Power Five conferences vote to approve $2.8B settlement

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NCAA, Power Five conferences vote to approve $2.8B settlement in House, Hubbard and Carter cases

Ross Dellenger

·Senior College Football Reporter

Updated Thu, May 23, 2024 at 7:41 PM CDT·8 min read

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In the spring of 2021, attorneys for the NCAA, appearing before the U.S. Supreme Court, argued vehemently against providing each college athlete with additional cash annually.

The amount: $5,980.

Three years later, in a landmark agreement that will transform the course of major college athletics, the organization left behind its archaic rules, shook off its long-time amateurism argument and thrust the industry into an era of direct athlete compensation.

The amount: more than $15 billion in new cash is expected to funnel to athletes over the duration of the 10-year agreement.

The NCAA and power conferences cast votes this week in support of settling three antitrust cases (House, Hubbard and Carter), approving terms that feature nearly $2.8 billion in back damages; a future athlete revenue-sharing model that will cost major conferences a cumulative $1 billion-plus annually; and other potential changes to the association’s governance, enforcement and scholarship structure.

While expected for weeks now, the vote is a historic moment, a groundbreaking and seismic shift for an organization that has, for decades, fought against direct athlete pay despite the billions earned from its major football and men’s basketball powers. The result of nine months of negotiations with plaintiff lawyers, NCAA president Charlie Baker and conference commissioners usher into the industry a new age that they hope brings stability to the current unruly recruiting landscape.

Caught in a purgatory between amateurism and professionalism, major college sports is springing forward — though not by its own volition. Begrudgingly forced into this semi-professional world by state laws and the court system, the industry still clings to a shred of amateurism, as the new model is expected to still prohibit pay-for-play and booster payments.

However, college leaders believe the agreement staves off future legal challenges, binds at least for another decade the power leagues with the NCAA, and brings more regulation to the recruiting environment.

“This would be the biggest change in the history of college sports. Period,” said Gabe Feldman, a sports law professor at Tulane and leading voice in NCAA litigation matters. “There have been significant changes and incremental changes. The NIL era has opened a lot of doors, but to have athletes share revenue with the schools would be not only monumental but would be contrary to what the NCAA has espoused for a century.”

What the new model means for athletes and how much it'll cost schools

All five power conference presidential boards — the Big Ten, SEC, Pac-12, Big 12 and ACC — voted in favor of the settlement this week. The Pac-12, despite its near dissolution, voted as originally structured. The league provided the final vote Thursday evening on a landmark day.

However, a finalization of the settlement may not happen for many months. The agreement will need approval from a judge and is available for objections from individual plaintiffs — at least a five-month haul, according to experts.

However, within 14 months, at the start of the 2025 fall semester, the industry’s new model is expected to be implemented permitting schools — but not requiring them — to share revenue with athletes up to a certain quasi-salary cap.

The revenue-sharing deals with athletes will be classified as NIL agreements, with schools providing funds for the use and broadcast of a players’ name, image and likeness — a concept at the heart of the House case. Other non-NIL forms of payments are an option.

Though plenty of questions linger around this new system, institutions will be permitted to share with athletes as much as $22 million per year. That figure, still very much in flux, was derived from 22% of an average of power conference revenues. The cap includes exceptions as a combined $5 million in Alston-related money and additional scholarships can be counted toward the total.

NCAA president Charlie Baker has lobbied for congressional help on NIL several times. (Matthew J. Lee/The Boston Globe via Getty Images) (Boston Globe via Getty Images)

A new model is expected to eliminate scholarship restrictions while implementing roster limits, a move to avoid more legal fights but one that could cost schools millions more in additional financial aid amid a hotly recruiting landscape.

At the end of it all is a steep price tag — $200-$300 million per school over the 10-year settlement agreement, or about $15 billion among all power schools. That figure assumes a school meets the revenue-distribution cap annually and expands scholarships by at least $3-5 million.

For many school administrators, sticker shock exists as they dig for extra cash in unusual ways, such as tapping into private equity and capital. A $30 million annual price tag coupled with $20 million in total scholarships is about 40-45% of the average athletic department budget of public schools in the ACC, Big Ten, SEC and Big 12.

However, without a settlement, college leaders risk another loss in court, a $20 billion damages tab and bankruptcy, according to documents obtained by Yahoo Sports.

Aside from the new financials, there are other changes coming.

Enforcement of rules isn't going away

The settlement-related model is expected to have a new enforcement arm and governance structure for, at least, the power conference schools, allowing them to create and enforce their own rules. Finalization around those details may be months away.

For administrators, the enforcement situation is a key piece. The settlement does not eliminate booster-led collectives, but incentivizes schools to bring them within the university’s athletic department, mostly through a stronger enforcement entity — one that potentially operates outside of the NCAA and gains teeth through the settlement itself.

As part of the settlement, the judge is expected to “reaffirm” existing NCAA compensation rules, specifically those that prohibit booster payments for deals that are not “true NIL,” according to a legal document summarizing the agreement. However, few details on the enforcement entity have been shared.

The settlement is expected to also provide what documents term a “release” of antitrust compensation claims from current, former and future athletes for 10 years as part of a “substitution” system for new plaintiffs. In a story at Yahoo Sports last week, such a concept was cited by plaintiff attorney Steve Berman, who said the settlement features a built-in element by which each new class of athletes can opt into the revenue-sharing structure.

The settlement isn’t perfect. It does not protect the NCAA and conference from future lawsuits brought by state attorneys general, does not preempt state NIL or revenue-sharing laws and offers no real ruling on Title IX’s application in such a compensation model.

Title IX “remains at the campus level to be applied,” the document notes — a situation that could lead to schools circumventing the federal law by continuously using outside third parties to compensate athletes.

Jeffrey Kessler, another plaintiff attorney in the case, believes the Title IX issue will eventually be resolved in the courtroom.

“The courts will decide,” he told Yahoo Sports. “It doesn’t impact us. If we have a settlement, we’ll negotiate a system in which athletes will be compensated. The degree in which Title IX applies will be determined [by the courts].”