On Thursday, May 23, 2024, the NCAA and the Power Five conferences (ACC, Big Ten, Big 12, Pac-12, and SEC) announced a settlement of three class-action antitrust lawsuits pending in the Northern District of California. The historic settlement – if approved by the judge overseeing the case – will have major implications for college and university athletic programs, athletes, boosters, and fans.
The terms of the settlement are not yet public, but have been described by counsel for the Plaintiffs. Under its terms, the NCAA and conferences will pay $2.75 billion dollars over 10 years to compensate Division 1 athletes who were unable to benefit from the current rules allowing players to profit from their name, image, and likeness, or "NIL." The NCAA will fund almost $1 billion of the settlement by reducing future disbursements to smaller conferences.
The historic settlement also allows colleges and universities to share revenue with players going forward, eliminating NCAA rules that prohibited such payments. The portion of revenue paid to students that each school can share is capped at 22% of the average Power Five school's revenue, which in the first year will be about $20 million. For now, schools can decide how they want to distribute their portion of the money, if at all.
The settlement doesn't resolve all the pending antitrust lawsuits against the NCAA. One remaining suit, Fontenot v. NCAA, is moving forward in Colorado after a federal judge denied a request to consolidate it with the three cases the NCAA settled.
Th settlement follows on the heels of the Supreme Court's 2021 decision in NCAA v. Alston, which held that the NCAA violated antitrust law in restricting education-related benefits for athletes, such as post-eligibility scholarships at graduate or vocational schools. While narrow in scope, the opinion signaled the death of the amateurism model of college athletics.
Given this recent history, the NCAA likely avoided a much larger judgment by settling. Now, with a potential show of good faith, the NCAA has turned to Congress, where it hopes to obtain an antitrust exemption similar to those enjoyed by professional sports leagues.
This settlement raises many questions. One such question is whether Title IX governs revenue-sharing schemes and puts any limits on how payments can be distributed between men's and women's programs. Another is whether athletes are considered employees, and if so, whether they can engage in collective bargaining and other legal protections afforded employees under state law. There will also be significant practical questions for each school as it determines how to navigate this new world.
This settlement should also be considered in the context of the NCAA's other recent antitrust settlement in Ohio v. NCAA, in which the NCAA agreed to stop enforcing all rules regulating student athletes transferring from one school to another. In December, the court in that case had granted a temporary injunction against a rule that required athletes to wait a year before competing after transferring to a new school. This settlement would make that rule change permanent, as well as preventing any retaliation against schools or athletes engaging in a transfer. It could be that the NCAA has decided to clear the docket of antitrust enforcement actions by accepting settlements regarding its alleged anticompetitive rules.
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