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NCAA and Power Five Agree To Pay Players in Recently Voted Settlement

June 3, 2024

Last week marked another monumental shift from the NCAA amateur model as we once knew it. The NCAA, Power Five Conferences (ACC, SEC, Big 10, Big 12, and Pac 12), and plaintiffs in three separate antitrust cases against the NCAA voted to approve a proposed settlement that would include a $2.8 billion damages pool for current and former athletes and establish a new revenue sharing model for current and future NCAA athletes to be directly paid by their schools.

The proposed settlement resolves three pending lawsuits; House v. NCAA, Hubbard v. NCAA, and Carter v. NCAA — each initiated by current and former Power Five athletes claiming the NCAA violated federal antitrust law. For example, in Carter v. NCAA, Plaintiffs claimed that Defendants, NCAA, and Power Five Conferences, “collectively conspired to illegally fix, limit and depress the compensation to college athletes for their athletic services.” Plaintiffs in House make similar allegations, namely related to the NCAA’s restriction of player compensation for name, image, and likeness (NIL) prior to 2021. These athletes claim they lost potential NIL revenue.

As a result, the first part of the proposed settlement includes a $2.8 billion payment in “backpay” to be made as far back as 2016 to those who lost out on potential earnings from the NIL landscape post-2021.

The second, most notable component of the proposed settlement establishes a framework for schools and conferences to directly share their revenues with athletes. The proposal creates a spending cap of approximately $22 million annually for each Power Five school — similar to salary caps used by professional sports leagues. This proposed model is set to start in the 2025-26 season. Athletes will continue to be allowed compensation for the use of their name, image, and likeness (NIL).

The proposed settlement must be reviewed and approved by Judge Claudia Wilken of the U.S. District Court for Northern California, which could likely take months. In the meantime, a preliminary settlement proposal is likely to be filed within the next 30 to 45 days.

While the settlement is good news for athletes, particularly in high revenue-generating sports like football and men’s basketball, the proposed revenue sharing model already raises Title IX uncertainties. Title IX prohibits academic institutions that receive federal funds from discriminating in educational activities and programs, including excluding anyone from participating in any educational program or activity or denying anyone the benefits of an educational program or activity on the basis of sex. This settlement will have ramifications on how spending caps are allotted between male and female athletes, as individual teams and athletes do not generate the same revenue. Additionally, NIL deals will continue to favor higher revenue-generating athletes.

As more information emerges concerning the proposed settlement and revenue model, we are likely to encounter new Title IX concerns that the Clark Hill Title IX Team will address.

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