Answering the 10 biggest questions about the NCAA antitrust settlement
Credit to Author: Dan Murphy| Date: Sun, 28 Jul 2024 17:59:45 EST
Big Ten commissioner Tony Petitti talks about the fallout of the NCAA antitrust lawsuit settlement likely being filed by the end of the week. (1:21)
The future structure of major college sports is starting to come into sharper focus.
The proposed details for how college athletes will likely be paid in the future were published Friday evening in an extensive court filing in Northern California. The changes are part of a pending legal settlement that would resolve a trio of looming antitrust lawsuits filed against the NCAA and its five wealthiest conferences.
The proposed settlement has two main functions. First, former athletes (dating back to 2016) are eligible to receive part of a $2.78 billion pool of damages. Second, the terms lay out the framework for paying players directly, along with rules designed to try to keep the wealthiest schools from gaining an even larger competitive edge than they already have.
To help digest the 100-plus pages of legal filings, we’ve distilled what we know about the settlement into 10 questions covering what it could mean for athletes, schools and fans.
If all goes according to plan, college athletes will be getting paid by their schools by this time next year.
The settlement still needs to be approved by a judge, and current college athletes will have several months to learn what it means for them and decide if they want to object to any of the terms.
The tentative schedule looks like this:
Early October: Athletes begin to receive details about how the settlement will impact them.
Mid-January: Deadline for athletes to submit any objections or opt out.
Mid-March: Judge Claudia Wilken makes final ruling on the settlement.
Summer 2025: Schools begin to sign deals with athletes.
At the start, schools will be able to spend a maximum of $23.1 million in additional money, according to projections shared in the settlement terms. That is in addition to the tuition, stipends and other benefits schools already provide players every year.
The new revenue sharing payments will come in the form of contracts in which schools purchase the rights to use their athletes’ name, image and likeness (NIL). Schools won’t be required to spend any money, but most athletic departments in the power conferences are expected to approach the limit to stay competitive in recruiting.
The cap will increase on a yearly basis during the 10-year-long settlement agreement. The number automatically grows 4% every year. It will also increase as the revenue generated by college sports grows. An economist hired by the plaintiffs’ attorneys projected that the cap would increase roughly $1 million each year, ending at $32.9 million per school by the 2034-35 academic year.
The spending limit is based on a formula that gives athletes 22% of the money the average power conference school makes from media rights deals, ticket sales and sponsorships. The money athletic departments make by collecting fees from the general student body or from donations is not included in the formula.
Athletes in major American pro sports leagues get about half the revenue their sport generates. Lawyers for both the NCAA and the plaintiffs say that when combined with the money schools already spend on scholarships, medical care and other benefits, the 22% revenue share figure will give athletes at many power conference schools roughly half of what the athletic department makes on a yearly basis.
However, that formula treats all athletes the same despite football and basketball bringing in the overwhelming majority of an athletic department’s earnings. There were a dozen football teams that reported more than $100 million in revenue on their own last season. Even if the players on those teams receive every dollar of the new revenue share money — and they won’t — those athletes will still be getting considerably less than half of what they generate.
Each school will be able to decide how to divide its pot of money among athletes.
It’s not clear how Title IX laws will apply to the money, and the settlement terms provide no guidance in that area. TCU basketball player Sedona Prince — one of the lead plaintiffs in the case and a prominent advocate for gender equity during her college career — told ESPN she thinks any increase in scholarship or medical benefits should be split equally between men and women but that revenue share dollars should be distributed based on a sport’s popularity.
“I think we should sport-by-sport,” Prince said. “Title IX has closed the gap so much. It’s a necessity in college sports and college life in general. But the facts are the facts. College football makes a massive amount of money compared to the rest of the sports.”
Prince said she hopes athletes on each campus will be able to be part of a negotiation when their schools are deciding how much money they will spend and how to split it up among the athletes. She is working with a group called Athletes.org that is attempting to organize chapters of athletes on many college campuses to help them negotiate with their schools for many items, including a say in how the new revenue share money will be distributed.
During the past three years, most of the money college athletes make has come from NIL collectives — groups of boosters who are ostensibly paying players for their NIL rights, but in practice are using that money to pay players for their performance. The most well-funded collectives are distributing between $15 million and $20 million annually, according to industry sources, and the vast majority goes to football players.
The NCAA negotiated to include several terms in the settlement with hopes of ending collective payments that aren’t for actual endorsements. Along with a clause that says booster payments to athletes must be for “a valid business purpose,” the settlement also gives the NCAA power to create future rules to close any unforeseen loopholes “designed to defeat or circumvent” the prohibition on booster payments.
Collectives will be able to provide NIL payments to players if the NCAA deems them to be legitimate endorsement compensation. The settlement states that the association will create a clearinghouse to collect data about all NIL deals to help them assess which are legitimate.
College sports attorneys who aren’t involved in the settlement and NIL collective operators remain skeptical that the NCAA will be able to effectively (and legally) prevent boosters from spending money aimed at making their teams better.
The settlement terms put the court in charge of making sure all parties adhere to the new rules. The court is also likely to appoint a special master to rule on any disputes. The settlement creates an appeals system for athletes or schools to ask an arbitrator to review any future decisions about these new rules. This would be a significant departure from the current enforcement system, administered by NCAA employees.
The plaintiffs’ attorneys — Steve Berman and Jeffrey Kessler — will be responsible for making sure the schools are properly reporting their revenue throughout the 10-year agreement. They also will be responsible for staying in touch with college athletes throughout that time to make sure schools honor the agreement and that incoming athletes understand their rights. The settlement terms say the lawyers can rely on advocacy groups such as the National College Players Association and Athletes.org to represent the view of athletes.
In the interest of removing as many universal caps on compensation as possible, the NCAA and conferences also agreed to get rid of the current rules that limit the number of scholarships allowed for each team. To keep the richest teams from stockpiling players, the NCAA will instead make rules that limit roster size.
The settlement terms include specific roster limits for 45 different sports. Football teams will be limited to 105 players on a roster. Men’s and women’s basketball teams can have 15 players each.
Current NCAA rules limit football teams to 120 players during the season, and only 85 of them can receive a scholarship. In the future, all 105 players on the team would be able to receive a scholarship. While schools aren’t required to give all of the players a scholarship, many coaches raised concerns this summer that the new rules would eliminate walk-ons. Each school will get to decide how many of its players it puts on scholarship.
All athletes will have an opportunity this fall to object to certain terms or opt out fully. If they opt out, they will retain the right to sue the NCAA in the future for other alleged antitrust violations. The terms state that if a certain number of athletes decide to opt out, the NCAA and conferences can back out of the settlement. The number of athletes needed to trigger that option was redacted in the public version of the documents.
Prince, who spoke to ESPN prior to viewing the details of the settlement, said she trusts Berman and Kessler to negotiate the best possible terms for athletes, but added that she would view the information critically and rely on other “checks and balances” to decide whether she thinks the result is a fair deal for athletes. Prince said the coming year is a crucial time for athletes to remain vigilant and make sure they have a say in how the framework laid out in this agreement is implemented moving forward.
“For athletes, it’s time to wake up and become educated in this,” she said. “It’s going to be better for the NCAA too if all of us come together and for us to kind of work together. I hope that they understand that. I hope that athletes understand that. Right now is the time for us to join and to figure this out, or it’s just going to be the same [legal battles] over and over again.”
The settlement also states that the terms of the deal do not preclude athletes from collectively bargaining for more rights in the future if that opportunity arises.
Along with the future payments to athletes, the NCAA has agreed to compensate former athletes for the money they might have otherwise made during their career. All athletes who played Division I sports from 2016 through the present are eligible to receive some of that money. The 2016 cutoff date is due to the statute of limitations on antitrust claims.
Football and men’s basketball players from power conference schools will be eligible to get an average of $135,000, Berman said. Women’s basketball players from power conferences could receive an average of $35,000. The likely payout for athletes from other sports will depend on how many enter claims.
For some, payouts will also be based in part on the athlete’s potential earning power had they been able to sign NIL deals while in school. Berman said the highest individual estimated payout for one athlete will be $1.8 million.
Berman and Kessler’s law firms also requested to receive nearly $500 million (slightly less than 20 percent of the damages) for their fees and to cover their expenses. The lawyers also proposed receiving roughly 1 percent of the money schools pay players during the next 10 years. According to projections in the settlement, that would net the lawyers an estimated $12 million to $25 million per year as the spending increases.
No. The NCAA is still involved in multiple court battles to try to prevent athletes from being deemed employees of their schools. NCAA leaders have been asking members of Congress to write a federal law saying that college athletes aren’t employees and codifying some of the rulemaking ability included in the settlement.
NCAA president Charlie Baker said earlier this summer he hoped this settlement would provide momentum for a federal bill.