The proposed settlement in the House v NCAA case is set to be the final stake in the weakly beating heart of “amateurism.” Why? Because, assuming the judge overseeing the case grants final approval, schools will no longer be prohibited by NCAA rules from directly paying their athletes.
Alas, those hoping that the settlement will settle everything will be disappointed. Even if the judge grants approval, major questions remain. Here are the biggest ones:
Whither Title IX?
Perhaps the biggest issue that schools are struggling with now is how Title IX will apply to the newly allowed cash payments (often referred to as revenue-sharing payments). Under Title IX guidance from the Department of Education, athletic scholarship dollars must be distributed proportionally to college athletes based on a school’s overall male/female student body population. So if, for example, a school’s student body makeup is 55% female and 45% male, around 55% of the school’s athletics scholarship dollars are supposed to go to female athletes.
But the revenue sharing payments schools will be making won’t be athletic scholarship aid. They’ll be payments for licenses to use athletes’ NILs and for promotional services performed by the athletes. With no guidance to date from the Department of Education on how Title IX applies to this compensation (and none expected before schools start paying their athletes), schools and their legal counsel will have to make that call based on risk tolerance and desired competitiveness. It’s also possible that some conferences will direct their members to all take the same approach.
If the new revenue-sharing payments are treated like athletic scholarship dollars, the school in the scenario above would have to pay around 55% of its revenue sharing payments to female athletes. The House settlement will initially allow schools that choose to do so to pay a maximum of around $22 million per year to their athletes (the actual number will be 22% of the average athletics revenue for Power 4 schools, and will increase as revenue grows). At a school taking this approach and paying the maximum $22 million, female athletes would receive around $11 million, leaving around $9 million for the school’s male athletes. And this is in a world where some NIL collectives are currently paying football teams alone around $20 million.
Another Title IX approach being considered by schools is distributing the revenue sharing payments based on which sports bring in the most dollars. This is how the back damages are going to be paid according to the House settlement. Hence, 75 percent of those damages are being paid to football players, 15 percent to men’s basketball players, five to women’s basketball players, and five to athletes in other sports. In this scenario, a school’s football players would receive around $15 million of the annual revenue sharing payments, men’s basketball around $3 million, and women’s basketball around $1 million. Athletes in other sports would split the remaining $1 million.
You can see how basketball teams at schools taking the second approach would have a recruiting advantage, as they’d likely have a larger revenue-sharing budget to distribute among the roster.
While schools or conferences will initially be tasked with deciding which Title IX approach is correct, the question will likely ultimately be resolved by the courts – again.
Will non-football schools have an unfair advantage?
Basketball teams at schools without football will potentially have a big recruiting advantage. As noted above, all Division I schools that decide to participate in the new revenue-sharing model will initially have around $22 million available to spend on their athletes. At schools with football teams, a majority of that $22 million is expected to be spent on the football roster. A school where basketball is king and there’s no football team, such as Gonzaga, Providence or VCU, will likely be able to vastly outspend teams at schools with football programs (assuming they can come up with the money).
What will athlete contracts look like?
College athletes will now be entering into contracts with their schools that compensate them in return for a license to use their NIL and/or for the promotion of their school through the performance of various marketing services.
These revenue sharing contracts will likely look a lot like coaching contracts, minus the coaching services aspect of those contracts. Many football and basketball head coaching contracts at the Division I level include an NIL component where the coach is being compensated for licensing the use of his or her NIL to the school and for performing certain promotional services. And like coaching contracts, some of these athlete contracts will include buyouts and bonuses. With these contracts new to college sports, will some schools be able to use the structure and content of their contracts to gain a recruiting advantage? Will schools come up with unique provisions that will shift the balance away from the players? What other surprises lie ahead?
Can all this be done without the athletes being considered employees?
While athletes won’t be considered employees for now, that issue will still loom large. The settlement agreement explicitly notes it does not prevent college athletes from becoming employees in the future. And there are a number of efforts pending in courts and with the National Labor Relations Board that are seeking to make that happen. If I had to bet, I’d wager that some college athletes will be employees of their schools within at least the next three years. If that’s the case, the House settlement would no longer be applicable and the college athletics model would be in for even more change.
The House settlement also does not allow college athletes to engage in formal collective bargaining, something that many people in college athletics have recently called for. Collective bargaining is appealing because it would allow rules on player movement and compensation to be immune from antitrust law and legal challenges. Tony Bennett is the latest (now former) college coach to throw his support behind collective bargaining, endorsing it at his retirement press conference. But under current law, athletes would need to be employees to collectively bargain. There’s a growing effort to have the law changed to allow collective bargaining by college athletes without them being employees, so stay tuned on that.
When does all this go into effect?
Assuming that the House settlement receives final approval in the spring of 2025, the plan is for schools to begin contracting with and making revenue sharing payments to their athletes by July 1, 2025. NIL laws in some states — Virginia and California, for example — already allow schools to make NIL payments to their athletes. So it’s possible payments will start sooner at some schools. Either way, schools are actively pursuing plans now to make the revenue sharing payments and are seeking new revenue sources to help fund them.
Will collectives go away?
What does all this mean for NIL collectives, the booster entities that are currently paying college athletes instead of schools? The House settlement is attempting to end the days of collectives raising millions of dollars and paying that money to athletes in return for nominal services. The tricky question is, how to enforce that without creating more legal jeopardy?
Most likely, collectives that want to stick around post-House will have to take on one of two roles. They can either become a school’s revenue sharing designee, the entity responsible for paying and contracting with the school’s athletes (via funding from the school). Or they can focus on acting as a marketing agency for a school’s athletes, by finding and creating third party NIL revenue for a school’s athletes.
It’s also possible (if not likely) that a collective will sue the NCAA or conferences to challenge the restrictions the House settlement is attempting to impose on them. If a lawsuit like this is successful, and collectives are able to continue operating the way they do now, it would knock out one of the NCAA’s priorities in settling the case.
Current and former college athletes that remain part of the House settlement (they can elect to opt out) will be prohibited from suing the NCAA in the future for claims relating to compensation limits. But future athletes (current high schoolers, for example) will be able to bring lawsuits that seek damages caused by those limits, such as the salary cap discussed above. That, and the employment issue, are why many university presidents believe the settlement will only bring very limited and very temporary stability to college athletics.
For those who have long been pining for stability – and believed the House settlement would deliver it – that is an unsettling thought. Even if the judge gives final approval, there are still a lot more answers to be found. Most likely, that means college athletics will be challenged by legal issues well into the future.
