In a landmark move that could reshape the landscape of college athletics, the NCAA and five major conferences have agreed to a $2.78 billion antitrust settlement that could significantly alter how college athletes are compensated. The details of the settlement, filed in federal court in the Northern District of California, outline a plan that allows for direct payments to athletes and sets new regulations for payments from third parties, including boosters.
This settlement follows years of legal battles challenging the NCAA’s compensation rules, particularly the restrictions on athletes profiting from their names, images, and likenesses (NIL). While the NCAA had previously lifted its ban on NIL earnings in 2021, this settlement addresses broader issues of compensation and establishes a framework for how athletes can receive a share of the massive revenues generated by college sports.
Key Details of the Settlement
The agreement, which still requires approval from a federal judge, is poised to benefit thousands of former and current college athletes. Payments to athletes will vary widely, ranging from a few dollars to over a million, depending on factors such as the sport played, the athlete’s tenure, and the conference in which they competed. Football and basketball players from Power Five conferences—who generate the bulk of the revenue from billion-dollar media rights deals—are expected to receive the largest payouts.
The settlement covers three antitrust cases, including the high-profile class-action lawsuit *House v. NCAA*, which challenged the NCAA’s compensation rules dating back to 2016. Plaintiffs in these cases argued that NCAA regulations prevented athletes from earning millions of dollars from the use of their NILs.
A New Era of Athlete Compensation
One of the most significant aspects of the settlement is the creation of a new compensation system that allows schools to share up to $21 million annually with their athletes, starting in 2025. This figure represents 22% of the average revenue generated by Power Five conference schools through media rights, ticket sales, and other sources.
To ensure compliance, the settlement introduces an audit system that will allow plaintiffs to monitor athletic revenue. As new media rights deals come into effect, the amount of money available for athlete compensation is expected to rise, potentially leading to annual payouts of $1.5 billion to $2 billion. Schools will have the discretion to determine how these funds are distributed among their athletes, although the exact impact of Title IX gender equity rules remains unclear and will likely require federal clarification.
Changes to Scholarships and Rosters
The settlement also introduces changes to scholarship limits and roster sizes. Instead of traditional scholarship caps, schools will now operate under roster caps, potentially increasing the number of athletic scholarships available in Division I. For example, the cap on football scholarships will rise from 85 to 105 players, though schools are no longer required to offer full scholarships to every player. This move could lead to more opportunities for athletes to receive partial scholarships, a practice that has long been used in sports like baseball and volleyball but will now be expanded.
Regulating NIL Deals
The NCAA’s rules regarding NIL deals have been evolving, and this settlement further clarifies how these deals will be managed. While athletes can still strike deals with third parties, including booster-funded NIL collectives, these agreements will now be subject to greater scrutiny. A new arbitration process will be established to ensure that NIL deals serve a “valid business purpose.” Violations could result in penalties for both athletes and schools, potentially affecting eligibility and leading to sanctions.
Additionally, a voluntary reporting system for NIL deals exceeding $600 will be launched, with the NCAA creating a public database to help athletes assess the fair market value of their deals.
Distribution of Damages
The plaintiffs in the *House* case will oversee the distribution of nearly $3 billion in damages over the next decade. About 19,000 football and men’s basketball players from Power Five conferences are expected to receive an average payout of $91,000, with individual payments ranging from $15,000 to $280,000 for broadcast-related NIL use. Some athletes could also be eligible for additional compensation related to lost NIL opportunities and other forms of compensation deemed as pay-for-play. A small number of athletes could receive upwards of $1 million.
What’s Next?
The settlement is still several months away from final approval. Plaintiffs’ attorneys plan to file a motion for preliminary approval, after which a public website will be created to allow former college athletes to determine their eligibility for compensation. There will also be a period during which athletes can object to the settlement or request to be excluded. Already, Houston Christian University has attempted to object to the settlement, though its request was denied by the judge.
Impact on the Future of College Sports
While this settlement represents a significant victory for college athletes, it leaves some issues unresolved, particularly the question of whether athletes should be considered employees. The agreement does include provisions that suggest the settlement could be subject to change if laws or circumstances evolve to allow collective bargaining.
College sports leaders, including the commissioners of the major conferences and NCAA President Charlie Baker, have emphasized that while this settlement is an important step, it does not address all the challenges facing college athletics. They continue to call for federal legislation that would provide a unified framework for governing college sports and protecting against future antitrust litigation.
As the settlement moves closer to final approval, its effects will likely be felt across the entire landscape of college athletics, ushering in a new era where athletes are more fairly compensated for the value they bring to their schools, conferences, and the NCAA. However, the ongoing need for federal intervention and the potential for further legal battles suggest that the evolution of college sports is far from over.
