Long-form House v. NCAA settlement document filed in court

The much-anticipated long-form settlement document in the landmark House v. NCAA case was submitted to U.S. District Judge Claudia Wilken on Friday, an expected yet historic next step as college athletics moves ever closer to a landscape-shifting new financial model.

The broad strokes of the 10-year settlement include athlete revenue sharing, new roster limits for every sport and arbitration to enforce disputes. The expectation is lawyers will pick arbitrators before the final hearing of the suit.

Wilken must still certify the 333-page historic settlement in the coming months – or more likely early next year – which legal experts caution is not a foregone conclusion. In the interim, Wilken could balk at elements in the settlement, which would send both sides back to the negotiating table, and athletes will be given a 90-day period to opt out of the settlement.

The total value of new payments and benefits to college athletes is expected to exceed $20 billion over the next 10 years.

“Plaintiffs have secured a revolutionary settlement agreement with the NCAA and its five major conferences that will have a profoundly positive impact on the tens of thousands of college athletes at the hundreds of colleges and universities that play Division I sports each year,” the settlement states.

It later adds that, if approved, “the settlement will result in one of the largest payouts in an antitrust settlement in U.S. history and lead to pro-competitive changes benefitting college athletes.”

NCAA: House settlement an ‘important step’ forward

On May 23, the plaintiff’s attorneys and named defendants – the NCAA and five power conferences – agreed to broad settlement terms. At the time, that entailed the NCAA and all 32 Division I conferences paying thousands of athletes $2.576 billion in damages over a 10-year period, and schools, at their discretion, being permitted to pay athletes more than $20 million annually.

“This is another important step in the ongoing effort to provide increased benefits to student-athletes while creating a stable and sustainable model for the future of college sports,” the NCAA said in a statement. “While there is still much work to be done in the settlement approval process, this is a significant step toward establishing clarity for the future of all of Division I athletics while maintaining a lasting education-based model for college sports, ensuring the opportunity for student-athletes to earn a degree and the tools necessary to be successful in life after sports.”

Absorbing the long-form settlement in full, Sam Ehrlich, a sports law professor at Boise State, told On3: “The settlement agreement casts an extremely broad net, essentially seeking to end all remaining and potential new litigation over NCAA compensation rules (at least litigation not related to employment classification). But I imagine that won’t be nearly as easy to accomplish as they would hope.”

What’s in the House v. NCAA settlement?

The lengthy agreement paints a vivid picture of how many dollars in damages will be awarded to athletes who competed in college sports between July 2016 and September 2024. Athletes in the revenue-producing sports of football and men’s basketball will receive as much as $40,000 in athlete compensation, $4,000 for video game NIL and as much as $800,000 in lost NIL opportunities.

The significance: Some of the most recognizable names from that era will now be getting paid, years after competing in a pre-NIL age. How much each athlete will receive in damages will vary and depends on factors such as if they competed in a post-NIL world.

The average damages amount for a football or men’s basketball player at a Power 5 school is approximately $135,000.

The average for a women’s basketball player at a Power 5 school is approximately $35,000.

Hundreds of thousands of athletes in other sports across Division I (including football and basketball players in non-Power 5 conferences) will also receive settlement awards, which will depend on the athlete’s sport, school, years played, and the number of claimants.

Athletes in every Division I sport who played before the NCAA changed its rules in 2021 to allow for third-party NIL payments will be eligible to receive additional damages based on the third-party NIL payments they secured after the NCAA rule change, referred to as “Lost NIL Opportunities.” The highest damages payments in this category will exceed $1 million, with the highest estimated to be $1.859 million.

‘For too long, athletes were deprived of economic rights’

The long-form House agreement document, filed in the U.S. District Court for the Northern District of California, is also expected to settle two other antitrust cases confronting the NCAA: Carter and Hubbard.

“NCAA college athletes have waited decades for this moment, and their right to receive the full value of their hard work has finally arrived,” said Steve Berman, co-lead counsel for the plaintiffs. “We are incredibly proud to be in the final stages of historic change.”

Jeffrey Kessler, fellow co-lead counsel for the plaintiffs, said: “We’re pleased to take this next step towards finalizing this historic, industry-changing settlement that will provide a fair system of revenue sharing for the college athletes who generate hundreds of millions of dollars for their schools.

“For far too long, these athletes have been deprived of their economic rights in an unjust system that will now, finally, be fundamentally reformed. The new system will allow athletes to be fairly rewarded for their contributions and college sports will continue to thrive.”

Among the many elements in the House settlement, the agreement will lead to an increase in scholarships offered across sports, but also roster limits in each sport. On3 previously confirmed roster limits for football (105), men’s and women’s basketball (15), baseball (34), men’s and women’s soccer (28) softball (25) and volleyball (18).

The settlement also lays out roster limits for rowing (68), acrobatics & tumbling (55), equestrian (50), men’s lacrosse (48), indoor/outdoor track & field (45), women’s lacrosse (38), swimming and diving (30), soccer (28), field hockey (27), ice hockey (26), gymnastics (20), cross country (17), tennis (10), golf (9) and every other NCAA sanctioned sport.

‘True NIL’ deals key focus in House settlement

Plus, the settlement requires NIL collectives’ payments to be a valid business purpose related to the promotion or endorsement of goods or services provided to the general public for profit. This aligns with the long-time push from many in college sports’ administrative class to help ensure that donor-led collectives are engaged in what they call “authentic” or “true” NIL deals, rather than overt so-called pay-for-play transactions for recruiting and retention purposes.

All Division I athletes will be required to report to a newly created clearinghouse all third-party NIL contracts with a total value of $600 or more. Deals that are not approved could cause those athletes to be deemed ineligible for competition by a third-party arbiter.

In response to that, “There are going to be so many lawsuits coming out of the settlement agreement,” Mit Winter, a sports attorney, posted on social media. “This part will result in many of them.”

Ehrlich added to On3: “I was really surprised as to how much language there actually is in there regarding reporting and enforcement of NIL deals beyond the revenue sharing at the core of the House litigation. A lot of that language seems to be pulled almost word-for-word from some of the federal bills that were proposed. So, I imagine that was something the NCAA was dead set on including wherever they could.

“But I do wonder how much of that is going to draw Judge Wilken’s attention or the attention of objectors or litigators seeking to challenge those NCAA powers before or even after it is approved.”

In terms of the revenue-sharing model, during the first year of the settlement, each school can share payments with their athletes totaling 22% of the average Power 5 school’s revenues, which equates to $20-22 million. That so-called cap figure is expected to rise 4% during the first few years of the model.

The settlement details that defendants – the NCAA and power conferences – “may adopt rules that prohibit any transaction, payment, or agreement designed to defeat or circumvent the salary cap.”

The settlement stipulated that a court-appointed “special master” would settle compliance issues regarding the revenue-sharing model. The earliest a revenue-sharing model can take hold is fall 2025.

Initial House agreement raises several questions

The initial agreement prompted myriad questions:

• Where does Title IX fit into a revenue-sharing model? There is no consensus among legal experts. College sports leaders are seeking formal guidance either from the courts or the U.S. Department of Education.
  
• How will the annual opt-out process work for athletes?
  
• What will the third-party enforcement mechanism look like, and how will it operate outside the bounds of the NCAA? The settlement makes clear leagues will create their own new enforcement entity. The expectation is this will happen.

Another big question is how much, if at all, the settlement protects the NCAA from future antitrust lawsuits. In May, Berman, co-lead counsel for plaintiffs, acknowledged to On3 that the only way for the NCAA to completely insulate itself from further antitrust lawsuits is by opening the door to athlete collective bargaining or by securing an antitrust exemption from Congress.

The NCAA won’t do the former and is aggressively pursuing the latter.

“They [the NCAA] want the settlement to go forward and for there to be stability,” Berman said. “And in order to do that, we have to somehow get future athletes to agree to this. But every future athlete is entitled under the law not to be bound without notice. So every year they’ll get a notice, and then they have the opportunity to object.”