May 28

College Athletes To Be Paid Directly By Schools

Athletes, Finance, NIL

In a major shakeup for American sports, many college athletes will now be paid directly by universities. The change comes after three antitrust lawsuits hit the NCAA and "power five" conferences, which agreed to a settlement that includes more than $2.8 billion in damages and new rules for athlete compensation. 

Even just 10 to 15 years ago the idea of college athletes being paid to play their sports seemed far-fetched. But now, thanks to the settlement, former, current, and future athletes can all look forward to being paid for usage of their name, image, and likeness (NIL) in televised broadcasts.

Where The Settlement Goes From Here

 Current and former college athletes brought three antitrust lawsuits against the NCAA and a collection of conferences representing dozens of the most powerful college athletics programs in the country. The three lawsuits are House vs. NCAAHubbard vs NCAA, and Carter vs NCAA

The settlement is still proposed and all settlement terms ultimately have to be approved by the judge presiding over the case. Lawyers will work through the details over the next two-ish month before Judge Claudia Wilken ultimately reviews and approves the terms. 

From there, current student athletes will be allowed to review and opt out of these terms, if they wish to pursue independent legal recourse. All in all, the process should take anywhere from six to eight months. But most of the major hurdles — like albeit begrudging approval from the NCAA board and all the boards of the power five conferences — have been cleared. 

How Current And Former College Athletes Will Be Affected

For starters, there's the issue of paying former college athletes who are covered under this settlement. The $2.8 billion in damages set aside for these players will come from both the NCAA, which will cover a little over 40 percent of those costs, and the other conferences, which will cover the rest. The vast majority of the money is expected to go to former college athletes who participated in football and men's basketball, since these sports were largely the ones covered under television contracts. 

These damages will be paid out over 10 years. Had these lawsuits gone to court in January 2025 and the NCAA and schools lost, the defendants would've been responsible for nearly $9 billion in damages paid immediately. 

Current and incoming students would be given the option to opt-in to a revenue sharing model, which would see the players earning a share of a capped amount of money every year. The proposed cap is currently $20 million with increases every year and a reset every three years. It's unclear how much that would amount to per player. 

Other details include the potential for increased spending on academic scholarships. 

Could This New Agreement Be Disrupted?

While the settlement seems likely, it doesn't mean everybody is happy about it. For instance, smaller schools will still be on the hook to pay damages to former athletes, even if they didn't participate in nearly as much revenue from contracts. 

Notably, many schools who are not members of the power five conferences — a total of 27 other conferences — will still be on the hook to pay back some of these damages. Of the portion not covered by the NCAA, only 40 percent will come from power five conferences, while 60 percent will come from other conferences that likely saw much less revenue than those schools. 

There's also a fourth lawsuit named Fontenot vs NCAA which was not lumped in with the other three antitrust suits. That case, as well as any college athlete's right to refuse terms of the settlement, leaves the NCAA and conferences open to lingering threats of antitrust litigation.


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