College sports changed radically Friday night.
Schools will begin directly paying their athletes in less than a month, thanks to a legal settlement that was officially approved in federal court Friday. Judge Claudia Wilken said the deal would create “ground-breaking changes in NCAA rules that govern student-athlete compensation.”
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The battle to let players share in the spoils of an industry that has long outgrown any amateur roots it ever had started more than 20 years ago. While Friday’s decision was a long-awaited milestone, both players and administrators said they view it as a fresh starting point for the future of college sports, not a finish line.
Sports fans can be forgiven for tuning out of the tedious legal process that led up to this point. Let’s get up to speed on what this means for the immediate future in college sports and what major questions remain unanswered:
New limits
Starting July 1, each school will be allowed (but not required) to spend roughly $20.5 million in new payments to their athletes.
That figure comes from a negotiated formula that caps athlete payments at 22% of the average annual revenue that FBS-level schools get from ticket sales, broadcast rights and a few other items. The cap will grow on a regular basis during the 10-year lifespan of the settlement as the schools’ revenue expands and via scheduled incremental increases. Sports economist Daniel Rascher, a subject matter expert used in the settlement process, wrote that he expects it will grow to more than $30 million per year by the time the deal expires.
Each school’s athletic department can decide how it will divide that money among athletes. Not many major programs have shared their budget plans, but those that have say they will spend the overwhelming majority (up to 90%) of their money on football and men’s basketball players.
Athletes are also still allowed to make money from selling the rights to their name, image and likeness (NIL) to other parties. The settlement creates a new set of rules and a brand-new organization called the College Sports Commission that will try to stop boosters from using NIL deals as additional salary payments, a practice that became commonplace in the past several years.
However, many teams are already working in concert with booster collectives to find creative ways to pad their payrolls with third-party NIL deals that fit within the new rules. Industry experts say football and basketball teams will likely have to find ways to provide several million dollars beyond the salary cap limits if they want to field a team that can compete for championships.
New legal challenges
Friday’s settlement ends a trio of federal antitrust lawsuits that had the potential to financially weaken the NCAA. But the deal does not end the long list of legal problems for the college sport industry’s business model.
The contracts that athletes are now signing with their schools will likely bolster ongoing legal arguments that at least some college players should be considered employees of their schools. The NCAA is fighting more than a dozen lawsuits that challenge rules about how long athletes are allowed to remain in college sports.
Many sports lawyers expect that key parts of the settlement will spur a new barrage of lawsuits — both the negotiated salary cap and the College Sports Commission’s attempts to stifle deals between athletes and third parties could be the target of future antitrust challenges. Schools will also likely have to defend their decision to provide most of the new payments to men’s sports teams against claims that their budgets violate Title IX — a federal law that prohibits gender-based inequity.
The NCAA’s next steps
NCAA president Charlie Baker and many of his colleagues say the only way to solve these remaining legal problems is for Congress to write a new law that blocks athletes from becoming employees and gives the association an antitrust exemption to make rules that would limit players’ earning power.
“In the weeks ahead, we will work to show Congress why the settlement is both a massive win for student-athletes and a road map to legislative reform,” Baker wrote in an open letter Friday night.
The NCAA and its schools have been lobbying federal lawmakers for help during the past several years, but they have made little progress toward a new law. They hope that the expensive compromises they made in the settlement will spur some action in the coming year.
The players’ next steps
A growing group of athletes and their advocates say the best way to solve the industry’s remaining legal problems is through collective bargaining.
Professional sports are able to set legal salary caps and restrict player transfers by negotiating for those powers with a player’s union. Because college athletes are not employees, they can’t form unions. Without unions, it’s not clear that any of the limits negotiated in the new settlement can stand up to future antitrust lawsuits.
Sedona Prince, a lead plaintiff in one of the lawsuits that led to the settlement, told ESPN on Friday night that she and her peers hope the settlement is a launching pad to increase players’ power in shaping new rules.
“We just walked into a new world,” said Prince, who wrapped up her college basketball career earlier this year. “It’s a guideline for us to build and add to in the future. We needed this foundation. Now we’re being treated like semipro athletes, but there are a lot of concerns going forward for improvement in player health and player representation in decision making.”
Prince is a member of Athletes.org, one of several groups that is aiming to form players’ associations that could evolve into unions in the future.
Those groups and college administrators are already gearing up for the next tedious stages of a battle that will continue to play out in courtrooms and the halls of Congress for years to come.
