In the spring of 2021, NCAA lawyers, appearing before the United States Supreme Court, vehemently opposed the idea of providing every college athlete with an additional amount of money each year.
The amount: $5,980.
Three years later, in a historic deal that would transform the course of major college sports, the organization left behind its archaic rules, shed its long-held argument about amateurism and dove the industry in an era of direct athlete compensation.
The amount: More than $15 billion in new money is expected to be paid to athletes over the life of the 10-year deal.
The NCAA and power conferences voted this week to settle three antitrust cases (House, Hubbard and Carter), approving terms providing nearly $2.8 billion in damages; a future athlete revenue sharing model that will cost major conferences more than $1 billion a year; and other potential changes to the association’s governance, enforcement and scholarship structure.
Although awaited for weeks, the vote is a historic moment, a revolutionary and seismic shift for an organization that for decades has fought against direct remuneration of athletes despite the billions made thanks to its major football powers and men’s basketball. The result of nine months of negotiations with plaintiffs’ attorneys, NCAA President Charlie Baker and conference commissioners ushers in a new era in the industry that they hope will bring stability to the recruiting landscape current unruly.
Caught in a purgatory between amateurism and professionalism, major college sports are growing — but not of their own accord. Reluctantly forced into this semi-professional world by state laws and the court system, the industry still clings to a modicum of amateurism, as the new model should still prohibit fee-for-service and reminder payments.
However, college leaders believe the agreement avoids future legal challenges, ties the powerful leagues to the NCAA for at least another decade and brings more regulation to the recruiting environment.
“It would be the biggest change in the history of college sports. Period,” said Gabe Feldman, a sports law professor at Tulane and a leading spokesperson in NCAA litigation. “There have been significant and gradual changes. The NIL era has opened a lot of doors, but allowing athletes to share their revenue with schools would not only be monumental but would be contrary to what the NCAA has advocated for a century.
What the new model means for athletes and how much it will cost schools
All five power conference presidential councils – Big Ten, SEC, Pac-12, Big 12 and ACC – voted in favor of the settlement this week. The Pac-12, despite its virtual dissolution, voted according to its initial structure. The league took the final vote Thursday evening, on a historic day.
However, finalization of the settlement may not occur for several months. The agreement will have to be approved by a judge and may be subject to objections from individual plaintiffs – a delay of at least five months, according to experts.
However, within 14 months, at the start of the fall 2025 semester, the new industry model is expected to be implemented, allowing schools – but not requiring them – to share revenue with athletes up to a certain quasi-salary ceiling.
Revenue sharing agreements with athletes will be classified as NIL agreements, with schools providing funds for the use and dissemination of a player’s name, image and likeness – a concept at the heart of the House affair. Other forms of non-NIL payment are an option.
Although many questions remain around this new system, institutions will be allowed to share with athletes up to $22 million per year. This figure, still very fluctuating, came from 22% of the average revenues of the power conferences. The cap includes exceptions, in that a total of $5 million in Alston-related money and additional scholarships can be counted toward the total.
A new model would eliminate scholarship restrictions while imposing enrollment limits, a move aimed at avoiding more legal battles but which could cost schools millions more in additional financial aid amid busy recruiting. .
Ultimately, the price tag is high: $200 million to $300 million per school over the life of the 10-year settlement agreement, or about $15 billion for all schools in power. This figure assumes a school meets the revenue distribution cap each year and increases scholarships by at least $3 million to $5 million.
For many school administrators, sticker shock exists when they seek additional liquidity in unusual ways, such as by tapping private equity and capital. A $30 million annual award combined with a total of $20 million in scholarships represents approximately 40-45 percent of the average public school athletic department budget in the ACC, Big Ten, SEC and of the Big 12.
However, without a settlement, university executives face another loss in court, a $20 billion fine and bankruptcy, according to documents obtained by Yahoo Sports.
Besides the new financial aspects, other changes are coming.
Rule enforcement won’t go away
The colony-related model should feature a new enforcement mechanism and governance structure, at least for the Power Conference schools, allowing them to create and enforce their own rules. Finalizing these details could take months.
For administrators, the application situation is a key element. The regulation does not eliminate booster-led collectives, but encourages schools to integrate them into the university athletic department, primarily through a stronger enforcement entity – one that potentially operates outside of the NCAA and is gaining ground thanks to the regulations themselves.
As part of the settlement, the judge is expected to “reaffirm” existing NCAA compensation rules, particularly those that prohibit booster payments for transactions that are not “genuinely NIL,” according to a legal document summarizing the settlement. agreement. However, few details about the entity responsible for execution have been shared.
The settlement is also expected to provide what the documents call a “release” of antitrust claims from current, former and future athletes for 10 years under a “substitution” system for new plaintiffs. In an article on Yahoo Sports last week, such a concept was cited by plaintiff’s attorney Steve Berman, who said the settlement has a built-in element by which each new class of athletes can opt into the structure of revenue sharing.
The regulations are not perfect. It does not protect the NCAA and the conference from future lawsuits by state attorneys general, does not preempt state NIL or revenue sharing laws, and offers no real ruling on the application of the Title IX in such a compensation model.
Title IX “remains to be enforced at the campus level,” the document notes — a situation that could lead schools to circumvent federal law by continually relying on outside third parties to compensate athletes.
Jeffrey Kessler, another plaintiff attorney in the case, believes the Title IX issue will ultimately be resolved in the courtroom.
“The courts will decide,” he told Yahoo Sports. “It doesn’t concern us. If we reach a settlement, we will negotiate a system in which the athletes will be compensated. The degree of enforcement of Title IX will be determined (by the courts). »
Opposition to this historic regulation
The Board of Governors’ vote follows a controversial approval process within the 32-conference NCAA Division I. Angered by the funding model used to pay nearly $2.8 billion in damages, the 22 non-FBS conferences united in an effort to block the move. Despite the misgivings, the NCAA Board of Directors approved the funding model Tuesday, with five of the 21 voting members not supporting the plan. The approval sent the item to the Board of Governors, which met Wednesday for more than an hour before a vote.
Under the approved framework, the NCAA will fund 41 percent of the damages ($1.1 billion), while schools will fund 59 percent ($1.65 billion) over the 10-year recovery period. What is at issue is the part of the schools. The power conferences will pay approximately $664 million in damage contributions. The other 27 powerless conferences will pay $990 million — a breakdown that has angered the powerless leagues.
Power Conference and NCAA executives, deeply involved in negotiations since August, only presented the financing plan and settlement terms to low-revenue leagues two weeks ago, they say . One commissioner called the process “not healthy.”
There is even more resistance to the deal.
Leaders of players’ associations and college athlete advocacy groups have publicly criticized the settlement, calling it a short-term solution. They are urging college leaders to explore a collective bargaining framework that gives a voice to the athletes themselves as well as a longer-term solution.
Meanwhile, NCAA and conference leaders should continue to push for congressional action, both to codify settlement terms and to preempt state laws and protect them from implementation. work of an employment model.
There is also another problem with this.
On Thursday, a hearing is scheduled in a separate antitrust case taking place in Colorado, Fontenot v. NCAA. The case seeks billions of dollars for college athletes in compensation for TV broadcasts. While the House rule is expected to consolidate two other antitrust cases – Hubbard and Carter – the Fontenot case is an exception. House, Hubbard and Carter share the same legal team. The law firms of Korein Tillery and Olson Grimsley Kawanabe Hinchcliff & Murray are leading the Fontenot case.
The hearing is expected to focus on the potential consolidation of the case. While lawyers for the House case expect the case to be consolidated with the Carter case, Fontenot’s lawyers filed a legal brief Tuesday with a clear message: They don’t want the case to be consolidated. A consolidation of the four cases is ideal for the NCAA to avoid future legal challenges.