Landmark NCAA Settlement Contemplates Direct Payments to Student-Athletes

Photo of Jack D. Hepburn
Jack D. Hepburn
Associate, Corporate Department
June 6, 2024

On May 23, 2024, the NCAA and the “power-five” conferences reached a groundbreaking settlement in a class action lawsuit pertaining to three antitrust cases –  House v. NCAA, Carter v. NCAA, and Hubbard v. NCAA. The agreement, which still must be approved by a federal judge overseeing the class action, will dramatically alter the landscape of collegiate athletics by allowing colleges and universities to pay student-athletes directly.

NCAA President Charlie Baker, along with the commissioners of the ACC, Big Ten, Big 12, Pac-12, and SEC, released a joint statement that they have agreed to pay nearly $2.8 billion in damages to current and former collegiate athletes for money they could have earned for the commercial use of their name, image and likeness (“NIL”) had NCAA rules permitted these athletes to monetize their NIL. In addition to monetary damages, the settlement calls for revenue-sharing between power five colleges and universities and their respective student-athletes, and contemplates a salary cap system which would allow these schools to pay players a combined annual amount of up to $21 million (cap amount may be adjusted upwards based on revenue, similar to the NFL and NBA salary caps).

“This landmark settlement will bring college sports into the 21st century, with college athletes finally able to receive a fair share of the billions of dollars of revenue that they generate for their schools,” plaintiffs’ attorney Steve Berman said.

Around 14,500 players are expected to be paid varying dollar amounts from the settlement. The NCAA will cover 41% of the $2.77 billion total, while the power-five conferences will kick in another 24%. The remainder of the settlement will be funded by non-power-five football conferences. Members of the class action may opt out and pursue their own lawsuits against the NCAA and the conferences.

While the monetary terms of the settlement have been agreed upon, there is not yet a definitive settlement agreement for the presiding judge, U.S. District Court Judge Claudia Wilken, to review. Furthermore, several questions remain unanswered. For example, will the revenue sharing requirement under the settlement agreement have Title IX implications? Will we see current and former student-athletes leave these class action lawsuits and bring their own independent actions against the NCAA? How will a college or university’s ability to directly compensate their student-athletes impact current NIL collectives? Lastly, and most importantly, will Judge Wilken even approve the proposed settlement agreement once finalized?

While it appears that profound changes are inevitable, it remains unclear what impact these changes will have on the future of collegiate athletics.