What is the House settlement involving college sports and why does it matter?
The settlement of a $2.8 billion federal class-action antitrust lawsuit filed by athletes against the NCAA and the largest conferences (ACC, Big Ten, Big 12, Pac-12 and SEC) was approved by the defendants and plaintiffs in May 2024 and not long afterward by U.S. Judge Claudia Wilken, who must give final approval before terms can go into effect as early as July 1. Some questions and answers about this monumental change for college athletics:
Q: What is the House settlement and why does it matter?
A: Grant House is an Arizona State swimmer who sued the defendants. His lawsuit and two others were combined and over several years the dispute wound up with the proposed settlement that will create a new substructure for college sports. What’s groundbreaking is that it ends a decades-old prohibition on schools cutting checks directly to athletes. Now, each schools will be able to make so-called NIL payments to athletes, compensating them for use of their name, image and likeness.
Q: How much will the schools pay the athletes and where will the money come from?
A: In Year 1, each school can share up to about $20.5 million with their athletes, a number that represents 22% of their revenue from things like media rights, ticket sales and sponsorships. Alabama athletic director Greg Byrne famously told Congress “those are resources and revenues that don’t exist.” Some of it will be raised through ever-growing TV rights packages, especially for the newly expanded College Football Playoff. But some schools are increasing costs to fans through “talent fees,” concession price hikes and “athletic fees” added to tuition costs.
Q: What about scholarships? Wasn’t that like paying the athletes?
A: Scholarships and “cost of attendance” have always been part of the deal for Division I athletes, and there’s certainly value to that, especially if athletes get their degree. But they have long argued that it was hardly enough to compensate them for the millions in revenue they helped produce for the schools, which went to a lot of places, including multimillion-dollar coaches’ salaries.
Q: Haven’t players been getting paid for a while now, though?
A: Yes, since 2021. Facing losses in court and a growing number of state laws targeting its amateurism policies, the NCAA cleared the way for athletes to receive NIL money from third parties, including so-called donor-based collectives that support various schools. Under House, the school can pay that money directly to athletes and the collectives are still in the game.
Q: What about players who played before NIL was allowed?
A: A key component of the settlement is the $2.78 billion in backpay going to athletes who competed between 2016-24 and were either fully or partially shut out from those payments. It will come from the NCAA and conferences (but really from the schools, who will receive lower-than-normal payouts from things like March Madness).
Q: Who will get most of the money?
A: Since football and men’s basketball are the primary revenue drivers at most schools, and that money helps fund all the other sports, it stands to reason that the football and basketball players will get most of the money. But that is one of the most difficult calculations for the schools to make.
Q: Couldn’t unequal divvying of the money open up issues of fairness, equity and Title IX?
A: Yes, there could potentially be Title IX issues if schools deliver more resources to men than women. But the most recent guidance from the Trump administration suggests schools won’t have to consider NIL payments in their Title IX calculations. Attorneys on both sides in the House case have argued that the settlement is not the arena to resolve Title IX issues.
Q: Is this a done deal?
A: That’s an open question. Wilken could do it as soon as Monday or wait to craft a decision after weighing objections. She could scuttle the entire thing, though she granted preliminary approval in October. Currently, the terms of the deal are set to start July 1.
Q: So, once this is finished, all of college sports’ problems are solved, right?
A: Not by a long shot. Some of the more pressing issues include establishing an enforcement entity to make sure schools are staying within the spending guidelines and what to do if they’re not — an area that seems ripe for litigation. There are also the issues of collective bargaining and whether athletes should flat-out be considered employees, a notion the NCAA and schools are not interested in. NCAA President Charlie Baker has been pushing Congress for a limited antitrust exemption that would protect college sports from another series of lawsuits.
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