The NCAA’s proposed multibillion-dollar antitrust settlement aimed at resolving the 𝘏𝘰𝘶𝘴𝘦, 𝘊𝘢𝘳𝘵𝘦𝘳, and 𝘏𝘶𝘣𝘣𝘢𝘳𝘥 antitrust litigations encountered a major setback. 🚨
During a recent hearing, U.S. District Judge Claudia Wilken expressed serious concerns about core aspects of the settlement, particularly its potential impact on athletes’ Name, Image, and Likeness (NIL) opportunities. Judge Wilken hinted that without major changes, the deal might not move forward.
The primary concern centers around the settlement’s approach to distinguishing between legitimate NIL deals and “pay-for-play” arrangements. The judge pointed out that while the settlement prohibits athletes from receiving payments for playing sports, it simultaneously allows them to be paid for media rights, sponsorships, and other NIL-related commercial uses. This raised questions about how the agreement would define “legitimate” NIL payments versus payments used as recruiting inducements.
The settlement proposes a new system requiring schools and athletes to report NIL deals exceeding $600 and subjecting those deals to a fair market value analysis to identify possible recruitment inducements. The judge rightly doubted the practicality of this system, as determining fair market value in the NIL space is notoriously difficult. Also, she noted that the system might undermine NIL opportunities for athletes.
The settlement also aims to regulate booster involvement in NIL deals, distinguishing between third-party NIL deals with brands versus booster collectives. The judge noted a lack of clarity in the settlement regarding this distinction.
Another sticking point in the settlement involves its alignment with NCAA guidelines. Wilken noted discrepancies between the settlement’s NIL depiction and the NCAA’s own NIL rules, suggesting that there may be unresolved disagreements between the parties on critical details.
The hearing was part of two motions addressing separate proposed settlements. The first, led by former college swimmer Grant House, would resolve a 2020 class action and pay $2.78 billion in damages over 10 years to more than 184,000 former student-athletes. This settlement also establishes a framework for distributing revenue from athletic programs at Power Five conference schools to athletes. The second, a $200 million settlement led by former Oklahoma State football player Chuba Hubbard, addresses claims by athletes who competed between April 2019 and September 2023, focusing on compensation for academic achievement awards previously prohibited by NCAA rules.
While Judge Wilken seemed inclined to preliminarily approve the Hubbard settlement with minor adjustments, she declined to approve the House settlement. A provision barring athletes from entering private NIL deals with boosters raised red flags, as it could negatively impact athletes currently benefiting from such deals.
The parties continue to negotiate.
Stay tuned‼️ 🍿