On October 7th, U.S. District Judge Claudia Wilken, granted preliminary approval for the highly anticipated $2.78 billion NCAA antitrust settlement deal, potentially marking a significant turning point in college sports.
For years, the National Collegiate Athletic Association (NCAA) strictly prohibited college athletes from profiting off their names, images, and likenesses (NIL), limiting them to scholarships as their only form of compensation. These stringent rules were intended to preserve amateur status, which ensures that these athletes remain students first and refrain from accepting payment for athletic performance. However, the NCAA has faced mounting criticism given the substantial revenue that student-athletes generate for their institutions and the association at large.
In 2021, the NCAA made a dramatic shift in its policy by allowing student-athletes to profit from their NIL through endorsement deals, product promotions, and social media presence. This marked a pivotal step toward acknowledging athletes’ rights to control and monetize their personal brands.
Despite this policy shift, unresolved issues persist, especially regarding the missed earning opportunities for athletes in previous years. Now, the NCAA is facing a $2.78 billion antitrust settlement deal. Antitrust laws are designed to promote fair competition and prevent organizations from using their power to unfairly limit market opportunities.
Initial Settlement Details
The massive antitrust settlement aims to address three previous class action lawsuits against the NCAA, primarily focusing on these key issues:
(1) Payment for Damages Regarding Lost NIL Opportunities
The settlement agreement requires the NCAA to distribute $2.78 billion, over 10 years, to more than 14,000 former athletes, with eligibility dating back to 2016 enrolment. This period is limited by the statute of limitations on antitrust claims, which restricts the amount of time that parties have to initiate legal proceedings. While student-athletes today can earn substantial income from their NIL, past athletes were denied such opportunities. This settlement seeks to compensate for those lost earnings.
(2) Adoption of a Future Compensation Model
The settlement also introduces a revenue-sharing model that allows student-athletes to receive direct payments from their schools. This marks a significant shift from the previous model, where student-athletes could only earn through external opportunities. Participating schools could now commit to distributing roughly one-fifth of their annual revenue to their players—a figure expected to grow. This could result in student-athletes receiving between $1.5 to $2 billion annually.
(3) Other Notable Elements
The settlement agreement also includes additional elements that could reshape the relationship between the NCAA and its student-athletes.
First, future NIL agreements between student-athletes and external parties may be subject to review by a third party, to ensure they serve a valid business purpose, rather than acting as disguised ‘pay-for-play’ arrangements. ‘Pay-for-play’ arrangements compensate athletes specifically for their athletic performance, which goes against the NCAA’s amateurism rules, as it blurs the line between student-athlete and professional. While this measure could help the NCAA regulate these deals more effectively, it also poses barriers by delaying or limiting legitimate NIL opportunities. This potential to undermine the settlement’s goals was a key point of contention in Judge Wilken’s recommendations.
Second, the NCAA will lift its restriction on the number of scholarships allowed per team, opting instead to enforce a roster limit. A roster limit caps the total number of athletes a team can have, ensuring that specific programs don’t stockpile more talent than they can field. This change aims to promote a more balanced distribution of athletes across the NCAA.
Settlement Approval Progress
During the first meeting on September 5th, Judge Wilken refused to grant preliminary approval unless significant changes were made to critical aspects of the deal. Specific concerns were raised regarding how boosters could provide money to athletes. The NCAA aimed to regulate external NIL opportunities to ensure they served a ‘valid business purpose’ that reflect genuine business interests, rather than simply paying student-athletes for their athletic performance. However, Wilken objected to these measures, expressing concern that they might create a chilling effect on the NIL marketplace.
In response to these concerns, the parties submitted a revised settlement agreement, eliminating the term ‘booster,’ and limiting the NCAA’s oversight to individuals directly affiliated with the schools, excluding major brands and corporate sponsors.
On October 7th, Judge Wilken granted preliminary approval for the $2.78 billion antitrust settlement. While the agreement is not finalized, this strongly indicates that the court is likely to approve it at the final hearing, tentatively scheduled for April 7, 2025. If final approval is granted, the settlement agreement could take effect as early as July 2025, bringing the outlined changes into action. Steve Berman, one of the lead attorneys on the case, excitedly stated that college athletes were “one huge step closer to a revolutionary change.”
Significance
The settlement allows the NCAA to preserve its education-based model, striking a delicate balance by treating student-athletes as amateurs rather than professional employees. If finally approved, the NCAA antitrust settlement will fundamentally reshape the landscape of college sports, marking a significant milestone in the ongoing efforts to affirm the rights of college athletes while also creating a more stable and sustainable framework for their future.
Works Cited
Berkowitz, Steve. “Judge gives preliminary approval for NCAA settlement allowing revenue-sharing with athletes” (7 October 2024), online: USA Today https://www.usatoday .com/story/sports/college/2024/10/07/ncaa-revenue-sharing-house-settlement-approved/75514164007/
Dosh, Kristi. “10 Things to Know About the NCAA’s House Settlement” (24 May 2024), online: Forbes https://www.forbes.com/sites/kristidosh/2024/05/24/10-things-to-know-about- the-ncaas-house-settlement/
Hosick, Michelle. “Settlement Documents Filed in College Athletics Class Action Lawsuits” (26 July 2024), online: NCAA https://www.ncaa.org/news/2024/7/26/media-center- settlement-documents-filed-in-college-athletics-class-action-lawsuits.aspx
McCann, Michael. “NCAA Players Revised House Antitrust Settlement” (26 September 2024), online: Sportico https://www.sportico.com/law/analysis/2024/ncaa-players-revised-h ouse-settlement -1234798799/
Murphy, Dan. “Answering the 10 biggest questions about the NCAA antitrust settlement” (28 July 2024), online: ESPN https://www.espn.com/college-football/story/_/id/40658452/ncaa-la wsuit-settlement-paying-players
Murphy, Dan. “Settlement designed to pay college athletes gets preliminary approval” (7 October 2024), online: ESPN https://www.espn.com/college-football/story/_/id/40658452/nca a-la wsuit-settlement-paying-players