Revised House v. NCAA settlement documents submitted to court
Attorneys in the House v. NCAA lawsuit submitted revised settlement documents on Thursday night, focusing on boosters and NIL collectives in the U.S. District Court for the Northern District of California.
At a preliminary approval hearing on Sept. 5, Judge Claudia Wilken called for attorneys to “go back to the drawing board” because of concerns around third-party NIL restrictions. Specifically, she was concerned about how the settlement would limit opportunities for athletes moving forward.
Not much has changed, though.
The revised settlement agreement still prohibits NIL collectives and boosters from entering into agreements with athletes unless they can prove the compensation is “fair market value.” The settlement also requires non-institution, third-party NIL deals with athletes to be approved by a clearinghouse.
“Defendants’ enforcement authority over third-party NIL deals will no longer extend to all third parties (as it did under the Interim NIL Rules) or the broadly defined term ‘boosters’ (as it did under the prior Settlement Agreement presented to the Court),” the filing states. “Rather, it will be limited to a narrower group of entities and individuals closely affiliated with the schools (‘Associated Entities or Individuals) to prevent circumvention of the settlement.”
Commercial parties like shoe companies and people who have given $50,000 to a school will be exempt from NIL enforcement.
The language specifically prohibits boosters from entering into deals with athletes unless the booster can prove that the pay is for a legitimate endorsement deal and is of “fair market value,” something expected to be policed by the clearinghouse. All third-party NIL deals of $600 or more must be approved by a clearinghouse that will vet contracts. If not approved, the settlement says a new third-party arbiter could deem athletes ineligible or result in a school being fined.
“The relevant section of the Agreement merely permits the NCAA to continue its existing prohibitions on ‘faux’ NIL payments by the narrow category of Associated Entities or Individuals,” the filing states.
Speaking with sources following the Sept. 5 hearing, On3 learned leaving collective/booster restrictions out of the settlement could be a dealbreaker for certain conferences. The NCAA and Power Four conferences have viewed this settlement as crucial in regaining control of NIL activity between athletes and boosters.
Since the summer of 2021, NIL collectives have become integral for football and men’s basketball programs to recruit and retain top talent. The majority of collectives are spending $5 to $20 million annually on football rosters. More than 80% of the dollars distributed to athletes in NIL come from booster-funded entities.
Starting UNLV quarterback Matthew Sluka left the Rebels’ program earlier this week because he was verbally promised a minimum of $100,000 during his recruitment but only saw a $3,000 relocation fee, according to his agent. UNLV is 3-0 and in the mix for the College Football Playoff.
House v. NCAA settlement hinges on NIL enforcement
During the Sept. 5 hearing, NCAA attorney Rakesh Kilaru said not including enforcement around boosters could be a dealbreaker.
“It’s clarification,” plaintiffs’ attorney Jeffrey Kessler recently told On3 about the revisions. “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.”
Wilken’s largest concern with the initial long-form settlement was capping the amount of dollars athletes could earn from boosters, potentially taking away financial opportunities. How the judge will respond to Thursday’s filing remains to be seen. No hearing has been scheduled. If no settlement is reached, a trial date could be set.
“If this House settlement goes through,” Wilken said on Sept. 5, “you’re explicitly paying for play [via revenue sharing].”
If the House v. NCAA settlement is eventually approved, some $2.75 billion in damages will be paid to thousands of college athletes over 10 years. The average damages award for a football or men’s basketball player at a Power Five conference school will be approximately $135,000. And schools, at their discretion, will be able to share $21-22 million annually with athletes. The figure equates to 22% of the average Power Five school’s revenue. It will rise 4% each year.
In the preliminary approval hearing on Sept. 5, Wilken did not question that Title IX is not addressed in the House v. NCAA settlement. The revised long-form settlement documents do not include Title IX or Johnson v. NCAA claims.
This is a breaking news story and will be updated