Anthony Wilson
College sports leaders and lawyers are moving closer to a legal settlement in a landmark antitrust case that will pave the way for revenue sharing with players as part of the inevitable march toward professionalization in college athletics.
The long-awaited House v. NCAA could take place as early as this week, with college athletics’ governing body expected to pay approximately $2.7 billion in back damages over the next decade, according to a memo obtained by multiple media outlets.
Within that total, $1.6 billion would come from reductions in NCAA distributions — nearly 60% of which would come from Group of Five institutions and the other 40% would come from power conferences — according to ESPN. However, there are 68 power conference schools and nearly 300 Division I programs that do not fall into this category. Division II and Division III schools are not expected to be affected, but that could change.
The remaining $1.1 billion would come from NCAA reserves and budget cuts, among other sources.
But back damage is only one part of the equation. Also under discussion is an accelerated timeline for conferences and universities to implement a new pay-for-play model. Although the reinforcement-led NIL collectives were not eliminated completely as part of a new “inspection infrastructure“They would be subject to protections not currently seen in the current unregulated market, according to Yahoo Sports.
The most notable power players swaying in the wind are the athletic directors who lead multimillion-dollar athletic ventures. They prepared for multiple financial scenarios as House v. NCAA faces a possible settlement before its trial date in January 2025. But with endless possibilities, there is exasperation.
“Right now, there’s a real lack of clarity,” Baylor athletic director Mack Rhoades told 247Sports. “I don’t expect, if there is a deal, any potential guidelines on how each athletic department distributes this money. Who gets it? All student-athletes? Just revenue-generating sports? Is everyone equal? My guess is it’s not. How can we figure it out?”
The short answer to these questions (and more) is simple: it’s up to lawyers, and potentially the courts, as other lawsuits against the NCAA play out.
Why a House v. House Settlement Is Likely NCAA?
Legal advisors for the NCAA and the power conferences have been in “in-depth discussions” with plaintiffs’ attorneys in recent months to resolve the main lawsuit — House v. Board of Education. NCAA – and avoid court. A turning point in these discussions occurred last month. The settlement will come at a steep price for individual conferences and schools, with the plaintiffs seeking more than $1 billion in back payments to athletes during the four years before the NCAA enacted NIL regulations in 2021.
Why are the NCAA and power conferences eager to settle the lawsuit? Courts typically triple damages in favor of plaintiffs, which equates to more than $4.2 billion if the NCAA loses in court.
What happens if the NCAA rejects the offer?
Adoption of a deal seems likely, but there’s always the chance the NCAA could reject it. This would be much more expensive, however. The penalty for NCAA and power conference officials could increase nearly sevenfold, in the form of $20 billion in back damages — plus the risk of bankruptcy — according to documents obtained by Yahoo Sports.
How much will revenue sharing cost schools?
In addition to back salaries, schools are preparing their financial books for a new annual item — player revenue share — that could range from $15 million to $25 million, according to estimates from several athletic directors polled by 247Sports. The Collective Association, which represents 35 NIL collectives, presented a revenue sharing model to the NCAA and SEC earlier this year that outlines a 20% share of media revenue, which would be distributed among the NIL collectives.
Will there be a salary cap for college programs?
Administrators also expect a salary cap to be tied to annual revenue shares, similar to that in professional sports. While the number is fluid and can fluctuate, it could equate to 22% of an average of power conference schools’ media rights, ticket sales and sponsorships, according to Yahoo Sports.
Still, it presents another gigantic unknown: are NIL collectives considered in the agreement? In this case, this eases the financial burden on athletic departments. Otherwise, the challenges will only increase as programs with richer boosters flourish and provide additional payouts beyond players’ revenue shares.
“Collectives will not disappear if there is a salary cap,” said Russell White, president of The Collective Association. “Universities will continue to want to compete above and beyond (basic revenue shares).”
If collectives are not included in the revenue sharing model, will Congress, which has struggled to move NIL legislation beyond committee discussions, feel less obligated to adopt legal guidelines?
“We definitely still want standards and rules to bring order to the NIL space,” White said.
The implications of Title IX are not good
Title IX also complicates a potential settlement. The unspoken truth is that administrators and players seem unlikely to advocate equal pay for athletes whose sports generate less revenue than the cash cows of football and men’s basketball.
“It is very likely that we will see non-profit sports get slaughtered,” said Jason Belzer, president of Student Athlete NIL. “Title IX is going to be a huge battle. How are you going to stop it? It’s going to be difficult.”
Where Players Associations Fit In
Meanwhile, several organizations have laid the foundations over the past few years to be the central entity in collective bargaining on behalf of stakeholders. Athletes.org made waves this week when signed the entire UAB football team as members of the players association.
“You can’t make a deal that has any real protection from further litigation without doing it with athletes at the table, period,” said Jim Cavale, founder and president of Athletes.org. Cavale firmly believes that a revenue sharing model, along with collective bargaining, will be in place by July 1, 2025, and the AO is aggressively seeking new members.
AO has surpassed 3,000 active members, including nearly 1,500 players from power conferences, Cavale said. He believes AO will “reach critical mass” with more than 50% of all athletes in power conferences next year. If that happens, it could pave the way for a players association similar in structure to the NFLPA or MLBPA, with major conferences represented by athletes at the negotiating table.
“I still maintain that we are in the business of education,” said UCF athletics director Terry Mohajir. “This national narrative has been hijacked that it’s these poor boys and girls who are being taken advantage of. Now, as it is today, with Alston payments, attendance and expense payments and housing, our student-athletes live like $100,000 employees in our organization because they have no expenses and do not pay taxes on any extra money they receive with Alston payments, academic awards, cost of attendance and medical expenses.”
The National Labor Relations Board is expected to hear in two pending cases at USC and Dartmouth that athletes are employees and have the right to form unions. Meanwhile, the NCAA maintains that players are not employees, and NCAA President Charlie Baker reinforced that position in December when he introduced a proposal that would allow schools to pay players up to $30,000 annually for their NIL rights.
“If you convert all college sports into jobs, there is simply no question, based on the math, that you will miss out on a huge number of student-athlete opportunities across all three divisions because the money is simply not there,” Baker said. . “Most schools lose money on sports, even in DI.”
Will the Group of Five be spared or skewered?
Revenue sharing and late payments could harm smaller athletic departments, although the Chamber’s plaintiff lawyers are not targeting the Group of Five conferences in the lawsuit. Most departments are ill-equipped to pay athletes up to $20 million annually. More than 50% of Group of Five schools earn less than $40 million annually in revenue. The Power Five conferences (then including the Pac-12) combined generated more than $3.3 billion in revenue for the 2022 fiscal year, according to federal tax filings. Ohio State had $251.6 million in revenue last year to lead all Power Five schools.
The Chamber’s plaintiff attorney, Jeffrey Kessler, declined to comment when contacted by 247Sports. In April, Kessler spoke at Howard University on a panel about the future of college athletics.
“You really have to think about [Power Four] so different,” Kessler said at the event, according to Yahoo! Sports. “The reason we get tied up is because we confuse schools that have developed these gigantic independent commercial businesses with schools that are still just educational institutions with extracurricular activities. When you try to create one rule for everyone, you go crazy. You have to look at schools differently. For those who have money, there is plenty of money to compensate the athletes and share with women’s sports.
“After dividing everything, this is not difficult. It’s only difficult if you say, ‘Well, how is Lehigh going to be able to afford all this?!’ They won’t and won’t pay [athletes]. If their concern is that Lehigh won’t be able to compete with Alabama in football… OK, is that your concern? Is that your concern?!”
Waiting for help from Congress
Four active antitrust lawsuits threaten current college athletic models. A settlement in the House case will protect the NCAA and power conferences from lawsuits for the next eight to 10 years, according to Yahoo Sports. The question is whether Congress will provide general protection through a new law. NIL proposals in Congress have failed more than a dozen times to advance beyond the pony show of committee hearings.
“You hope (a deal) will be the genesis for Congress to step in and put some additional guardrails in place,” Rhoades said. “It’s really difficult to navigate if there’s revenue sharing and employee status, and paying whatever that salary is.”
