Formal settlement documents were filed Friday in the U.S. District Court for the Northern District of California to advance the process of approving a settlement to resolve class actions involving the NCAA and the Atlantic Coast Conference, Big Ten Conference, Big 12 Conference, Pac-12 Conference and Southeastern Conference (Autonomy 5 conferences).
The settlement documents address three cases: Chamber vs. NCAA, Hubbard vs. NCAA And Carter vs. NCAA – involving back injuries and future benefits for Division I student-athletes.
“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,” said the commissioners of the five conferences and the NCAA president. “While much work remains to be done in the bylaw approval process, this is an important step toward clarifying 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.”
The rule
The settlement addresses three main issues: payment of retroactive damages for claims related to name, image and likeness (NIL), academic awards and other benefits; increased institutional benefits to student-athletes going forward, including additional NIL opportunities for student-athletes directly with the institution; and the elimination of scholarship limits in favor of roster limits.
- The settlement provides for total damages of approximately $2.78 billion, to be paid over 10 years, or approximately $280 million per year, with the allocation of damages to be determined by the plaintiffs.
- Going forward, the settlement will allow A5 member institutions (and other DI schools that choose to participate in the new structure) to provide increased benefits to student-athletes, including for NIL. If approved by the court, this model would allow schools to provide up to 22% of average Autonomy 5 sports media, ticket and sponsorship revenue to student-athletes, beginning in the 2025-26 academic year. The future model could allow student-athletes to receive between $1.5 billion and $2 billion in new benefits each year.
- The new benefits that could be offered to student-athletes would be in addition to the many benefits they currently receive, including free tuition, room and board, scholarships, academic support and tutoring, mental health and medical resources and support, nutrition resources and support, life skills development, high-quality coaching and training, and extended health coverage after competition ceases. By adding these existing benefits to the benefits that will be available under the new model, many A5 schools would provide nearly 50% of athletic revenue to their student-athletes.
- Under the new model, institutions can pay student-athletes directly for their NIL fees. Any institutional NIL payments would apply to the 22% cap. Third parties can continue to enter into NIL agreements with student-athletes. These agreements will be subject to review to ensure they are legitimate, have fair market value and are not being used to pay to play. NIL payments made by third parties would not apply to the 22% cap but must be disclosed to a clearinghouse for review.
- The new model allows for a robust and effective monitoring and oversight program to ensure that the new NIL model achieves its objectives. Establishing a clearinghouse for NIL payments over $600 would provide institutions with access to information about external NIL activities, providing a level of transparency that does not currently exist to enable better management of third-party influence and greater assurance of the legitimacy of NIL activities.
- Finally, scholarship caps will be eliminated in all sports and enrollment caps will be established. Institutions will have the authority to offer partial or full scholarships as long as they do not exceed enrollment caps. This change will allow institutions to offer additional scholarships to student-athletes in the future.
Next steps
The settlement must be approved by the court before it can be final, a process that is expected to take several months. If the court preliminarily approves the settlement, class members will be notified. Class members seeking damages based on their past conduct will have the opportunity to opt out of the settlement if they choose. Class members, including incoming student-athletes, will also be given notice and allowed to file objections to the future relief/model with the court.
Unresolved questions
While approval of the agreement would be an important step forward, there would still be outstanding issues that highlight the need for further legislation at the federal level. These issues include:
- The agreement does not address the problem of the patchwork of state laws, many of which may conflict with the agreement. These laws will need to be replaced by federal legislation for the agreement to be effective.
- The settlement ignores ongoing efforts to designate student-athletes as employees under federal and state labor and employment laws. These efforts by the NLRB and plaintiffs’ attorneys pose a direct threat to both the sustainability of athletic programs (particularly those that do not generate revenue) and the basic level of support provided to all athletes.
“This agreement is an important step forward for student-athletes and college athletics, but it does not solve all the problems,” the A5 commissioners and the NCAA president said. “The need for federal legislation to address these issues remains. If Congress fails to act, the progress made through the agreement could be significantly eroded by state laws and continued litigation.”