through contracts.

NIL Collectives – organizations designed to organize opportunities to support student-athletes – are similarly expected to continue to serve a more diverse role, playing a key role in offering student-athletes additional incentives beyond revenue sharing, supported by a third-party bonus provider.

NIL remains the Wild West of the college sports landscape. The transfer portal and NIL structure offers players the opportunity to act as professional free agents at least once a year. According to ESPN’s Dan Murphy, in exchange for regaining control, coaches and athletic administrators will likely give up some of the television revenue going to college sports.

While a newly developed revenue-sharing model could give UCLA a recruiting advantage when it joins the Big Ten – due to the conference’s lucrative television contracts – Title IX implications would mandate an equal division of funds between men’s and women’s sports, thus potentially diluting the benefits for football and men’s basketball.

The University of California Board of Regents approved an annual $10 million payment from UCLA to California following the Bruins’ decision to join the Big Ten. Facing $20 million in annual payouts to student-athletes and $10 million in annual liabilities to California, the University of California, Los Angeles is facing budgetary difficulties that are further exacerbated by increased travel costs and stringent accounting practices.