In House settlement, what is the NCAA's line in the sand?

As part of the settlement in the landmark House v. NCAA case, the association may be willing to pay billions in damages to thousands of athletes.

It may be willing to introduce a financial model in which schools can pay as much as $22 million annually to athletes.

Yet, the NCAA’s firm line in the sand is something else entirely: an employment model that would for the first time enable athletes to collectively bargain compensation and benefits through a formal union.

Athlete employment would provide the NCAA long-sought protection from further lawsuits alleging it is unlawfully capping athlete compensation. But the association is hell-bent on trying to secure that protection while also avoiding formal athlete collective bargaining.

“Really twisting themselves into knots trying to avoid employment,” said Mit Winter, a college sports attorney at Kennyhertz Perry and board member for the players’ association Athletes.org.

Report: Documents reveal details of NCAA settlement

To that point, an important potential settlement concept, first reported by ESPN, entails an annual process giving new collegiate athletes a chance to opt-in or opt-out of revenue-sharing terms.

The terms of the House settlement will only be binding on athletes who are members of the injunctive class in the case, which will not include anyone who becomes a Division I athlete after the date the settlement is approved.

“If this [opt-in, opt-out] concept becomes part of the settlement, the NCAA will essentially have to hope that every year all Division I athletes decide to opt-in to the House settlement’s revenue sharing terms,” Winter told On3. 

“Which doesn’t provide any long-term stability since every new year brings the possibility that some athletes won’t opt-in to the settlement terms and will challenge the cap with a new lawsuit.”

Is a hard salary floor, soft cap the answer?

Because the compensation cap won’t be collectively bargained – as are salary caps in the NFL and the NBA, for instance – it won’t be exempt from antitrust law.

“Why are we talking about some sort of untested [concept] that has no precedent?” Jason Stahl, founder of the College Football Players Association, told On3. “That seems bizarre. Why are we trying to reinvent the wheel here, with some sort of new Rube Goldberg solution? 

“Why are we talking about something with no precedent where we could be talking about things which have been tried and tested in the real world in other professional sports?”

For example, Stahl floated the idea of a hard athlete compensation floor – to ensure that schools are sharing an appropriate portion of media rights revenue with athletes; a so-called soft compensation cap; and a luxury tax for the strongest revenue-producing schools who are willing and able to share revenue that exceeds the soft cap threshold. 

Perhaps the collective revenue generated through the luxury tax could then be shared with lower-resourced schools.

If it’s a soft cap, where schools are permitted to spend as much as they like on athletes with the understanding they’ll have to pay a tax for doing so, that would provide “more legal protection,” Winter said. While that model is similar to what both the NBA and MLB have in place, here is the key difference:

“Both of those soft caps are still collectively bargained,” Winter said.