'The alternative is litigation:' House v. NCAA faces pushback in court over NIL collectives

As Judge Claudia Wilken continued to shake her head in disapproval, the message was clear: The House v. NCAA settlement was not receiving preliminary approval Thursday night.

For more than two hours on Thursday, plaintiffs’ attorneys, the NCAA’s attorney and objectors met with Wilken on a Zoom call. The date had been circled on calendars by college sports administrators for weeks.

Wilken pushed back on the language centered around third-party NIL restrictions in the settlement. She expressed concern that the agreement would take away from the “large sums” of dollars currently going to athletes.

Since the summer of 2021, NIL collectives have become integral for football and men’s basketball programs to recruit and retain top talent. More than 80% of the dollars being distributed to athletes in NIL come from booster-funded entities. A preliminary injunction in Tennessee this winter forced the NCAA to halt all ongoing investigations into collectives.

Around the topic of boosters, Wilken stated “These boosters, you can’t prove they’re connected with the school.”

“I think we’ve got problems with this. I don’t have an idea of how to fix this,” the judge said toward the end of Thursday’s hearing. “I will throw it back on you all to come up with something better and consistent. Keep in mind that taking things away from people doesn’t work well.”

“… I think what I’ll do is just ask you to go back to the drawing board at this point.”

The NCAA and plaintiffs’ attorneys now have three weeks to craft new language around NIL collective restrictions. At one point, the NCAA’s attorney, Rakesh Kilaru, called the disagreement a possible dealbreaker.

“Without it, I’m not sure there will be a settlement to submit,” he said.

In a statement released Thursday night, the NCAA said it would “carefully consider the court’s questions, which are not uncommon in the context of class action settlements.”

Kessler and his co-counsel Steve Berman, however, are fine moving forward with or without a settlement. Kessler told the judge Thursday he was happy to schedule a trial date.

“Oh, 100% serious,” Kessler told On3 on Thursday night about his threat of a trial. “Either we’re moving forward with a deal or not. We’re happy to make the changes the judge suggested in NIL. I hope they’re willing to do it, too. But if not, we’re not going to spend the next three or four months negotiating.

“Either we can resolve the judge’s concerns, which we’re happy to do, or we’ll go back to trial. That’s the way of the world.”

In the current NIL collective model, the power conference organizations are paying out $7 to $15 million annually to athletes. Some schools, such as Ohio State, are spending between $18 to $20 million. In the current settlement agreement submitted to the court, third-party NIL deals would be submitted to a clearinghouse.

On3’s top 15 NIL collectives in college sports

The House settlement would allow schools to share $20 to $23 million annually in revenue to athletes. Theoretically, it would reduce the dollars collectives are spending and put a cap on spending. Wilken pushed back on Thursday.

Now the NCAA has a decision to make. Examine its stance on NIL collectives and boosters to rewrite the settlement. Or, in what would be a drastic turn that the organization has staved off to this point, head to trial and face upwards of $20 billion in back damages.

“None of those suggested are a problem for us,” Kessler said. “We hope that the deal will still go forward. But if not, the alternative is litigation.”