Additional States Join Virginia and Tennessee’s Lawsuit Against the NCAA; NCAA in Discussions to Settle Antitrust Claims

John DeWispelaere headshot
John DeWispelaere
Associate, Corporate Department & Vice-Chair, Sports Practice Group
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Christopher J. Walsh
Associate, Litigation Department
May 9, 2024

It has now been over two months since the United States District Court for the Eastern District of Tennessee (the “Court”) halted the NCAA’s “NIL-recruiting ban”, and additional states have now joined Tennessee and Virginia’s efforts to permanently undo that NCAA rule as illegal.  As a reminder, Tennessee and Virginia initiated litigation against the NCAA on January 31, 2024, arguing that the NCAA was violating federal antitrust law with its NIL-recruiting ban, i.e., the NCAA’s current policy that prevents student-athletes and prospective student-athletes from having discussions with any booster or NIL collective regarding what NIL opportunities are available to them before they enroll in the school or sign their letter of intent.  On February 23, 2024, the Court agreed that Tennessee and Virginia were likely to succeed on the merits of their legal claims, and now Florida, New York, and the District of Columbia have joined the lawsuit as well.  Specifically, on May 1, 2024, the plaintiff states filed an Amended Complaint against the NCAA.  Beyond adding the three new plaintiff states, the Amended Complaint provides further details about how the “massive business” that is the NCAA impacts the states’ economies, and it asserts that “the NCAA itself acknowledges the obvious anticompetitive harms that its NIL-recruiting ban causes” because without that ban, “member institutions and collectives would compete for prospective athletes by offering ‘high-value and high-volume NIL compensation’ in a way that ‘does not presently exist.’”  The NCAA has until July 1, 2024 to respond to the states’ Amended Complaint.

In the meantime, though, the NCAA is in the middle of settlement discussions with the plaintiffs in the House v. NCAA lawsuit that currently being litigated in the United States District Court for the Northern District of California, and likely with the Attorney Generals of the aforementioned states, to settle the active antitrust and related cases against it. The class of plaintiffs in House v. NCAA is largely comprised of former NCAA athletes who are seeking damages against the NCAA for it illegally preventing these former student-athletes from making money off their NIL while they attended their respective college or university. This class of plaintiffs is seeking monetary damages from the NCAA north of $4 billion.

The most recent publicly known settlement figure between the House plaintiffs and the NCAA is $2.7 billion. One new wrinkle in these settlement discussions is that the NCAA’s national office would be directly responsible for these damages rather than the NCAA member schools and athletic conferences. Under the proposed settlement, the NCAA would pay the settlement amount over a period of 10 years.

These settlement discussions do not only pertain to the monetary damages requested in House v. NCAA. The settlement would also set forth a revenue sharing arrangement between the Power 5 conferences and their student athletes on a going forward basis. The settlement is also likely to include an agreement of the NCAA’s NIL restrictions, namely, whether colleges or universities are able to compensate student-athletes directly for their NIL.

One key component that is currently not included in this settlement is an agreement to eliminate all future antitrust lawsuits against the NCAA and its member schools. This is a critical component of these discussions. The last thing the NCAA wants to do is settle its current litigation matters to then turn around and fight substantially similar antitrust claims from other plaintiffs. As a result, it is not out of the realm of possibility that the NCAA seeks congressional approval of this proposed settlement.

Overall, it appears it is “when,” not “if,” the NCAA settles House v. NCAA, and its outstanding antitrust litigation. This settlement will foster a new era of college sports, one that looks fundamentally different from the eras before it.