The most important element in House case settlement? Protection from further lawsuits

The most consequential outcome in an anticipated settlement of the landmark House v. NCAA antitrust lawsuit won’t be the hefty bill for the NCAA, which could exceed $2.7 billion paid over the next decade.

Nor will it be the creation of a framework for a long-awaited revenue-sharing model, which has long been viewed as an inevitability among industry leaders at least for the power conferences.

As a settlement that will shift the tectonic plates of college sports nears – with potential details first reported by ESPN and Yahoo Sports – here’s the most important component to watch for:

Protection from further lawsuits.

The only way for an expected settlement to be sustainable long-term is for the deal to be merely the first move in a two-step process that staves off continued antitrust lawsuits against the NCAA.

There are only two ways for that to occur:

The NCAA could finally secure its long-sought antitrust exemption from Congress. Or it could open the door to athlete collective bargaining, where, much like in pro sports, athletes would negotiate compensation and benefits as part of a union.

“A settlement has to lead to involving the athletes in the schools and conferences that are going to share the revenue with them,” one industry source told On3. “That’s the only way the new deal can be decided in a way that’s sustainable.”

Can NCAA legally establish a salary cap?

The NCAA can’t legally establish what amounts to a salary cap for schools to compensate athletes – whether it’s $20 or another dollar amount – without the cap being collectively bargained by athletes.

Absent collective bargaining, a salary cap opens the door for athletes, specifically those who enter college athletics in the future, to challenge the cap through more litigation. 

But for athletes to unionize and assemble a formal collective bargaining unit, they must be employees of their schools. That prospect shifts the spotlight back on the all-important employee model question currently in the hands of the National Labor Relations Board, which is assessing two consequential cases.

Dartmouth men’s basketball players in March voted to unionize, a historic move following the Feb. 5 ruling by NLRB regional director Laura Sacks that the athletes are employees of the college. The college has requested that the NLRB conduct a formal review of Sacks’ decision. 

Even if the NLRB chooses not to review the case, Dartmouth has other appeal avenues in what could be a lengthy review process that ultimately lands in the U.S. Supreme Court.

In an even more consequential case, a Los Angeles-based NLRB administrative law judge is weighing whether USC football and men’s basketball players are employees of the university, the Pac-12 or the NCAA.

The National Labor Relations Act governs private institutions. But because the Pac-12 and NCAA are charged as being joint employers, a ruling could potentially open the door for some athletes at public universities to be deemed employees as well.

The NCAA, and particularly President Charlie Baker, have steadfastly opposed an employee model, asserting that it would lead to schools cutting sports and other ramifications.

Will NCAA secure a Congressional lifeline?

On the Congressional front, for weeks two sources have told On3 that a settlement in the House case could include or coincide with Congress granting the NCAA at least some antitrust protection.

At least at the moment, there is no indication that prospect is imminent, and the NCAA’s recent track record on Capitol Hill is not encouraging.

There’s been more than 10 college sports reform Congressional hearings. There’s been a flurry of discussion drafts of potential federal reform bills that have circulated – not one has even gone to a vote.

The clock is also ticking for the NCAA – and plaintiffs in the House case have all the leverage. A settlement before January’s trial date is the only viable option for the NCAA – something it’s trying to accomplish in the next 40 days.

The settlement could also potentially bring to a close at least two other lawsuits hovering over the NCAA: Carter v. NCAA alleges that rules prohibiting schools from paying athletes violate antitrust laws, and Hubbard v. NCAA relates to retroactive Alston payments to athletes.

House case poses financial threat to NCAA

Legal experts have viewed the House case as an existential threat to the NCAA because of the sheer dollars potentially in play absent a settlement. The NCAA and power conferences could be on the hook for as much as $4.2 billion in retroactive NIL pay and shares of broadcast revenue that could be owed to thousands of athletes.

For perspective, the 2020 Covid-driven cancellation of the NCAA Tournament devastated college sports financially. The loss of some $600 million prompted one high-ranking college sports official to tell me, “We literally cannot afford to go through anything like that again. It can’t happen.”

The U.S. District judge who is presiding over the House case, Claudia Wilken, is the same judge who ruled against the NCAA in O’Bannon and Alston at the trial court level. Clearly, she was not averse to ruling that NCAA compensation rules violate antitrust law. She also has U.S. Supreme Court precedent to rely on and adhere to as well – see the Alston decision.

Wilken‘s class-action ruling in November was consequential because potential damages wouldn’t only be in play for three plaintiffs: former Arizona State swimmer Grant House, former Illinois football player Tymir Oliver and TCU basketball player Sedona Prince.

Thousands of athletes in play for damages

The ruling meant that thousands of athletes who fall into the following classes were now in play to receive damages: The classes include one for Division I football and men’s basketball players who have competed collegiately since June 15, 2016. One for women’s basketball players from the same date and an additional sports class – including all other sports – from the same date are also in play.

In addition, the injunctive relief class encompasses all Division I athletes who competed from June 15, 2020 – when the complaint was filed – through the case’s judgment. The goal of this particular class is to change current rules.

NCAA has become ‘candy store’ for lawyers

And rules – essentially the industry’s financial model – will in fact be changed.

That is expected to be achieved when the NCAA creates the framework for a revenue-sharing model, which will enable schools to be able to directly compensate athletes, if they choose.

But as a settlement in the blockbuster House case nears, the biggest question – and the most significant component to watch for – is whether it also includes or leads to protection from future lawsuits.

In light of the mountain of legal threats facing the NCAA, retiring American Athletic Conference Commissioner Mike Aresco told On3 that college sports has become the “candy store” for lawyers.

If so, there are only two ways to prevent more antitrust lawsuits: secure a lifeline from Congress or give athletes a seat at the table to collectively bargain. The ball is in the NCAA’s court, with the clock ticking.