In the spring of 2021, NCAA lawyers appeared before the U.S. Supreme Court, arguing strongly against giving each college athlete additional money annually.
Amount: $5,980.
Three years later, in a landmark deal that changed the course of major college athletics, the organization ditched its archaic rules, shook off its longstanding amateurism, and ushered in an era of direct compensation to athletes.
Amount: More than $15 billion in new money is expected to funnel to athletes over the course of the 10-year deal.
The NCAA and power conferences voted this week in favor of settling three antitrust cases (House, Hubbard and Carter). A future athlete revenue-sharing model that could cost major conferences more than $1 billion annually; and other possible changes in the governance, enforcement and scholarship structure of the Society.
Anticipated for weeks now, the vote is a historic moment, a dramatic and seismic shift for an organization that for decades has fought against direct player pay despite making billions from its major football and men’s basketball powers. Plaintiff attorneys have ushered in a new era in the industry that they hope will bring stability to the current unruly recruiting landscape as a result of nine months of negotiations with NCAA President Charlie Baker and conference commissioners.
Caught in a purgatory between amateurism and professionalism, major college sports is moving forward — though not of its own accord. Although reluctantly forced into this semi-professional world by state laws and court systems, the industry still clings to a small slice of amateurism, as the new model is still expected to ban pay-to-play and incentives.
However, college leaders say the deal prevents future legal challenges, ties power to the NCAA for at least another decade, and brings more regulation to the recruiting environment.
“It will be the biggest change in the history of college sports. Period,” said Gabe Feldman, a professor of sports law at Tulane and a leading voice on NCAA litigation. “There have been significant changes and incremental changes. The NIL era has opened a lot of doors, but having athletes share revenue with schools is not only monumental, but contrary to what the NCAA has stood for over a century.
What the new model means for athletes and how much it costs schools
All five power conference presidents’ boards — the Big Ten, SEC, Pac-12, Big 12 and ACC — voted in favor of the settlement this week. The Pac-12, though it was nearly disbanded, voted to be the first to be structured. The league handed out the final vote on Thursday evening, a crucial day.
However, the final decision on the settlement may not happen for several months. According to experts, the deal will require a judge’s approval and be open to objections from individual plaintiffs — at least a five-month gap.
However, within 14 months, beginning with the fall semester of 2025, the industry’s new model is expected to be implemented that would allow — but not require — schools to share revenue with athletes up to a certain half-salary threshold.
Revenue-sharing agreements with athletes would be classified as NIL agreements, providing funds for schools to use and broadcast the players’ name, image and likeness — the concept at the heart of the House case. Other non-NIL payment methods are an option.
While plenty of questions remain surrounding the new system, companies will be allowed to share up to $22 million a year with athletes. That figure, which is still in flux, is derived from 22% of average e-conference revenue. The $5 million in Alston-related money includes exemptions and can count toward the total of additional scholarships.
A new model is expected to arrive Remove scholarship restrictions while implementing list limitsA move to avoid more legal battles, but could cost schools millions in additional financial aid amid a heated recruiting landscape.
At the end of it all there is a steep price tag — $200-$300 million per school over a 10-year settlement agreement, or about $15 billion across all power schools. That number means a school meets the annual revenue-distribution threshold and expands the endowment by at least $3-5 million.
For many school administrators, there is sticker shock when it comes to digging for extra cash in unusual ways Tapping into private equity and capital. A $30 million annual price tag and $20 million in total scholarships is 40-45% of the average athletic department budget of public schools in the ACC, Big Ten, SEC and Big 12.
However, without a settlement, college leaders risk another loss in court, $20 billion in damages and bankruptcy, according to documents obtained by Yahoo Sports.
Besides the new funds, other changes are coming.
Enforcement of rules is not going away
The settlement model is expected to include, at a minimum, a new enforcement division and administrative structure for power conference schools, allowing them to develop and enforce their own rules. It could take months to wrap up those details.
For administrators, the enforcement situation is an important area. The settlement doesn’t eliminate booster-led coalitions, but encourages schools to bring them into the university’s athletic department, often through a strong enforcement agency — one that can operate outside the NCAA and get teeth through the settlement.
As part of the settlement, the judge is expected to “reaffirm” existing NCAA compensation rules, specifically prohibiting booster payments for non-“true NIL” contracts. According to a legal document summarizing the contract. However, few details about the enforcement agency have been shared.
As part of a “replacement” system for new plaintiffs, the settlement is expected to provide documentation for the “release” of antitrust compensation claims from current, former and future athletes for 10 years. In a story in Yahoo Sports last week, plaintiffs’ attorney Steve Berman cited such an idea, saying the settlement has built-in elements that allow each new category of athlete to choose a revenue-sharing structure.
The solution is not correct. It does not protect the NCAA and the conference from future lawsuits brought by state attorneys general, does not preempt state NIL or revenue-sharing laws, and does not provide a de facto judgment on the application of Title IX to such a compensation model.
The document notes that Title IX “is at the campus level to apply” — which could lead schools to violate federal law by continuing to use third parties to compensate athletes.
Attorney Jeffrey Kessler, another plaintiff in the case, hopes the Title IX issue will eventually be resolved in a courtroom.
“The courts will decide,” he told Yahoo Sports. “It doesn’t affect us. If we have a solution, we will negotiate a system to compensate the athletes. The degree to which Title IX applies will be determined. [by the courts].”
Opposition to this historic solution
The Board of Governors’ vote continued a contentious approval process within the NCAA’s 32-conference Division I. Angered by the financial model used to pay nearly $2.8 billion in compensation, 22 non-FBS conferences banded together in an attempt to block the move. Despite the pushback, the NCAA Board of Directors approved the funding model on Tuesday, with five of the 21 voting members not supporting the plan. The approval sent the item to the Board of Governors, who met Wednesday for more than an hour before the vote.
Under the approved structure, the NCAA would fund 41% of the damages ($1.1 billion), while the schools would fund 59% ($1.65 billion) over a 10-year payback period. The problem is the area of schools. Power Conferences will pay about $664 million in damages. The other 27 non-power conferences will pay $990 million — angering the non-power leagues.
Power conference presidents and NCAA administrators, deep in negotiations since August, only offered the low-revenue leagues a financial plan and settlement terms two weeks ago, they argue. One commissioner described the process as “not healthy”.
There is further pushback against the deal.
There are leaders of players’ associations and college athletic advocacy groups He publicly criticized it as a short-term solution. They urge college administrators to explore a collective-bargaining structure that gives athletes a voice and provides a more long-term solution.
Meanwhile, the NCAA and conference executives are expected to continue lobbying for congressional action, preempting settlement regulations and state laws and protecting them from implementing the employment model.
There is another shorthand in this.
A hearing is scheduled for Thursday in a separate antitrust case in Colorado, Fontenot v. NCAA. The lawsuit seeks billions of dollars in damages from the television broadcasts to the college athletes. The House settlement is expected to consolidate two other antitrust cases — Hubbard and Carter — with the Fontenot case an outlier. House, Hubbard and Carter share the same legal team. Law firms Corinne Tillery and Olson Grimsley Kawanabe Hinchcliffe & Murray are leading the Fontenot case.
The hearing is expected to focus on possible consolidation of the case. While House case lawyers expect it to be consolidated with the Carter case, Fontenot’s lawyers filed a legal filing Tuesday with a clear message: They don’t want it consolidated. It is best for the NCAA to consolidate all four cases to prevent future legal challenges.
