The House v. NCAA Settlement: Reshaping the Landscape of College Athletics
The House v. NCAA settlement marks a transformative shift in college athletics, impacting everything from athlete compensation to the very structure of the NCAA. This article delves into the details of this landmark agreement, exploring its implications, potential challenges, and what it means for the future of college sports.
What is House v. NCAA?
House v. NCAA is an antitrust lawsuit that argued the NCAA and its member schools unlawfully restricted student-athletes from profiting off their name, image, and likeness (NIL). The settlement resolves three separate antitrust cases: House v. NCAA, Hubbard v. NCAA, and Carter v. NCAA. The "House" refers to former Arizona State swimmer Grant House, who brought a federal lawsuit seeking damages for athletes who could not earn NIL money. The three lawsuits were among a flurry filed against the NCAA and its power conferences in recent years related to college athletes’ earnings.
Key Provisions of the Settlement
The settlement brings about significant changes to college athletics, primarily in the areas of athlete compensation and NIL rules. The settlement “will result in extraordinary relief . . .
Direct Revenue Sharing Payments to Athletes
Starting July 1, 2025, NCAA Division I schools can opt into directly making revenue sharing payments to student-athletes, with a cap initially set at $20.5 million per school per year. The number is calculated as 22 percent of Power 5 schools’ average athletic revenue. Most FBS schools that opt in plan to use the formula for the backpay damages as a blueprint: 75 percent to football, 15-20 percent to men’s basketball, 5-10 percent to women’s basketball, and whatever is left to Olympic and non-revenue sports. However, there are no stipulations for how the funds are allocated, as long as they stay under the cap. This is already creating internal jockeying over which teams will get how much.
Back-Pay Damages
Nearly $2.8 billion will be set aside as back-pay damages for athletes dating back to June 15, 2016, through September 15, 2024, who did not have the opportunity to be compensated for their name, image, and likeness (NIL). The NCAA plans on paying this amount in installments over 10 years. Most of that money will go to power conference football and men’s basketball players, given that those media rights generate the most revenue among college sports.
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New NIL Guidelines
The settlement establishes new NIL guidelines, mandating athletes declare any third-party NIL payments over $600 to a clearinghouse dubbed “NIL Go” and run by the accounting firm Deloitte. The new governing body will be responsible for overseeing NIL deals between athletes and third parties that don’t fall under the revenue-sharing agreements between schools and athletes. Deloitte has been contracted to assess the fair-market value of those deals.
Roster Limits
Scholarship limits will be replaced by roster limits. Schools can allocate scholarship funds - partial or full - as they see fit, potentially allowing more athletes to fund more scholarships than before. In a late change to the settlement terms, any athletes who lost or were in danger of losing a roster spot because of the new roster limits can now receive legacied status for the remainder of their college eligibility, allowing those athletes to retain their spot and remain exempt from roster limits, whether at their current school or a new institution.
Additional NCAA Rule Changes
Multiple other NCAA rules were eliminated to facilitate the Settlement and the related payments and benefits. The Settlement also required various modifications to the NCAA’s rules, which will apply only to those Division I schools that opt-in to revenue sharing. The Settlement concerns only Division I athletics; questions remain as to how (if at all) the NCAA will alter its rules for Division II and III athletics. Another open question relates to international students-athletes and their ability to share in revenue sharing models. Further still, the manner in which the NCAA will alter, change, and interpret its rules surrounding the prohibition of NIL payments remains untested.
What the Settlement Does Not Do
While the settlement addresses key issues, it's important to understand its limitations.
No Preemption of State NIL Laws
The settlement does not preempt or resolve competing state legislation surrounding NIL. This is problematic because states are becoming increasingly more autonomous in the realm of NIL, sometimes bypassing the NCAA. Many states already have laws that contradict terms of the settlement, which has led to the power conferences drafting “membership agreements” that require member universities to abide by the oversight and enforcement of the CSC. There remain questions about the legal viability of the membership agreements, particularly if it conflicts with state law, while underscoring the fact that the settlement is not a cure-all for the NCAA and power conferences.
Read also: Crafting Your NCAA Profile
No Resolution of Employee Status
The settlement does not address the recurring issue of whether college athletes are employees of the universities. The idea that member schools and athletes should be treated as an employer-employee relationship has gained traction in recent months. However, newly appointed General Counsel of the NLRB, William Cohen, subsequently issued a memorandum rescinding the prior designation of college athletes as employees.
Preparing for the Settlement: A Holistic Approach
Navigating the future of college sports requires more than just talent on the field. It takes education, preparation, and the right guidance. IMG Academy is committed to helping student-athletes and families understand this once-in-a-generation shift in college athletics.
Implications and Potential Challenges
The House v. NCAA settlement is poised to reshape the landscape of college sports in numerous ways.
Widening the Gap Between Power and Non-Power Conferences
The richest programs will have the easiest time allocating revenue share and additional scholarships, along with finding ways to generate those over-the-cap NIL deals. It’s much more accessible for Power 4 schools, bringing in tens of millions of dollars a year in television revenue, to max out revenue sharing compared to the Group of 6, in the same way it’s much easier for schools like Ohio State or Texas to earmark that $20.5 million a year and orchestrate outside marketing deals for their star players.
Financial Strain on Schools
The vast majority of schools are having to figure out where those revenue share funds will come from. Some schools are raising ticket and concession prices - what Tennessee is calling a “talent fee.” Others are pushing fundraising campaigns. All are adjusting budgets in some fashion, trying to find any cuts or pockets of inefficiency that can be redirected toward the cap.
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Title IX Concerns
Eight female athletes filed an appeal this week, arguing the agreement violates Title IX, the US law banning sex-based discrimination in education. They say the way the money is divided, largely favoring football and men’s basketball players, shortchanges women by more than $1bn. Their appeal has paused all back payments, potentially delaying them for more than a year. The female athletes argue that since NIL bans affected both genders equally, compensation for those bans must also be equitable, and that using historical TV revenue (which favors men’s sports) ignores systemic barriers women have faced in marketing and media exposure. Some worry that schools will cut so-called “non-revenue” sports - like wrestling, swimming or gymnastics - to fund revenue-sharing with top athletes.
The NCAA's Diminishing Role
As college sports become more professionalized, at least at the highest levels of competition, the NCAA’s role as a governing body is diminishing. The power conferences that were named defendants in the massive antitrust lawsuits covered by the settlement are in the process of creating a new enforcement and regulatory structure outside the NCAA, named the College Sports Commission. The new governing body will be responsible for overseeing NIL deals between athletes and third parties that don’t fall under the revenue-sharing agreements between schools and athletes. The new body will also handle enforcement of the financial rules related to the so-called cap, investigations into possible violations and handing down penalties - essentially taking over an area of college athletics the NCAA has struggled to for decades to police: The influx of improper benefits.
Ongoing Legal Challenges
The settlement will not put an end to the legal challenges facing college sports. There are still other prominent, ongoing cases. The Johnson v. NCAA case is arguably the most notable regarding athlete employment, and the debate over college athlete employment status, unionization and collective bargaining could be the next high-profile legal standoff in collegiate athletics. The NCAA, power conferences and to-be-established College Sports Commission are all still susceptible to additional litigation regarding Title IX disputes, antitrust claims over the restrictions on third-party NIL and conflicts with state laws. It’s why those groups continue to lobby for federal NIL legislation and an antitrust exemption, similar to what American professional sports leagues have. That’s the only way to shield college sports from more and more legal challenges, though those efforts in Washington D.C. have thus far been unsuccessful, and it’s unclear if they can occur without addressing employment status or some form of collective bargaining.
What's Next?
The Ninth Circuit will now review the Title IX appeal. Briefs are due by 3 October, and while both sides say they’ll push for speed, appeals in this court have been known to take 12 to 18 months. Until the case is resolved, no back payments will be made to athletes who played between 2016 and 2021.
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