The NCAA and plaintiffs filed a detailed agreement Friday to settle a multibillion-dollar class action lawsuit that paves the way for a new revenue-sharing model and governance that introduces roster size limits and NIL regulations in major college sports.
“NCAA college athletes have waited decades for this moment, and their right to receive full value for their hard work has finally arrived,” Steve Berman, managing partner and co-founder of the law firm Hagens Berman, told CBS Sports. “We are incredibly proud to be in the final stages of historic change.”
The 100-page agreement filed in the Northern District of California provides more details on the terms of the settlement, which involves three class actions, including the House vs. the NCAA. The latest and most significant details include roster size limits beginning with the 2025-26 seasons, which were set by Power Conference commissioners earlier in the week, and unlimited scholarships in all sports. The agreement also paves the way for sharing up to 22% of total revenue with future athletes and creating a clearinghouse to help govern name, image and likeness agreements.
“This is another important step in the ongoing effort to provide increased benefits to student-athletes while creating a stable and sustainable model for the future of college athletics,” an NCAA spokesperson wrote in a press release. “While much work remains to be done in the bylaw approval process, this is an important step toward establishing clarity for the future of all Division I athletics while maintaining a sustainable, education-based model for college athletics, ensuring student-athletes have the opportunity to earn a degree and the tools needed to succeed in life after athletics.”
Schools will also have the option to share scholarships, with all sports now labeled as “equivalency sports,” which will allow partial scholarships to be distributed to football and basketball players. Those sports were previously labeled as “student-count sports,” which required players to be on full scholarship.
Football rosters will be capped at 105 players, which will result in up to 20 additional scholarships on top of the current restriction of 85, sources told CBS Sports. With unlimited scholarships, baseball teams will be able to offer up to 34 scholarships to players, up from the 11.7 “matches” allowed today for 27 players. Softball will increase from 12 to 25.
Former athletes will receive $2.78 billion in retroactive payments over the next 10 years. The new revenue-sharing structure with future players will be capped at 22% of the average total revenue generated by schools in eight categories reported in the NCAA’s member financial reporting system. Those revenue categories include ticket sales and media rights. That’s expected to amount to nearly $22 million per year, increasing 4% per year, with further reassessments built in after the first, fourth and seventh years of the 10-year agreement. If the parties agree that revenue has changed significantly between those dates, an annual assessment is possible.
The detailed agreement also includes stricter NIL rules, though how they will be enforced remains unanswered — and the NCAA and the plaintiffs have yet to agree on an arbitrator. NIL deals over $600 will be subject to review by a clearinghouse to ensure they are legitimate, have fair market value and are not being used in a pay-to-play scheme. How the five autonomous schools will control NIL remains to be determined, and it’s unclear whether enforcement will be handled by the NCAA or the conferences. Schools will also be allowed to pay players directly for their NIL, but that will apply to the 22% revenue cap. Outside parties will continue to be allowed to enter into separate NIL deals with players.
“Collectives will not disappear if there is a salary cap,” said Russell White, president of The Collective Association“Universities will continue to want to compete beyond (basic revenue shares).”
According to the NCAA, the 22% share of athletic conference revenues represents up to $2 billion annually. In addition to the scholarships, meals and academic support already provided, the NCAA says athletic conference schools will share “nearly 50%” of their athletic revenues with players.
That doesn’t necessarily mean every school will offer full scholarships to every player. For example, several administrators interviewed by CBS Sports this week don’t plan to offer full scholarships to all 34 players on baseball rosters. The increase in scholarships is expected to add between $5 million and $10 million to each school’s expenses.
The NCAA is still seeking federal legislation to circumvent state laws that could conflict with the agreement. Conference leaders have also made clear that they prefer not to designate players as employees. The National Labor Relations Board and plaintiffs’ attorneys have already argued in favor of designating them as employees, according to the NCAA.
The biggest complication is Title IX compliance and whether future payouts should be split evenly among all players or whether a weighted system can be used to reward revenue-generating sports like football with more money than their women’s counterparts. The unspoken truth among administrators is that they seem unlikely to advocate for equal pay for athletes whose sports earn less than football and men’s basketball.
“It’s very likely that we’re going to see a massacre of nonprofit sports,” said Jason Belzer, president of Student Athlete NIL. “Title IX is going to be a very big fight. How are you going to stop it? It’s going to be tough.”
But is there a blueprint to follow in the current settlement agreement? It calls for 90% of the outstanding payments to be distributed to football and men’s basketball players. Several administrators believe that structure could pave the way for the future revenue-sharing model, though it likely needs to be codified in Congress to avoid Title IX lawsuits.
Plaintiffs’ attorney Jeffrey Kessler told CBS Sports in May that the Title IX implications could become a school-by-school issue resolved in court, not one decided by conference-wide resolutions.
“There are some schools that believe they are violating Title IX right now, and there’s a lot of uncertainty about how that applies in different cases,” Kessler said. “That will continue to be the case, and it’s going to be up to the courts to determine in which cases that applies.”
Steve Berman, the House’s co-lead counsel, added: “I’ve heard from both sides. … I don’t know the answer to that question, and that’s their problem.”
Simply put, the comprehensive agreement provides a blueprint rather than an instruction manual for the future of college sports. Many issues remain unresolved and further litigation is possible.
“I never considered the threat of other events as a reason to do nothing,” Big Ten Commissioner Tony Petitti told CBS Sports earlier this week. “At some point, you have to choose a path. Is this the best path to stability? Is this adequate to address many of the concerns we have in college sports right now? I think the answer turned out to be yes. That’s why we did it. That doesn’t mean the agreement addresses all the other issues. At the end of the day, these were a very critical group of cases that were resolved. They provide a pretty clear pathway.”
The NCAA will have to pay 40% of the $2.78 billion settlement, and the remaining 60% will come from reducing its revenue distributions to the 32 Division I conferences over the next 10 years ($1.6 billion). The NCAA uses a formula based on revenue distributions presented to each league over a nine-year period starting in 2016, which leans heavily on basketball units tied to NCAA tournament appearances, according to Yahoo Sports. The Power Five conferences — the ACC, Big Ten, Big 12, Pac-12 and SEC — will pay 24% of the overall damages, followed by the Group of Five at 10%. The FCS will pay 14% and non-football Division I conferences will pay 12% of the overall settlement, according to documents reviewed by CBS Sports.