House v. NCAA settlement attorneys working to clarify booster, NIL collective enforcement

NCAA and plaintiffs’ attorneys are clarifying language in the House v. NCAA settlement around boosters and NIL collectives but not making drastic changes.

In a phone interview with On3 on Monday, plaintiffs’ attorney Jeffrey Kessler said the conversations have been “productive.” Northern District of California Judge Claudia Wilken sent the parties “back to the drawing board” during a hearing earlier this month. The judge appeared to support the settlement but found issues with language limiting boosters and NIL collective payments to athletes.

“It’s clarification,” Kessler told On3. “The discussions have been productive. … We’ll be able to agree on some clarifying language that will immediately move forward and be a benefit to the athletes. That’s what we believe is going to happen. And we’ll know in the next week or so.”

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 distributed to athletes in NIL come from booster-funded entities. A February preliminary injunction in Tennessee forced the NCAA to halt all ongoing investigations into collectives.

If approved, the 10-year settlement would usher in new roster limits for every sport and arbitration to enforce disputes. The House settlement would allow schools to share $20 to $23 million annually in revenue to athletes, and the NCAA and its conferences have also agreed to pay $2.8 billion in back damages to former athletes.

In the initial aftermath of the hearing earlier this month, Kessler told On3 he was “100% serious” about moving to trial if the NCAA could not agree on changes to the settlement around boosters and NIL collectives.

As On3 previously reported, leaving collective/booster restrictions out of the agreement could be a dealbreaker for certain conferences. With a Sept. 26 deadline for reporting back to Wilken, Kessler did not provide a timeframe of when the revised settlement will be submitted.

“We’ll submit it when it’s ready,” he said. “We told the court we would report within three weeks, and so it’ll be before the time we told the courts. When it’ll exactly be, I don’t know, but when it’s ready, it’ll be submitted.

What does settlement mean for boosters, NIL collectives?

The current House v. NCAA settlement requires third-party NIL deals with athletes of $600 or more to be approved by a clearinghouse that will vet contracts. What the clearinghouse will look like has yet to be determined.

If the third-party deal is not approved by the clearinghouse, a new third-party arbiter could deem athletes ineligible or result in a school being fined. Athletes who enter into multiple NIL agreements or receive NIL payments from the same third parties with an overall value of $600 or more must submit contracts. Athletes can appeal to a neutral arbitrator, which will be quicker than the current NCAA process. An arbitrator must rule within 45 days, however, but extensions are allowed. Rulings are “final and binding.”

The settlement prohibits boosters from entering into agreements with athletes unless it is “fair market value.” While the settlement does not ban collectives, it would handcuff them unlike ever before. NIL collective leaders previously described the settlement as “bullshit” while others called it “comical.

When challenged by Wilken, NCAA attorney Rakesh Kilaru called enforcement around boosters a “central part” of the settlement for the NCAA.

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

Wilken’s chief concern was limiting athletes’ ability to make dollars from NIL collective, which they are already making. For example, top transfer portal quarterbacks command more than $1 million annually.

“The judge identified a number of issues that she wanted to have clarified, and we’re trying to address that,” Kessler said.