NCAA Settlement Filed to Expand Scholarships and Pay Players

Formal settlement documents were filed with the Northern District Court of California Friday to advance the settlement approval process to resolve class-action lawsuits involving the NCAA and the Atlantic Coast Conference, Big Ten Conference, Big 12 Conference, Pac-12 Conference and Southeastern Conference (Autonomy 5 conferences).

The settlement documents address three cases – House v. NCAA , Hubbard v. NCAA and Carter v. NCAA – involving back damages and future benefits for Division I student-athletes.

“This is another important step in the ongoing effort to provide increased benefits to student-athletes while creating a stable and sustainable model for the future of college sports,” said the commissioners of the five conferences and the NCAA president. “While there is still much work to be done in the settlement approval process, this is a significant step toward establishing clarity for the future of all of Division I athletics while maintaining a lasting education-based model for college sports, ensuring the opportunity for student-athletes to earn a degree and the tools necessary to be successful in life after sports.”

The Settlement

The settlement addresses three primary issues: payment of back damages for claims relating to name, image and likeness (NIL), academic-related awards and other benefits; increased benefits from institutions to student-athletes going forward, including additional NIL opportunities for student-athletes directly with the institution; and eliminating scholarships limits in favor of roster limits.

• The settlement calls for total back damages of approximately $2.78 billion, to be paid over 10 years, equating to approximately $280 million annually with distribution of back damages as determined by plaintiffs.
• Going forward, the settlement allows the A5 conference member institutions (and other DI schools that choose to participate in the new structure) to provide increased benefits to student-athletes, including for NIL. If approved by the court, this model will allow schools to provide up to 22% of the average Autonomy 5 athletic media, ticket, and sponsorship revenue to student-athletes, starting in the 2025-26 academic year.  The future model could result in student-athletes receiving $1.5 billion to $2 billion in new benefits annually.
  • The new benefits that may be made available to student-athletes would be in addition to the myriad benefits currently provided to student-athletes, including free tuition, room & board, educational grants, academic support and tutoring, medical and mental health resources & support, nutrition resources & support, life skills development, superior coaching and training and extended medical coverage after they stop competing. Adding these existing benefits together with the benefits to be available under the new model, many A5 schools would be providing nearly 50 percent of athletics revenue to their student-athletes.
  • Under the new model, institutions may pay student-athletes directly for their NIL rights. Any institutional NIL payments would apply toward the 22% cap. Third parties may continue to enter into NIL agreements with student-athletes. Such agreements will be subject to review to ensure they are legitimate, fair market value agreements and not used for pay-for-play.  NIL payments by third parties would not apply toward the 22% cap but must be disclosed to a clearinghouse for review.
  • The new model allows for the establishment of a robust and effective enforcement and oversight program to ensure the new NIL model achieves its objectives. The establishment of a clearinghouse for NIL payments over $600 would give institutions access to information about external NIL activities, providing a level of transparency that does not currently exist to allow for better management of third-party influence and better assurance of legitimate NIL activity.
• Lastly, scholarship limits will be eliminated in all sports, and roster limits will be established. Institutions have the discretion to offer partial or full scholarships provided they do not exceed the roster limits. This change will allow institutions to provide additional scholarships to student-athletes in the future.

Next Steps

The settlement must be approved by the court before it becomes final, a process expected to take several months.  If the court preliminarily approves the settlement, the class members will be provided notice of the settlement. Class members with claims for monetary damages based on prior conduct will have an opportunity to opt out of the settlement if they choose.  Class members—including incoming student-athletes—will also receive notice and be allowed to present objections to the future relief/model to the court.

Unresolved Issues

While approval of the settlement would be a significant step forward, there would still be pending issues to be addressed that highlight the continuing need for federal legislation. These issues include:

• The settlement does not resolve the patchwork of state laws, many of which may conflict with the settlement. These laws will need to be preempted by federal legislation in order for the settlement to be effective.
• The settlement does not address ongoing efforts to designate student-athletes as employees under state and federal labor and employment laws.  These efforts by the NLRB and plaintiffs’ attorneys pose a direct threat to both the sustainability of sports programs (especially for non-revenue generating ones) and to the baseline of support provided to all athletes.

“This settlement is an important step forward for student-athletes and college sports, but it does not address every challenge,” said the A5 conference commissioners and NCAA president. “The need for Federal legislation to provide solutions remains. If Congress does not act, the progress reached through the settlement could be significantly mitigated by state laws and continued litigation.”

–News release courtesy of NCAA ( NCAA.org )