Breakdown: House settlement will pay former college athletes billions in NIL back damages

The historic House v. NCAA long-form settlement was filed Friday to Judge Claudia Wilken in the Northern District of California.

The 333-page document institutes new roster caps and athlete revenue sharing. The settlement aims to bring new enforcement to college sports, with lawyers expected to pick arbitrators before the final hearing of the suit.

The House settlement paves a new college sports landscape if certified by Wilken. But it also provides a payday for the thousands of athletes who were not allowed to capitalize on NIL, participate in revenue sharing or profit from video games.

Instead of facing $20 billion in back damages, the NCAA and Power 5 conferences signed off on a 10-year settlement agreement that includes $2.776 billion in back damages. The NCAA is responsible for paying the amount over the next decade, $277 million annually. Roughly 60% will come from a reduction in distribution to institutions. The NCAA is tasked with closing the other 40%, which will come through reducing operating expenses.

However, in court papers obtained by On3, the defendants in House v. NCAA will pay $2.576 billion to the settlement damages classes, including $1.976 billion for the NIL damages claims and $600 million in additional compensation.

The first back-damage payment is due May 15, 2025, or within 45 days of the settlement’s finalization, which attorneys expect to happen in the early part of 2025 (January-February). Yearly payments will be made each July 15.

For some of the top athletes in recent memory, they will make millions. Athletes are being broken up into four different classes, including a settlement declaratory and injunctive relief class that includes athletes who compete on, competed on, or will compete on a Division I team any time between June 15, 2020, over the next 10 years.

There are three classes established to receive back damages:

• Football and Men’s Basketball – Athletes who have received or will receive a full scholarship and compete on a D-I men’s basketball or FBS team at a Power 5 conference school (including Notre Dame). Athletes any time eligible for competition from June 15, 2016, through Sept. 15, 2024.
  
• Women’s Basketball – Athletes who have received or will receive a full scholarship and compete on a D-I women’s basketball or FBS team at a Power 5 conference school (including Notre Dame). Athletes any time eligible for competition from June 15, 2016, through Sept. 15, 2024.
  
• Additional Sports Class – Excluding football, men’s basketball and women’s basketball, all athletes who have received or will receive a full scholarship and compete on a team at a Division I school. Athletes any time eligible for competition from June 15, 2016, through Sept. 15, 2024.

The $1.976 billion for the NIL damages is being allocated into three categories: broadcast NIL, video game NIL and lost NIL opportunities. Dr. Daniel Rascher – a sports economics and finance, business professor at the University of San Fransisco – estimated the damages for each category. According to documents, $1.815 billion will go to broadcast NIL, $71.5 million set aside for video game NIL and $89.5 million for lost NIL opportunities.

According to documents submitted Friday, 95% of the additional compensation net settlement fund will be allocated to the Power Five football and men’s basketball portion with a distributed ratio of 75/15/5.

Compensation breakdown for football, men’s basketball class

Football and men’s basketball players have historically generated the most TV revenue for conferences and starred in college sports video games. Because of that, athletes in those sports will reap the most benefits in those two categories in back damages.

According to court documents, football and men’s basketball players will make approximately $91,000 in broadcast NIL. The range for athletes is $15,000 to $280,000. ESPN and the College Football Playoff agreed on a 12-year deal from 2014 to 2025, with the total price tag at approximately $5.64 billion, roughly $470 million annually. The College Football Playoff and ESPN agreed to a new six-year, $7.8 billion contract through the 2031-32 season in March.

Rascher evaluated the NIL marketplace to estimate the third-party NIL compensation that class members received since the start of NIL in July 2021, and who played their sports during previous years of eligibility during the class period when third-party NIL payments were not allowed.

Just 3,000 athletes fall into the lost opportunities category in football and men’s basketball with an average payout at roughly $17,000. But for some of the top talent that missed out on NIL, they could command $800,000.

Notable athletes who will collect back damages in this class include names like Joe Burrow, Baker Mayfield and Zion Williamson.

Compensation breakdown for women’s basketball class

Since a women’s college basketball video game was never made, athletes in this class will not receive any compensation for missed video game opportunities. Women’s basketball broadcast NIL will include 3,000 athletes paid at approximately $23,000.

Similar to the men’s basketball and football class, just 400 athletes in the women’s basketball class will be able to collect a lost opportunities claim. The approximate payment is $8,500 for players in the class, but the range is from less than $1 to $300,000. The pay-for-play claimed damage category includes 2,000 athletes with an approximate payout of $14,000.

Notable women’s basketball players in this class will include Sabrina Ionescu, A’ja Wilson and Aliyah Boston.

Compensation breakdown for additional sports

The breakdown of back damages for additional sports is murky and all-encompassing of Division I. For 26,000 D-I football and men’s basketball players, they will receive approximately $300 to $4,000 for video games.

From there, 6,000 non-Power 5, Divison I athletes will collect damages for lost NIL opportunities. The average payout will be $5,300, ranging from less than $1 to $1,859,000. Very few athletes will max out the monetary value of the claims.

Nearly 400,000 athletes can collect pay-for-play damages. Notably, 3,500 Power 5 baseball players will dip into the pay-for-play category with an average payout of approximately $400. The top non-Power 5 football conferences – American Athletic, Mountain West and BYU – will have 1,400 athletes be paid approximately $1,400.

The top non-Power 5 basketball conferences – American Athletic, Atlantic 10, Big East, Mountain West and Gonzaga – will have 1,300 players paid approximately $3,400. Seven hundred non-Power 5 women’s basketball players from the American Athletic, Big East and Gonzaga will be paid out roughly $300.

The 380,000 other non-Power 5 athletes outside of baseball, football and basketball will be paid roughly $50.