On Friday evening, Northern District of California Senior District Court Judge Claudia Wilken granted final approval in the highly publicized House v. NCAA antirust class action litigation. The settlement agreement provides for substantial structural changes to college athletics. While there are a number of modifications to rules and governance, there are several key takeaways.
In general terms, the settlement agreement, approved by Judge Wilken as modified from its original form by the parties, establishes a fund of approximately $2.8 billion to compensate the settlement classes for NIL income they would have received but for the NCAA’s prohibition on student-athletes receiving compensation for use of their names, images, likenesses, and reputations, i.e. endorsement deals. This settlement fund is spread across 10 years and funded by the NCAA and the Division I conferences (more for the Power Four, less for the remainder) via a combination of direct payments and amounts withheld from member distributions (e.g., March Madness payouts). Of the $2.8 billion, $2.3 billion will go to football and men’s basketball players in the settlement class, for an average of $120,000 per player over 10 years. The remaining half-billion will be divided amongst the remaining sports, namely women’s basketball and Olympic sport athletes.
Second, the agreement also establishes go-forward compensation in the form of revenue sharing, similarly extended for a 10-year term. In Year 1, each school that opted in to the settlement can share up to a maximum of $20.5 million with its athletes, which under the agreement represents 22% of their revenue from sources such as media rights, merchandise, ticket sales, and sponsorships. That revenue share maximum, or “House cap”, is subject to a percentage escalator each year. The House cap may be apportioned amongst schools’ athletic programs at the school’s discretion, subject to certain limitations. Most Power Four programs are expected to spend anywhere between $13-16 million of the House cap on football, with the next largest tranche of House cap revenue shared with men’s and women’s basketball, and the remainder amongst the rest of the school’s programs. Notably, schools are not required to revenue share, but looming over that caveat are the practical and recruiting implications if they choose not to.
Revenue sharing begins July 1, 2025. Alston awards (education-related financial awards that a school may provide an athlete, up to $5,980 per year) count toward the House cap, up to $2.5 million. Consequently, many schools will likely eliminate or reduce Alston payments. Importantly, revenue sharing is separate and distinct from NIL compensation, which athletes may still receive.
Third, the agreement provides for increased roster limits and scholarships. Schools may (but do not have to) field 105 full-scholarship football players (up from 85). The second-largest increase is baseball, up to 34 possible scholarships from 11.7. Basketball will increase to 15 (from 13). Most schools are not expected to maximize their scholarship limits, which will in turn allow for walk-ons to still participate on teams.
Finally, there is a new enforcement mechanism established by the settlement. Deloitte has been hired to manage “NIL GO”, colloquially known as the NIL clearinghouse, to review all non-school NIL deals over $600 and determine—in Deloitte’s opinion—whether the deals meet “fair market value”. If not, NIL GO will recommend they be disallowed.
NIL GO will officially launch June 11, but its reporting obligation reaches back to capture agreements entered into prior to June 11. The clearinghouse provides for an expedited arbitration process, not dissimilar from baseball arbitration, for disputes about Deloitte’s valuation determinations. Related, a new enforcement entity has formed—the College Sports Commission—which will be headed by Bryan Seeley, former Assistant United States Attorney for the District of Columbia and most recently the Executive Vice President of Legal and Operations for Major League Baseball.
NIL GO will likely be tested early and often. Compliance with the clearinghouse requires voluntary disclosure of deals over $600, and it is expected that disclosure for many athletes and NIL collectives or business partners may not come willingly. Also possible is creative structuring of NIL deals which could keep them just below the $600 disclosure threshold while maximizing NIL payments to players (e.g., breaking a million-dollar deal into a series of $599 mini-deals). An additional issue for NIL GO will be the authority of its determinations, as well, as NIL GO does not, itself, have independent enforcement power (hence, the creation of the CSC).
But even the CSC will likely face early pushback, and it is an open question whether its authority will be recognized by some schools, or even states. For example, recent legislation in Tennessee contradicts many of House’s material terms, including limits on NIL compensation and restrictions. To avoid some risk of inconsistent enforcement, adherence, and application of the settlement terms, a House-related affiliation agreement recently circulated amongst universities, whereby signatory universities would agree to voluntarily comply with House restrictions and the clearinghouse. Whether that agreement survives an early onslaught of legal challenges (or, more practically, schools stealthily or not-so-stealthily deviating from it to win recruiting battles) remains to be seen.
While revolutionary for college athletics, the House settlement may not end future litigation, despite the NCAA’s confidence to the contrary. During the settlement approval process, a number of objectors came forward. The most notable, and indeed the objectors for whom Judge Wilken showed the most sympathy and concern, were the roster limit objectors, who objected to the proposed settlement based on its expected impact on some athletes’ roster status (for context, in anticipation of settlement approval, many schools in recent months have rescinded scholarship offers to recruits and others have cut existing players from their programs).
Also notable, and related, were the Title IX objectors, who took issue with the proposed settlement based on Title IX implications. It is rumored that several prominent law firms are prepared to file Title IX lawsuits almost immediately now that settlement has been approved. Appeals may also affect full implementation of the settlement’s terms.
And these are just the potential challenges to the settlement, itself. Surely to come from this new structure are labor and employment-related lawsuits, not to mention the rash of eligibility-related antitrust challenges that are currently making their way through the state and federal courts.
In all, House created as much uncertainty as it resolved. The future of college sports is now markedly different than it was only a week ago. True, impending complications and difficulties abound for administrators and practitioners, alike. But so do opportunities. Nevertheless, the NCAA, its member schools, and their new business partners, including Deloitte, are most likely not out of the woods—or courtrooms—just yet.
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