Critical week arrives for House settlement, revenue sharing in college athletics
The long-form House v. NCAA settlement – the agreement that will usher in revenue sharing and owe $2.776 billion in back damages to former athletes – is set for its first court date.
U.S. District Judge Claudia Wilken will rule on preliminary approval of the landscape-shifting settlement on Thursday. Power Four conferences, the NCAA and attorneys for plaintiffs will all argue in support of the 333-page settlement document.
If Wilken provides preliminary approval, current and former athletes will be notified about how they can earn back damages. Even if the judge grants preliminary approval, it does not secure Wilken’s final approval.
If she does not preliminarily approve of the settlement, both sides could be sent back to the negotiating table. According to sports law expert Michael McCann, Wilken is responsible for ensuring the settlement is “fair, reasonable and adequate.”
“Plaintiffs have secured a revolutionary settlement agreement with the NCAA and its five major conferences that will have a profoundly positive impact on the tens of thousands of college athletes at the hundreds of colleges and universities that play Division I sports each year,” the House v. NCAA settlement states.
Revenue sharing hinges on approval
The 10-year settlement agreement, if approved, will also bring new roster limits for every sport and arbitration to enforce disputes. The expectation is lawyers will pick arbitrators before the final hearing of the suit.
For revenue sharing to begin with the 2025-26 academic year, the House settlement must earn final approval, adding to the importance of the preliminary approval. During the first year of the settlement, each school can share payments with their athletes totaling 22% of the average Power Five school’s revenues, which equates to $20-22 million. That so-called cap figure is expected to rise 4% during the first few years of the model.
House preliminary approval would start back damages
Instead of facing $20 billion in back damages, the NCAA and Power Five conferences signed off on the 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.
If preliminarily approved this week, schools will notify current and former athletes about how they could be paid from the House settlement. In new court documents submitted last week, examples of ways to notify athletes were submitted, including postcards.
The request to begin notifying athletes asks Wilken to name Verita Global, a company that specializes in legal settlements and claims administration, as the settlement operator. The company would be tasked with establishing a website for the settlement: collegeathletecompensation.com.
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.
House settlement could pay former athletes millions
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.
The average damages amount for a football or men’s basketball player at a Power 5 school is approximately $135,000. The average for a women’s basketball player at a Power 5 school is approximately $35,000.
Hundreds of thousands of athletes in other sports across Division I (including football and basketball players in non-Power Five conferences) will also receive settlement awards, which will depend on the athlete’s sport, school, years played, and the number of claimants.
Additionally, athletes in every Division I sport who played before the NCAA changed its rules in 2021 to allow for third-party NIL payments will be eligible to receive additional damages based on the third-party NIL payments they secured after the NCAA rule change, referred to as “Lost NIL Opportunities.” The highest damages payments in this category will exceed $1 million, with the highest estimated to be $1.859 million.