EXCLUSIVE: House Settlement Proposal | NIL Blitz: Jul. 22 - Jul. 28

Here are some fun messages that started buzzing on my phone Friday evening…?

“Explain this to me like I’m five”

“Sparknote me :)”

“BralyGPT”

Like Jeff Franklin on ABC in the 80’s, I’ve gone Full House on today’s edition of the Blitz. I was debating spewing one long thread to cover it all but instead chose to keep the five core segments. I start us out at a 30,000 foot view and then dial into key functions of the future of college sports.

If you’re afraid I missed something after the first section, that’s because I probably did so intentionally! Just keep reading. (There's a surprise for those who make it to the end!)

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1. House Settlement: Big Picture ??

2. Revenue Sharing / Broadcast NIL ??

3. Direct-to-Athlete NIL Payments + School Marketing Agencies ??

4. Houston Christian Denied ?

5. Looming Questions ??♂

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?1. House Settlement: Big Picture ??

The wait is over… err, sort of.

On Friday at 5:04pm ET, the long-form submission of the House, Hubbard and Carter cases surfaced to the public. There are a pair of important documents – the Stipulation and Settlement Agreement (the 133-page behemoth from both the plaintiffs and defendants) and the NCAA/Power Conference’s motion for preliminary settlement (the big but not quite as big 51-page angle from the defendants) – along with a slew of immediate news reports, opinions, and perspectives.

I’m not going to worry about the outside reports or speculation yet. I’ve read the 100+ page bedtime story and want to give a genuine, uninfluenced reaction to the piece. (Also, a fair time to reiterate that I am not a lawyer, just a nerd working in the NIL space.)

So, here we go with ten overarching finds...?

1. This is NOT final. I hope by now we all understand that changes can - and likely will – be made. According to the NCAA and Power Conferences, on September 5, Judge Wilken is expected to grant preliminary approval for the settlement as well as pick a date for a Final Fairness Hearing. Expect that over these next 38 days, Judge Wilken may prompt the parties to adjust this proposed settlement. After September however, the details ought to be much clearer, leading to an anticipated final approval in early 2025.
2. The backpay timeframe has been adjusted to former athletes between June 15, 2016, through September 15, 2024. This adds thousands to the formerly reported ’19-’21 class.
3. Football, Men’s Basketball and Women’s Basketball players who were not full scholarship players are not in the backpay classes. The long-form is explicit that non-full grant-in-aid athletes are only included if they competed in sports other than the aforementioned three.
4. The NCAA and Power Conference’s bill will be the same regardless of who opts in or out. Even if athletes opt out, the damage pool will be adjusted to pay more out to the athletes in the class from the pool of money that would’ve gone to those who opted out. Once the figure is decided, there is no going back.
5. This is tiptoeing eerily closer towards an employment model. There are specific callouts preventing the athletes’ attorneys from showing any public merit to the employment model, but collective bargaining is acknowledged as a possible alternate outcome. Admittedly, without federal safeguard it is hard to imagine a decade more of the issue being tempered.
6. This is not a guarantee of long-term protection. The language is couched to only ensure issues related to athlete compensation and benefits are not challenged over the next ten years. However, there is also opportunity for athletes to assert claims should future issues arise which they didn’t realize at the time of the settlement. Watch out for the additional cases listed in #10.
7. Congress will be called on. It is written that “in good faith” both the plaintiffs and defendants will seek the protection needed to implement the outcome of the settlement, including federal antitrust.
8. The lawyers are going to get a pay day, in the form of lump sums, possibly even including compensation for their hourly rates and future work. Bookoo bucks.
9. Title IX was nowhere to be found in the documents, apart from some brief allusion to how backpay would disseminate to former athletes.
10. Other cases will play a role in the viability of this settlement. It is explicitly mentioned in the long-form that approval of Hubbard is required for the settlement to move forward, and there was no clear mention of Carter in the 133-pages. Stakeholders are also very much cognizant of (1) Fontenot, the Colorado-based case whose motion of prevent inclusion in the settlement was denied; (2) Johnson, the employment-centered case which is headed back to the courts for further review; (3) Chalmers and the 1983 NC State National Championship team’s challenges to past highlight usage; and (4) a slew of NLRB and FLSA cases pushing for employment designation. ?

Remember that these documents were written for a judge – not for ADs, sport administrators, athletes, third-parties, or NIL dudes like me. The ink on the page is written to outline protocol, not resonate with the boots-on-the-ground perspective. So as much information as there was provided, there was a lot of legal jargon and there is still a long road ahead to prescribe the processes that will occur over the next decade.?

I love a good look at where governance is heading, but I will also be the first to acknowledge there are gaps between a big picture proposal and what will play out for athletes and admins.

(If you do want to know where I think the nitty-gritty is heading, I suggest you keep reading!)

2. Revenue Sharing + Broadcast NIL ??

Titled the “Benefits Pool” in Article 3 of the long-form, there was much to be said about what the future payment model will look like.

• Beginning July 1, 2025, 22% of the average Power Conference athletics budget (in select countable categories) will create a cap of sorts of which schools can put out to their athletes. Nothing new structurally there from the original news report back in late May, but it is clear that this is an average not a median. So, the outliers at both the top and bottom of the league will be driving this up.
• Countable revenue categories are limited to specific categories in an athletics department’s budget. Categories include Membership Financial Reporting System (MFRS) sections: (1) Ticket Sales; (7) Guarantees (money paid out to schools for participation in away games); (11) Media Rights; (12) NCAA Distributions; (13) Conference Distributions (excluding media and bowl game payouts); (13A) Conference Distributions of Football Bowl Generated Revenue; (15) Royalties, Licensing, Advertisement and Sponsorships; and (19) Football Bowl Revenues. When ballparking the current average of these categories, the estimate falls between $20M - $22M for a preliminary cap.
• The cap will move. There is 4% annual growth baked into the cap with a reset every third year. In reviewing annual growth in revenue categories historically, 4% may even be a conservative number – especially when you consider the direction on on-field sponsorships and the private equity push. There is a clause allowing for the Plaintiff’s Counsel to propose an adjustment to this, too.
• There are ways to chip away at the 22% cap. There is a brief list of payments that can be counted against the “benefits pool”, such as: Alston payments (max is $2.5M/per year/per institution); New athletic scholarships (~$2.5M/per year/per institution); NIL payments directly contracted with the school and athlete (this is specifically regarding the school having a student-athlete promote the school or other, it cannot be used to pay a student for participation/media rights); Other benefits (e.g., NIL payments, vehicles, travel not currently allowed under NCAA rules, etc.)
• There are benefits athletes can and will receive that do not count towards the 22% cap. The following sources of direct-to-athlete payments will NOT be counted against the 22% cap: NIL payments from third-party entities or individuals; NIL payments via third-party marketing agent; NIL licensee payments; Student-Athlete Assistance Fund (SAF); and NCAA benefits to SAs.
• There are some key dates to watch each year if you’re curious about the Rev Share cap changing. Noted in the document, on September 1 of each year schools will report the benefits they’ve provided to athletes from the prior year and on May 15 schools will report their MFRS data. In tandem with the Court, Class Counsel, and Defendants, these figures could be the leading change agents each year.
• Broadcast NIL (BNIL) is called out in a handful of places in the long-form. Receiving its own two-page section, Article 8 of the piece is detailed to hold the line on athletes being paid out for appearances in broadcasts over the ten year term.
• Athletes can continue to engage in NIL deals with title sponsors. There is a near verbatim recount of NCAA NIL guidance which allows an athlete to engage in an NIL deal with title sponsors of events (e.g., GEICO as a presented of the Las Vegas Bowl) so long as it is not promotion of the event and simply a promotion of the brand or services of the sponsor.
• There are reservation clauses if the courts, legislators, and/or NCAA determine BNIL rights do exist for athletes. As it sits, athletes are not to be compensated for their participation or broadcasted appearance in a game. Unless Judge Wilken pushes hard on this, I don’t see this changing as there are current complaints from former athletes (e.g., Fontenot, Chalmers, NC State 1983 National Championship Team) as it relates to promotional and broadcast usage. Said plainly, I think that issue is resolved elsewhere.

The fascinating thing about all this is that you can go a mile deep into each bullet point above. Heck, there are going to be businesses built around assisting schools on each one these caveats. If you thought there were a lot already, I expect the industry of collegiate athletics will see more and more third-parties coming to find a seat at the table.

3. Direct-to-Athlete NIL Payments + School Marketing Agencies ??

Speaking of businesses that are likely to spring up, there are a handful of lines in particular which are going to catch opportunistic ADs’ eyes quickly.

Why I say opportunistic is because I see two schools of thought: (1) ADs whose budgets are tight, will struggle to “max the cap”, and make decisions to find dollars for every countable category; or (2) ADs whose budgets may be more forgiving, who won’t struggle to “max the cap”, and will instead seek opportunities to exceed the cap.

Let’s dial in on the second one. As noted in the long-form, commercial NIL opportunities not paid for by the school are not counted towards the cap. This cherry on top spans from all of the EA Sports and Beats by Dre deals down to the mom and pop shop ambassadorships. Schools are growing out NIL and personal branding staff to assist athletes in these endeavors already, so I wouldn’t be surprised if more expansionary roles are added.

There is a lot of momentum behind spinning collectives into marketing agencies. The famed “Mizzou Model” which finally caught national attention in the spring is an example. The architect of that model, Nick Garner , is now leading Two Circles’ college division to replicate it nationwide. These are athlete-marketing-the-school models which can break the cap.

Now let’s go back to our first AD. There are ways for them to reach their cap via NIL, it just requires a direct agreement between the athlete and the school. To date, the NCAA has staunchly opposed this and many state laws would still prohibit it if the rules changed immediately. For the schools electing to enter into direct agreements with athletes, there is the two-fold benefit of chipping away at the 22% total and an ability to leverage genuine athlete NIL value to further the goals of the athletics department and institution. This is what Blake Lawrence was saying a month ago that got significant attention in the space.?

4. Houston Christian Appeal Denied ?

One non-long-form update that surfaced last week – Houston Christian was denied a chance to intervene with the House settlement.

Judge Wilken, the very individual who will be the final sign-off on the long-form we’ve been piecing up, ordered against HCU as they are not one of the named parties to the lawsuit (only involved by way of the NCAA). Further, she noted they were a little late to the party. This case has been on a trajectory towards this week for months now and was filed years prior.

Now, do I blame HCU for their timing on attempted opposition? No not really. Most DI schools we met with had a visceral reaction in May when the proposed settlement terms started to leak. I don’t think the true financial implications of the settlement were clear. Whether it was the vagueness of it all or simply a disbelief that it would ever come to this, for HCU’s (and many other DI/FCS schools unhappy about this plan) sake it appears to be a dead end.

The sentiment remains that HCU and all NCAA members, by electing to be a part of the Association, are all in this thing together.

5. Looming Questions ??♂

Gee whiz, that was a lot. Did this answer every question? No probably not. Here are some we are still working through.?

What does the timing look like on all of this?

Let me start by saying I believe the timetable is a somewhat answerable question. In fact, in talking with some school partners over the past few days there is a better sense of what is coming now than there was six months ago.

We know the Court’s timeline is chartable, with Judge Wilken reviewing the proposed settlement in a matter of weeks, followed by an anticipated approval in early 2025. But between now and then, the NCAA will begin leveraging its October DI Council and January Convention to unravel previously framework and begin aligning their manual with the ten year terms.

What about those pesky state laws?

There are some that counter NCAA NIL policy, yes, but those will likely be tempered for now. There are only 10 states with legislative sessions still active for this year so we’ve more or less passed the wave of any widespread changes. As I unpacked a few months ago, there are auspicious provisions in states like Virginia, Nebraska, South Carolina, Missouri and Mississippi – but as the lion’s share of attention is on the settlement I think this cools for now.

When will we understand how Title IX will apply?

Sometime after July 1, 2025. I’m not saying that to be smart, but I say that because Title IX is more often than not understood through violations of it. Claims will be raised and analyses will be made. The process of risk assessment and determination have already been vocalized by the Department of Education and will be navigated at a campus level.

What about those other cases you mentioned previously?

I mentioned it in the first section, but our gumbo of Fontenot, Chalmers, Johnson and trio of NLRB complaints are going to influence the next ten years of this space. The speed at which they are moving likely won’t be fast enough to change this proposed settlement, but enough “future proofing” clauses were littered this document to lead me to believe everyone can see the writing on the wall.

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If you made it this far – congratulations! Drop a comment on this post and enjoy this celebratory gif.

You are now an expert in the overview of the proposed settlement terms which is still subject to change!

(I jokingly say that because it is not entirely futile to commit this to memory. I would peg +85% of this infrastructure to hold up.)

But hey, I’m two days behind on this write-up and this industry is changing at a million miles per hour so it bought me a bit more time to think.

If you found this perspective to be helpful, that's wonderful! Please share this in your network because there are so many reports flying around from folks who haven't even read the darn thing yet.

If there's anything I missed or you're curious about, let me know and let's chat!

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