The principle of amateurism—an amorphous concept that the National Collegiate Athletic Association (NCAA) historically relied upon to prevent NCAA athletes from profiting from the commercial use of their identity, otherwise known as name, image, and likeness (NIL)—is officially dead.
On May 23, 2024, the NCAA Board of Governors voted to accept a landmark antitrust class action settlement of more than $2.7 billion which will allow schools within the NCAA’s purview to pay athletes directly. The settlement resolves three pending federal antitrust cases, House v. NCAA, Hubbard v. NCAA, and Carter v. NCAA, which challenge the NCAA’s limits on compensation and benefits that players can receive for their athletic services and NIL. As part of the settlement, eligible NCAA athletes must agree not to sue the NCAA for other potential antitrust violations in pending or future cases. Players can, however, opt out of the settlement and join separate and pending antitrust cases that are currently moving forward, such as Fontenot v. NCAA, a Colorado federal court class action alleging that the NCAA restricted athletes from sharing in television rights revenue.
The settlement terms must be approved by federal Judge Claudia Wilken, who currently presides over the House, Hubbard, and Carter cases and, more notably, previously ruled against the NCAA in two major NIL-related cases, O’Bannon v. NCAA and Alston v. NCAA. If enforced, this transformative settlement will set the stage for a future revenue sharing model between power-conference schools and athletes, and will require the NCAA to pay more than $2.7 billion in damages over ten years to past and current athletes. While the details are still being finalized, the NCAA appears to be responsible for 40% of the settlement, and the remaining 60% will come from reducing the NCAA’s revenue distributions to the 32 Division I conferences. That is, the Power Five conferences (the ACC, Big Ten, Big-12, Pac-12, and SEC) will pay 24% of the damages, the Group of Five conferences (the ACC, CUSA, MAC, MWC, and SBC) will pay 10%, the Football Championship Subdivision (comprised of 128 teams in 14 conferences) will pay 14%, and non-football conferences in Division I (e.g., the AEC, Big East, and MAAC conferences) will pay 12%.
The announcement of the agreement between the NCAA and major conferences on a framework to settle the House, Hubbard, and Carter cases is certainly significant but, at present, the details of the settlement and its implications on how schools should spend their money remain in flux. Colleges, universities, athletic departments, university administrators, and sports management agencies should therefore be aware of the NCAA’s shifting business model and be prepared to design new governance structures and revenue models that account for and adhere to the settlement’s terms. This is especially true for smaller, non-FBS Division I conferences, which may feel as if the proposed funding plan puts a disproportionate financial responsibility on them. Thus, the fate of non-revenue sports, which at most schools means any sports besides football and men’s basketball, is unclear at this time given the financial ramifications of the settlement. It does seem likely, however, that non-revenue generating sports are likely to suffer which may shrink the market for coaches and other athletic department jobs.
It will almost certainly take several months before any settlement is finalized and approved and, in the meantime, other NIL litigation will continue. Even after the settlement is final, it will not necessarily save the NCAA, the conferences, schools, coaches, collectives, and others from ongoing or future litigation, but the details of the settlement may provide at least some much needed clarity on issues related to NIL enforcement, players’ employment status and unionization rights, and Title IX implications surrounding the implementation of a new revenue-sharing model.
Comments