On road to revenue-sharing model, Houston Christian question looms

With the long-form House v. NCAA settlement expected to be submitted this week to U.S. District Judge Claudia Wilken, one conspicuous speed bump (among several) looms on the road toward the judge certifying this historic agreement in the coming months.

It remains to be seen how Wilken weighs Houston Christian’s motion to intervene in the case, filed on June 20 and representing the first formal objection to the settlement terms. HCU, a member of the Southland Conference, contends its interests were not represented in settlement talks. 

“If HCU is successful here and is able to intervene in the case, I expect we’ll see other non-P4 schools do the same,” Mit Winter, a sports attorney for Kennyhertz Perry, told On3. “That could really put the proposed House settlement on shaky ground.”

Is House certification a sure thing?

Legal experts caution that certification is not a foregone conclusion.

Athletes will have 90 days to opt out of the settlement. And Wilken could balk at some elements in the agreement, which could send both sides back to the negotiating table. 

If certified by Wilken – potentially by early next year – the settlement entails the NCAA and all 32 Division I conferences paying $2.8 billion in damages over 10 years, and schools, at their discretion, being permitted to share as much as $22 million annually with athletes.

In its July 12 reply to its motion to intervene, Houston Christian stated that it wasn’t until “approximately” May 23 – when the NCAA and Power Five conferences agreed to settlement terms – that HCU learned it would have to pay some $3 million over 10 years in backpay damages.

Houston Christian alleges the proposed settlement will cause its university and others to “divert funds from the core mission of education and research, in favor of funding big-time sports entertainment, without any finding that HCU has deprived student-athletes of their right to benefit from the use of their name, image and likeness.”

HCU added that the parties’ position is that the school has “no right to its own money, but the plaintiffs and defendants do. They believe they can spend HCU’s money as they see fit, all in furtherance of the cause of big-money sports and to the detriment of students pursuing a higher education at a non-Power 5 school.”

Plaintiffs want Houston Christian’s motion denied

On July 5, plaintiffs’ lawyers filed a motion requesting that Houston Christian’s motion to intervene be denied.

In court documents, plaintiffs’ lawyers asserted that the motion to intervene amounts to a “premature objection” to the proposed settlement. They also claim that, as a non-party in the case, Houston Christian “lacks standing to object to a class-action settlement. Because its motion for intervention is really an objection to the proposed settlement, it should be dismissed on this basis alone.”

In the leadup to the May 23 settlement approval, other non-power conferences also pushed back because they said their interests were not represented in settlement talks and the damages model disproportionately affects schools outside power leagues.

All of the conferences learned earlier in May that they would be on the hook for the bill, sources said. They also received a memo in the days leading up to the settlement laying out the financial breakdown, according to sources. Some 60% of the $1.6 billion that falls to conferences will come from leagues outside the Power Five fraternity and 40% will fall to power leagues.

Houston Christian not only group concerned

The damages model prompted the group of 22 commissioners outside the FBS ranks to propose an alternate damages framework. That would have shifted the percentage of the damages bill that falls to power leagues to nearly 60%. The proposal went nowhere fast.

The House damages model also spurred Big East Commissioner Val Ackerman to voice what she termed “strong objections” to the proposed damages framework in emails to NCAA President Charlie Baker and his legal counsel.

In her May 18 memo, a copy of which was obtained by On3, Ackerman wrote: “The liability of the 22 non-FBS conferences (including the Big East) under the proposed formula appears disproportionately high, particularly because the primary beneficiaries of the NIL ‘back pay’ amounts are expected to be FBS football players.”