The proposed $2.8 billion settlement in House v. NCAA has reached a crucial stage with federal Judge Claudia Wilken granting preliminary approval on October 7. The settlement dramatically changes the landscape of college sports. It allows schools to make direct payments to student-athletes for the first time, replacing the traditional NCAA amateurism model. A final approval hearing is scheduled for April 2025.
How We Got Here
The House v. NCAA case, spearheaded by former college swimmer Graham House, centered on athletes seeking compensation for the commercial use of their name, image, and likeness (NIL). After agreeing to a settlement with the NCAA, the plaintiffs filed for preliminary approval in July 2023. However, Judge Wilken initially raised concerns regarding NIL regulation, gender disparities, and damages during a September hearing. Following the revision of the deal’s language, especially regarding NIL restrictions, preliminary approval was granted.
Key Points of the Settlement
1️⃣ Past Athlete Compensation
Athletes from 2017-2020 are set to receive compensation, with the settlement costing the NCAA, major conferences, and member institutions over $1 billion.
2️⃣Future Athlete Revenue Sharing
Future athletes will benefit from a revenue-sharing model, receiving up to 22% of schools’ annual athletic revenue. The parties expect this to translate into over $20 billion in direct payments and benefits to athletes over the settlement period.
3️⃣ Elimination of Scholarship Limits
The deal replaces traditional scholarship limits with roster limits, making all athletes on a roster eligible for scholarships. For example, football rosters will shrink from 120 to 105 players, but every athlete is eligible for a scholarship.
Are Student-Athletes Employees⁉️
Although the House case is an antitrust issue, the settlement could affect related lawsuits, like Johnson v. NCAA, where former athletes argue they should be classified as employees under federal labor laws. The Third Circuit Court has established criteria to assess whether athletes are employees under the Fair Labor Standards Act (FLSA), and the revenue-sharing component of the House settlement could influence the future legal status of athletes as employees.
Now What❓
The class of athletes affected by the settlement is diverse, which could present obstacles to the settlement’s final approval. Several groups have already raised objections, with concerns regarding things like damages (some say the damages are closer to $6 billion), revenue sharing, and the impact on small schools.
The bottom line is that college sports is now in a modern-day, warp-speed industrial revolution. The NCAA’s prior business model is almost dead. Cheers 🥂 to that‼️