After House settlement filing, a deep dive into an unsettled state of play

Now that we’ve all digested 100-plus pages of the long-form House v. NCAA settlement – filed Friday in federal court – it’s clear all is settled in college sports, right?

Yeah, right – not even close.

Just a cursory gaze at the not-so-distant horizon reveals the potential for athlete opt-outs from the agreement, the next chapter in the continuous battle between the NCAA and donor-driven collectives and the potential for, yes, more lawsuits. That’s not even considering the sizable question surrounding U.S. District Court Judge Claudia Wilken certifying the settlement early next year.

The settlement terms are historic: Some $2.75 billion in damages will be paid to thousands of college athletes who competed from June 2016 to today over a 10-year period. The average damages award for a football or men’s basketball player at a Power Five conference school will be approximately $135,000.

And beginning a year from now, schools, at their discretion, will be able to share $21-22 million annually with athletes. The figure equates to 22% of the average Power Five school’s revenue. It will rise 4% each year.

The total value of new payments and benefits to college athletes is expected to exceed $20 billion over the next 10 years, making it one of the largest antitrust class-action settlements in history, plaintiffs’ attorneys contend.

“College athletes will finally be able to share in the billions of dollars their compelling stories and dynamic performances have generated for their schools, conferences, and the NCAA,” the settlement said. “This is nothing short of a seismic change to college sports following more than four years of hard-fought victories in this case.”

But there is a lot to sift through – unanswered questions, new questions, consequences both intended and otherwise and the specter of an employee model looming in everyone’s minds. Let’s catch our breath and take inventory of the still unsettled state of play:

What is the schedule ahead?

We’re a long way from Wilken certifying the settlement. Legal experts have told On3 that final approval is no forgone conclusion and that the final version may include changes from what was submitted Friday.

If Wilken preliminarily approves the agreement, a public website will be established this fall where former college athletes can determine the amount of back damages they are eligible to receive.

Athletes will then have a few months during which they can choose to opt out of the settlement, thus retaining their right to sue the NCAA in the future.

Before final certification, Wilken could balk at some terms in the settlement, which could require parties to go back to the negotiating table. She could ultimately approve the settlement early next year, perhaps in the spring. The settlement is expected to take effect a year from now, ushering in a radically new financial model.

Which cases will the House settlement settle?

The global settlement in the House case will also settle two other antitrust cases that, legal experts say, pose existential financial threats to the NCAA: Carter and Hubbard.

Carter alleges that NCAA rules that prohibit schools from paying athletes violate antitrust laws. The plaintiffs are Duke football player Dewayne Carter, Stanford soccer player Nya Harrison and TCU basketball player Sedona Prince.

In Hubbard, former Oklahoma State player Chuba Hubbard and former Oregon and Auburn track and field athlete Keira McCarrell filed a class-action lawsuit against the NCAA and several conferences, seeking damages for not being allowed to receive Alston academic achievement benefits. The suit sought back pay for Power Five and Big East athletes who would have received Alston academic incentive payments before those payments were allowed.

But another lawsuit, this one in Colorado, still warrants attention as legal machinations continue in the House case. Alex Fontenot, a former football player at Colorado, filed the class-action lawsuit against the NCAA and power conferences in November 2023, alleging that NCAA rules prohibiting athletes from receiving compensation from schools and leagues violate antitrust law.

In May, the NCAA and power conferences argued that a Colorado judge should consolidate Fontenot v. NCAA with Carter, which would make it part of the House settlement. But Judge Charlotte N. Sweeney ruled in May that the case would remain in Colorado and proceed outside of the House settlement.

Will athletes be able to collectively bargain?

No. While athletes will for the first time receive a share of their schools’ athletic revenue, and thousands of athletes will receive a damages award, there remains no avenue for athletes to have a proverbial seat at the negotiating table.

In late May, Steve Berman, co-lead counsel for the plaintiffs, acknowledged to On3 that the only way for the NCAA to completely insulate itself from further antitrust lawsuits is by either opening the door to athlete collective bargaining or securing an antitrust exemption from Congress.

The NCAA won’t do the former and is aggressively pursuing the latter.

Several organizations – Athletes.org and the College Football Players Association chief among them – are trying to position themselves to best represent the interests of college athletes as the industry continues to move toward a more professionalized model. AO was referenced in the settlement as a player advocacy organization that will be called upon to provide input on athletes’ views.

As of now, there is no mechanism for athletes to negotiate terms for the annual salary cap, for instance, or limits on the types of compensation collectives can provide, among many other elements. 

That said, the settlement does suggest the agreement is subject to change if “a change in law or circumstances permits collective bargaining.”

How is the NCAA trying to limit collectives?

The most striking takeaway from the long-form settlement was how aggressively the NCAA continues to try to prohibit donor-driven collectives from providing athletes with compensation packages that are not tied to endorsement deals.

In the three years since the NIL Era dawned, collectives have filled a void to routinely give athletes dollars strictly for recruiting and retention efforts.

The collective model was expected to enable some schools to circumvent the salary cap as a third-party entity, which can provide dollars to athletes without regard to Title IX compliance. But the settlement makes clear that the NCAA and leagues will be allowed to craft rules that specifically prevent schools from circumventing the cap.

Athletes will be required to report deals of more than $600 with third-party collectives to a newly created clearinghouse. The NCAA is also creating a public database as it tries to get a handle on what it calls “fair market value.”

Deals that are not deemed to be for a “valid business purpose” could put the athlete’s eligibility in jeopardy and subject the school to a fine. 

Legal experts and other industry sources have told On3 that restricting athlete compensation in this manner could result in more lawsuits.

When will we receive formal Title IX guidance?

This is the most consequential question hovering over college sports: How does Title IX apply to a revenue-sharing model? 

The entire industry is awaiting formal guidance, either from the courts or the U.S. Department of Education. 

The question: Do schools have to share revenue proportionately with male and female athletes? For example, if 55% of a school’s total athletes are women, do women at the school need to receive 55% of the total revenue shared?

The problem: If dollars do need to be shared proportionately, schools that do not allocate the shared revenue in that fashion could stand in conflict with Title IX. However, if schools do allocate their shared revenue in this way, athletes from football and men’s basketball could have grounds for a lawsuit because they are generating the bulk of the revenue. 

“The growth of women’s sports in this country right now is exciting,” Tim Pernetti, first-year commissioner of the American Athletic Conference, told On3 a few days before the settlement was filed. “This is not a moment in time anymore. This is a movement.

“Women’s sports are going to be important in this conference, and in order to make sure we set ourselves up for success, we need a little more transparency about Title IX and how should we all be approaching it as an industry.”

What is the future of walk-ons?

Scholarships are increasing in each sport across college athletics. But there are new roster limits as well. 

This raises the prospect that the traditional walk-on athlete – many of whom go on to achieve great success on and off the field – could be an endangered species.

Consider football, which had a scholarship limit of 85 and rosters that often hovered around 120. With these settlement terms, there will be a roster limit of 105, all of whom can be scholarship athletes.

The reason to increase scholarships stems in part from trying to provide some legal protection from lawsuits. The reason to establish new roster limits stems from trying to cut costs where possible.

Consequences abound and vary by sport. In just one example, what will this mean for a football program like Nebraska, whose storied walk-on program is well documented? The Huskers currently have 145 players, including dozens of in-state walk-ons, on their roster.

Will athletes opt-out of the House settlement?

This will be critical to watch in the coming months.

In the fall, athletes will have an opportunity to see how many dollars they are eligible to receive in back damages. And they will have a few months to decide whether they will opt out of the agreement, which would preserve their right to sue the NCAA in the future.

It is not clear how many athlete opt-outs would be enough to give Wilken pause and prompt her to request that both parties make changes to the settlement terms.

In addition, future college athletes will have the opportunity each year to opt out of the settlement. 

The annual mechanism to allow future college athletes to opt out from or object to settlement terms is designed to prevent future large-scale, class-action suits that – like the House case – posed an existential financial threat to the NCAA.

“They [the NCAA] want the settlement to go forward and for there to be stability,” Berman, co-lead counsel for plaintiffs, told On3 in May. “And in order to do that, we have to somehow get future athletes to agree to this. But every future athlete is entitled under the law not to be bound without notice. So every year they’ll get a notice, and then they have the opportunity to object.”

Is the NCAA still pursuing a Congressional lifeline?

Absolutely. The NCAA has long been in pursuit of a federal bill that would provide at least limited antitrust protection and codify that athletes are not employees of their schools. 

In recent years, we’ve endured about a dozen Congressional hearings on college sports reform. But a federal bill does not appear imminent, especially during a presidential election year. 

On that note, the outcome of the November election, especially if Republicans secure the Oval Office and both chambers of Congress, could significantly impact the next phase of college sports reform.

In the immediate aftermath of the filing of the settlement Friday, NCAA President Charlie Baker – in a joint statement with Power Four conference commissioners – made clear that his eyes are set squarely on securing federal legislation.

“This settlement is an important step forward for student-athletes and college sports, but it does not address every challenge,” the statement read. “The need for federal legislation to provide solutions remains. If Congress does not act, the progress reached through the settlement could be significantly mitigated by state laws and continued litigation.”

When will we know if athletes are employees?

Short answer, it’s going to be a while. 

Let’s start with the Johnson v. NCAA case. Earlier this month, a ruling by a U.S. appeals court kept open the possibility that some athletes are employees of their school, thus entitled to federal minimum wage and overtime under the Fair Labor Standards Act.

Nearly a year and a half after oral arguments were made in the case, the three-judge panel on the U.S. Court of Appeals for the Third Circuit sent the case back to a district court for consideration. In his majority opinion, U.S. Circuit Judge L. Felipe Restrepo appeared to draw a sharp distinction between the majority of college athletes nationwide and those who compete in revenue-producing sports. 

Elsewhere, the National Labor Relations Board is weighing whether the national board will formally review a regional director’s Feb. 5 ruling that Dartmouth men’s basketball players are employees of the college. The players voted in March to unionize.

Perhaps the most consequential ruling will come from a Los Angeles-based administrative law judge, likely later this year. At issue is whether USC‘s football and men’s and women’s basketball players are employees of the university. 

But this case carries added significance. The National Labor Relations Act governs only private entities. Because the Pac-12 Conference and the NCAA are charged with being joint employers of the athletes, the ruling could potentially open the door for athletes at public institutions to be deemed employees as well.