Schools are now free to begin paying their athletes directly, marking the dawn of a new era in college sports brought about by a multibillion-dollar legal settlement that was formally approved Friday.
Judge Claudia Wilken approved the deal between the NCAA, its most powerful conferences and lawyers representing all Division I athletes. The House v. NCAA settlement ends three separate federal antitrust lawsuits, all of which claimed the NCAA was illegally limiting the earning power of college athletes.
Wilken’s long-awaited decision comes with less than a month remaining before schools are planning to start cutting checks to athletes on July 1. Both sides presented their arguments for approving the settlement at a hearing in early April. While college sports leaders have been making tentative plans for a major shift in how they do business, the tight turnaround time means schools and conferences will have to hustle to establish the infrastructure needed to enforce their new rules.
The NCAA will pay nearly $2.8 billion in back damages over the next 10 years to athletes who competed in college at any time from 2016 through present day. Moving forward, each school can pay its athletes up to a certain limit. The annual cap is expected to start at roughly $20.5 million per school in 2025-26 and increase every year during the decade-long deal. These new payments are in addition to scholarships and other benefits the athletes already receive.
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Friday’s order is a major milestone in the long push to remove outdated amateurism rules from major college sports. Since 2021, college athletes have been allowed to make money from third parties via name, image and likeness (NIL) deals. Boosters quickly organized groups called collectives that used NIL money as de facto salaries for their teams, in some cases paying millions of dollars mostly to top-rated basketball and football players. Now, that money will come straight from the athletic department.
In June 2021, the Supreme Court unanimously ruled against the NCAA in a case that made it clear that college athletics should be treated less like an education-based endeavor and more like a lucrative entertainment industry. The decision unleashed a flood of fresh legal challenges to NCAA rules that have led to unprecedented turmoil.
The settlement approved this week will not put an end to the barrage of legal challenges. Questions about whether athletes should be considered employees and the current rules that dictate how long an athlete can play college sports remain unanswered.
However, NCAA president Charlie Baker and others believe the deal will help schools regain control and tamp down the skyrocketing, largely unregulated market for paying college players through third parties.
The NCAA and its schools are hoping that federal lawmakers will now intercede to help solve the industry’s remaining legal problems. Industry leaders have asked Congress to write a new law that would prevent athletes from becoming employees and provide the NCAA with an antitrust exemption to create some caps on player pay and transfers.
Salary caps and free agency restrictions in professional sports are legal because they are negotiated as part of a collective bargaining agreement with a union. College sports leaders say many schools won’t be able to afford to fund their teams if players are deemed to be employees and allowed to unionize.
The settlement gives the schools power to create new rules designed to limit the influence of boosters and collectives. Starting this summer, any endorsement deal between a booster and an athlete will be vetted to ensure it is for a “valid business purpose” rather than a recruiting incentive.
Many sources in the college sports industry have doubts about whether the limit on booster spending — aimed at protecting competitive balance — will be effective in slowing down the rapid increase in money flowing to athletes at the NCAA’s richest schools. Some believe the rule will spur new lawsuits.
The power conferences are planning to soon launch a new enforcement organization to monitor payments that come from both schools and boosters, a duty that was previously one of the main functions of the NCAA’s national office. College sports officials are hoping that the new organization will have a more streamlined and effective approach to investigating potential violations and punishing those who break the rules.
The new enforcement organization, called the College Sports Commission, has yet to name a chief executive or finalize the types of punishments it will dole out to those that break the rules. The group responsible for creating the new organization — a collection of athletic directors and conference executives — has been waiting for final approval of the settlement before publicly announcing its plans.
Sources told ESPN’s Pete Thamel and Jeff Passan that the target to be the new CEO of the College Sports Commission is MLB executive Bryan Seeley. Seeley has headed investigations for MLB and, according to sources, has been the target for weeks. MLB officials have been aware of his potential departure, sources said.
Wilken refused to approve the settlement in early April because several athletes objected to a term of the deal that allows the NCAA to set a limit for how many players each team can carry on its roster. The limits would have potentially resulted in thousands of athletes losing their place on their team. Lawyers for both sides agreed in late April to alter the deal so that no athletes would lose their opportunity to play college sports as a direct result of the new roster limits.
