The NCAA board of governors and the power conferences have approved a historic $2.7 billion settlement agreement with attorneys representing college athletes in three antitrust cases—House v. NCAA, Carter v. NCAA and Hubbard v. NCAA—according to the Associated Press. The parties had self-imposed a deadline of May 23, which they have now met.
If approved by a federal court and if it overcomes potential legal challenges, the settlement will pay athletes for earnings they could have made for the commercial use of their name, image and likeness, video games and broadcasts had NCAA rules permitted such payments. The deal also calls for a restructuring of college sports so that conferences can elect to share revenue with players.
In addition, the settlement contemplates a salary cap system, wherein individual colleges that opt into the framework can pay players a combined annual amount up to $21 million. The $21 million could rise based on revenues in a setup similar to those used by the NFL and NBA. It could mean that college teams hire salary-cap experts and general manager-like figures to oversee payments.
The settlement is not a “done deal,” and it will likely be months before U.S. District Judge Claudia Wilken reviews a final version. The parties have agreed on a settlement term sheet, which sets out the parameters—but not all the details—of an agreement. The agreement calls for about $2.7 billion in compensation, which will be funded by the NCAA and colleges and through a combination of direct pay and withholding of payments that would have gone to colleges. Some of that money, possibly 25% to 35%, will go to the players’ attorneys as determined by Wilken.
About 14,500 players are expected to be paid varying dollar amounts. Many details, including how much each school must pay, the impact on roster sizes and the role of NIL, will need to be negotiated in the months ahead. Expect to see analysis on immigration law implications, and a focus on Title IX, including whether conference payments—which unlike school payments have historically not been found to trigger Title IX liability—alter the legal analysis.
Class members will be able to opt out and pursue their own lawsuits against the NCAA and conferences. After approval by Wilken, the settlement could be appealed to the U.S. Court of Appeals for the Ninth Circuit and potentially the U.S. Supreme Court. As Sportico detailed Wednesday, there are multiple ways the settlement or its implementation could be legally challenged by athletes and schools. The new world of college athletes being paid as pros might not happen for a couple of years, though fall 2025 is possible.
An approved settlement would also not represent case precedent—it would only be a contract. And, since the settlement’s terms have not been bargained with a union, the settlement would not insulate the NCAA from other antitrust lawsuits. A system with revenue sharing, salary caps and other restraints on pay that is not borne through collective bargaining is vulnerable to antitrust challenge.
To that point, the settlement only resolves three antitrust cases. It does not settle prospective antitrust lawsuits against the NCAA or ongoing ones.
On Thursday U.S. District Judge Judge Charlotte Sweeney ruled that a separate and very similar case, Fontenot v. NCAA, is not part of the settlement at this time. The case raises familiar arguments, namely that colleges conspire through NCAA rules to deny athletes of compensation they would receive if the market operated without NCAA restraints. However, it is in a different jurisdiction, Colorado.
Fontenot could be added to the settlement if and when the settlement is approved by Wilken, but its continued presence highlights the limited universe in which the House settlement operates. If the NCAA and member schools believe they are buying a “get-out-of-court” card by settling, the legal system will have disappointing news to share.
The settlement would also not resolve ongoing and prospective legal efforts regarding college athletes gaining recognition as employees of their school, conference and the NCAA and potentially unionizing.
NCAA president Charlie Baker is likely banking on the settlement providing goodwill as he lobbies Congress for a federal law. The NCAA seeks a limited antitrust exemption so that player compensation rules can be adopted without collective bargaining and a declaration that college athletes are not employees. To date, those efforts have come up short.
The two lead attorneys for the players issued celebratory statements Thursday evening. They convinced the NCAA to agree to effectively end amateurism and convert college sports into a pro sports system.
Winston & Strawn’s Jeffrey Kessler, who scored a unanimous victory at the U.S. Supreme Court in NCAA v. Alston (2021), said “there is no justification for the NCAA to continue prohibiting college athletes from sharing in the massive revenues that they generate for their schools and conferences.” He views the settlement as bringing “a fair compensation system to college athletes.”
Hagens Berman’s Steve Berman shared a similar sentiment. “Our clients,” Berman said, “are the bedrock of the NCAA’s multibillion-dollar business and finally can be compensated in an equitable and just manner for their extraordinary athletic talents.”
(This story has been updated in the last three paragraphs to include comments from the players’ attorneys.)