Understanding The $2.7B NCAA Settlement

Well, it officially happened — a federal judge approved the $2.7 billion NCAA settlement known as House v. NCAA. What does it mean for former, current and future student athletes? Are people happy? Angry? Confused? 

Let's take a look. 

Origins Of The NCAA Settlement

House v. NCAA was the consolidation of three separate lawsuits from nearly 400,000 current and former student athletes. Those lawsuits claimed the NCAA and five of its Division I member conferences (Big Ten, Big 12, ACC, SEC, and Pac 12)  were illegally restricting the earning potential of college athletes. The case was officially filed in 2020 by Arizona State University swimmer Grant House and Texas Christian University and Oregon University basketball player Sedona Price.

However, this landmark case was not the first against the NCAA for essentially limiting the financial options of athletes. In 2014, O'Bannon v. NCAA ruled that the organization was engaging in anti-trust practices and eventually ordered to pay plaintiffs more than $40 million. A 2021 Supreme Court ruling in Alston v. NCAA upheld the decision and effectively introduce the new era of NIL opportunities for student athletes. 

Thanks in large part to these decisions, the NCAA voted in May 2024 to settle House v. NCAA. Almost a year after the vote, judge Claudia Wilken (who also oversaw the 2014 O'Bannon case) officially approved the settlement. Judges need to approve class action lawsuit settlements to ensure all of the parties negotiated in good faith and the result is generally fair. "Despite some compromises, the settlement agreement nevertheless will result in extraordinary relief for members of the settlement classes," Wilken said of the settlement.

So Who Gets What?

The price tag of the NCAA settlement may seem eye-popping at first, but when you consider how many athletes it covers, the actual amounts are a fair amount smaller. The most popular players of the covered timeframe are expected to get checks anywhere in the five figure to low six figure range (the way the check sizes will be determined wasn't made readily available). 

Athletes covered in the settlement include anybody playing from 2016 up to the agreed settlement date and the NCAA has 10 years to pay out the funds — meaning some athletes may not see any money until up to 19 years after they played. It's also important to note that athletes don't have to agree to join the settlement, and in fact some athletes are already challenging it, saying it violates Title IX due to the lopsided way in which certain athletes and sports are likely to benefit. 

Moving forward, schools will be allowed to pay players. The current salary cap is $20.5 million per school, though that's set to increase every year during the next 10 years — and to also create some potential disparities. Appeals and challenges to the current settlement will not stop those payments from starting.

The Trickiest Issue

There are still plenty of legal issues facing the NCAA, including separate challenges around unionizing, being considered employees, playing eligibility, and more. However, the actual settlement itself could also generate another big issue.

NCAA president Charlie Baker thinks parts of the settlement could actually strengthen the NCAA's grasp on NIL. So far, the NCAA has tried to sway Congress to pass laws that would ultimately give the NCAA more authority over NIL. Even now, the organization is likely to push for ways to be exempt from anti-trust laws and try to regain its grasp of collegiate athletics. Of course, the NCAA has fought against player compensation every step of the way, so its not a huge surprise. 

But perhaps the trickiest element of the NCAA settlement involves the establishment of a "third-party clearinghouse." This organization would essentially be allowed to assess the "fair market value" of potential NIL deals, meaning it could have control over whether or not people are allowed to accept deals. Professionals have already questioned the legality of such a clearinghouse. 

So what's next? Well, in the short term, players getting paid by universities to play their sports. But beyond that, there are still a lot of questions that will need to be answered, likely in court.