Historic Settlement Proposal in House v. NCAA Case

On Friday, plaintiff lawyers filed a formal settlement proposal in the House v. NCAA case, suggesting that schools can finally pay their players. This landmark proposal comes two months after the parties in the lawsuit announced their intention to settle.

The proposal, filed in the Northern District of California federal court, aims to pave the way for power conference schools to share television revenue with players for the first time in NCAA history starting in 2025–2026. This marks a significant step forward in athlete compensation.

The case, initially filed in 2020, argued that the NCAA and power conference schools owe athletes damages for missing out on name, image, and likeness (NIL) opportunities before the rule changes in July 2021. It also suggests that the definition of NIL should include broadcast television revenue, facilitating revenue sharing between athletic departments and athletes. The proposal consolidates two other athlete compensation cases, Carter v. NCAA and Hubbard v. NCAA.

A key component of the settlement is the $2.6 billion damage distribution that the NCAA and power conference schools will owe to various classes of athletes who missed out on NIL opportunities from 2016 to 2021. Athletes will receive payments in annual installments over ten years, starting in 2025, with amounts varying based on their sport, other NIL deals, and their playing period. Named plaintiffs in the House case will receive $125,000 each, while those in the Carter case will receive $10,000.

Some estimates from the court documents include:

- Thousands of football and men's basketball players will receive an average of $91,000 for NIL-related damages, up to $4,000 for video game NIL damages, and $40,000 for other compensation damages. Players who were active before and after the NCAA changed its NIL rules in July 2021 could earn up to $800,000.

- Women's basketball players could receive up to $300,000 for "lost opportunity NIL" damages, with averages of $23,000 and $14,000 for other damages.

- Athletes outside of football and basketball could collectively earn $1.8 million in damages related to "lost opportunity NIL" from 2016.

The settlement also outlines a 10-year agreement for future revenue sharing, allowing schools to share 22% of the average annual power conference revenue with their athletes, estimated to be $22 million annually in 2025–2026 and potentially growing to $32.9 million by the end of the agreement. All Division I schools with sufficient funds can participate in revenue sharing, although the division of money will not be mandated due to legal statutes like Title IX.

Additionally, there will be no more scholarship limits, allowing schools to offer scholarships up to modified roster limits (e.g., football will have 105).

The settlement also allows the NCAA to enforce some NIL restrictions without fear of future antitrust lawsuits from participating parties. For instance, athletes must report NIL deals over $600 to their schools, and power conference schools must report NIL agreements they enter into with athletes. Schools opting into revenue sharing must follow these reporting rules as well. Boosters and collectives will be regulated to ensure deals are of fair market value.

An enforcement mechanism will be established to resolve issues related to the settlement, with neutral arbitrators serving three-year terms. Plaintiff attorneys' law firms will earn around $50 million combined.

Despite the settlement, unresolved issues remain, including whether athletes should be classified as university employees, as debated in other cases like Johnson v. NCAA. If athletes gain the right to collectively bargain, the settlement could be renegotiated.

The settlement process will involve several steps, including a meeting on Sept. 5, a period for plaintiffs to object, and final approval from Judge Claudia Wilken. The process could extend into at least February 2025. The NCAA hopes the settlement will serve as a "blueprint" for federal legislation, potentially codifying the settlement terms and protecting the NCAA from further changes.