The House v. NCAA Settlement: Reshaping the Landscape of College Athletics
The landmark settlement in the House v. NCAA class action suit, approved by the District Court for the Northern District of California, marks a pivotal moment for college athletics. This antitrust suit, initiated in 2020 by former student-athletes Grant House and Sedona Prince, challenged the NCAA's restrictions on name, image, and likeness (NIL) compensation for student-athletes. The settlement, which consolidates House v. NCAA, Hubbard v. NCAA, and Carter v. NCAA, promises significant changes in how college athletes are compensated and treated.
Background of the House v. NCAA Case
The House v. NCAA case originated as an antitrust suit filed in 2020 by former student athletes Grant House and Sedona Prince. The suit aimed to prevent the National Collegiate Athletic Association (“NCAA”) from enforcing alleged anticompetitive restraints that prevented student-athletes from receiving NIL compensation. In 2023, House was certified as a class action lawsuit, and an initial settlement was reached in 2024.
Key Components of the House Settlement
The settlement fund is divided into two main parts:
- NIL Claims Settlement Amount: A $1.976 billion fund.
- Additional Compensation Claims Settlement Amount: A $600 million fund.
These funds will be distributed based on the type of injury suffered by class members. Class members include all student athletes who were eligible and on a Division I team roster, regardless of the team or conference, between June 15, 2016 and September 15, 2024.
Modifying NCAA Rules
NCAA rules will be modified to permit schools who opt in to the settlement to provide additional direct benefits and compensation to Division I student-athletes. The compensation can be worth up to 22% of the Power Five schools’ average athletic revenues each year, with yearly increases.
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Opting In: Financial Terms and Direct Payments
Division I schools that opt in must comply with the House settlement’s financial terms for directly compensating student athletes. The direct payment model allows for Division I schools to pay a portion of their revenue directly to student-athletes, with $20 million as the cap for the first year (2025-26). The pool cap increases annually over the 10-year term of the agreement, reaching a projected $32.9 million.
The justification for these direct payments from schools is that money earned by schools via media deals stems from student-athlete NIL. The pool cap is the total money that will be distributed from schools directly to student athletes and does not include an athlete’s third-party NIL deals. However, if student-athletes are entitled to buyout payments under their agreements and elect to transfer to another school, then their transfer may trigger pool cap reductions.
Scholarship and Roster Limits
Pursuant to the House settlement, there are no longer limits to the amount of scholarship athletes a school that opts in can have on a team. For example, NCAA rules previously limited Division I football programs to 85 full scholarships but put no limit on roster numbers. As the settlement took shape, Judge Wilken expressed concerns that the roster limits would deny current athletes the right to continue to participate.
Moving forward, NCAA rules for Division I programs will no longer include sport-specific scholarship limits. Instead, schools in the defendant conferences and others that opt in to the settlement rules and associated benefits to student-athletes will have roster limits, and schools will have the option to offer scholarships to any and all of those student-athletes. This change will dramatically increase the number of scholarships potentially available to Division I student-athletes, including more than doubling the possible number of scholarships that can be offered to women. The rules changes include legislated exceptions for current student-athletes with remaining eligibility whose roster spots would have been impacted by immediate implementation of the roster limits. The division's core guarantees - which include scholarship protections - are not impacted by the rules changes.
NIL Transactions and Reporting
All NIL transactions with a total value of $600 or more must be reported by student-athletes and member institutions to the Commission. Reporting will be done via an online platform called NIL Go, which will be overseen by LBi Software and Deloitte. The Commission will be responsible for determining whether reported NIL payments from Associated Entities and Individuals are at fair market value. Thus, Associated Entities and Individuals must attempt to determine valuation based on other deals entered into by similarly skilled and similarly famous athletes.
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Organizations that are not categorized as “Associated Entities or Individuals” - e.g., athletic apparel, sports drinks, and other consumer brands - may enter NIL deals with student athletes, without the need to comply with the fair market value rule.
Antitrust Exemption and Employment Status
Although House was an antitrust suit, issues remain as to the NCAA’s status under antitrust law. The NCAA is seeking an antitrust exemption from Congress. Professional sports leagues have such exemptions, allowing the leagues to regulate players more easily. Although the NCAA has been lobbying Congress since 2021 on this issue with little progress, new draft legislation could give the NCAA the antitrust protection it has been seeking. Specifically, the draft legislation would prevent legal challenges to direct payments to athletes.
The issue of employment status of student-athletes remains open. There are already challenges on the basis of Title IX following the House settlement.
Schools' Preparations and Potential Measures
Schools have been aware of the general contours of the House settlement and have been preparing for months following the announcement of the initial settlement in May 2024. Many schools are exploring creative ways to brace themselves financially for direct payments to athletes beginning on July 1, 2025, including possibly spinning out different entities for their athletics programs, private equity financing, and other alternatives. For other schools, opting in may result in drastic measures such as eliminating certain varsity sports, or even reclassifying to a lower division, both of which have already occurred.
University of North Carolina Asheville announced its decision that it will not opt in to the settlement for the 2025-2026 school year, stating, “the revenue generated by our athletic department is essential for enhancing and sustaining various aspects of our program, including scholarships, sports medicine services, mental health resources, and more.
Read also: Pell Grant Requirements Guide
Enforcement and Oversight
Although athletic conference commissioners are reportedly confident in the Commission and its ability to successfully oversee enforcement, some critics are skeptical as to the effectiveness of the new enforcement arm. Although the House settlement imposes restrictions on payments by Associated Entities including collectives, it is unlikely that NIL collectives will take a back seat despite the settlement. The College Sports Commission (CSC) will be in charge of enforcing the new rules. This includes making sure colleges are following the new revenue-sharing system and ensuring NIL deals are legitimate.
Reactions and Perspectives
Some may say that “it’s been a long time coming” for college sports as student-athletes, schools, and the NCAA enter into this post-House era.
"With the court's approval of the House settlement, college sports are entering a new era of increased benefits for college athletes," said Tim Sands, chair of the board and president at Virginia Tech.
Brandon Copeland, co-founder of Athletes.org, stated, “The House settlement is a step in the right direction by acknowledging that NIL is not the fix for college athletics, but that sharing the revenue with the athletes who produce it, is."
Pitt recently said in a statement: “The University of Pittsburgh is extremely proud of its rich and robust tradition of athletic excellence, and we are committed to building upon that legacy by implementing the provisions of House vs. NCAA.”
Key Dates and Timeline
The rollout of the House v. NCAA settlement includes several key milestones that will impact eligibility, roster management, and revenue sharing.
- July 1, 2025: The new revenue-sharing model is expected to start.
- Dec. 1, 2025: With the exception of “designated” student-athletes, winter and spring sports must be at or below roster limits by their first day of competition or Dec.
Winners and Losers
The House v. NCAA settlement marks a major shift in how college athletics will operate - and not everyone will feel the impact the same way.
The biggest winners are the student-athletes in the “revenue sports” - mainly football and men’s basketball. Under the new settlement, schools will pay top student-athletes a significant amount of money on top of Name, Image, and Likeness (NIL) deals. Now that student-athletes can get paid directly, the conversation is shifting to the idea of collective bargaining - which is basically a fancy way of saying that student-athletes might start forming unions to negotiate better deals.
For non-Power 4 schools, keeping up with the financial powerhouses like the Big Ten and the SEC will become even harder. College sports like tennis, swimming, and track (such as non-revenue generating sports or Olympic sports) may face tough times ahead. With more money going to football and basketball, colleges may choose to cut back on funding for other sports.
NIL's Continued Role
NIL is still alive and well. Since 2021, college student-athletes have benefited from the opportunity to make money through deals involving their name, image, and likeness. With the House settlement, that money will now be coming directly from the school’s athletic department. The money student-athletes make through NIL deals that are above $600 will be tracked in a system called NIL Go. This means NIL can no longer be used just to pay players to join a team. One major factor in NIL success is a school’s location and proximity to business opportunities.
Future Challenges and Considerations
This settlement is a big step in the ongoing fight to reshape college sports. There are still many legal challenges ahead, like whether college student-athletes should be treated as employees, which would have big implications for the way they’re paid and how their contracts work.
For high school student-athletes, this means that NIL deals could become even more important, and the level of scrutiny around these deals is likely to increase.
Open Questions and Concerns
Several questions and concerns remain regarding the implementation and long-term effects of the House settlement:
- How much of the settlement will go to legal fees?
- How will this affect the compensation available to athletes?
- How will the settlement affect my ability to enter into NIL deals in the future? What are the restrictions?
- Who will oversee the review process for third-party agreements? How can we ensure that process is fair?
- Student fees and fundraising have been considered “university revenue” for quite some time-so why are they not being counted here?
- Why are health and safety benefits not being negotiated as part of this case?
- Is there any process for athletes to provide feedback on the settlement? How do athletes' get their voices heard?
- Who came up with this framework, and why were athletes not involved in the discussion?
- How exactly will schools pay their student-athletes? Who will keep everything fair?
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