A new era has dawned for the NCAA: paying athletes directly

Since its founding, the NCAA has operated with a business model that defines a college athlete as an amateur. Over the years, as college sports has evolved into a massive enterprise, lawsuits and labor actions have chipped away at this model, which has increasingly become seen as exploitative in big-money sports like football and men’s basketball.

But the NCAA’s $2.8 billion settlement Thursday night in an antitrust class action represents the deadliest — and perhaps decisive — blow to that system.

If approved by a U.S. District Judge in California, the settlement would allow the creation of college athletics’ first revenue-sharing plan, a historic shift in which schools would pay athletes directly to play.

However, this radical change also brings questions of its own, critics say. These include whether women would be compensated fairly, whether smaller conferences would bear a disproportionate burden of settlement, and whether this framework would do anything to limit the power of co-ops — booster-funded groups that lure players with payments to hopscotch from one school to another. .

Michael H. said: “It’s a historic and deeply flawed agreement,” Leroy, a law professor at the University of Illinois. “The idea that schools are paying millions of dollars to people who sell TV contracts and fill seats — that’s a good thing. But it closes one Pandora’s box and opens four or five others.”

In recent years, college athletes have already made great strides in earning the right to earn money for their performances. Three years ago, they were allowed for the first time to legally market their name, likeness and image individually. In March, the Dartmouth men’s basketball team voted to form a union after a federal official ruled that the players were employees of the school. Thursday’s settlement in House v. The NCAA was viewed by many college administrators as a foregone conclusion.

The lawsuit is named after former Arizona State swimmer Grant House, the plaintiff.

In settling the case, the NCAA sought to avoid a disastrous ruling and stave off a steady drumbeat of antitrust litigation that had hampered the organization’s ability to set even the simplest rules.

Had the suit gone to trial, the NCAA and the major conferences named as co-defendants — the Big Ten, Southeastern, Atlantic Coast, Big 12 and Pac-12 — feared the potential price tag would exceed $4 billion.

By settling, the NCAA is also sending a signal to Congress — which has been reluctant to interfere in the organization’s management — that the NCAA’s request for antitrust relief is needed relief, not a bailout.

Pastor John I. said: “Although the settlement is undesirable in many respects and heralds only temporary stability, it is necessary to avoid what would be the bankruptcy of college athletics,” Jenkins, Notre Dame’s president, said in a statement. He called on Congress to preempt a patchwork of state laws, ensure athletes are not employees, and allow schools, with an antitrust exemption, more freedom to set rules.

But the uncertainty over antitrust protections was underscored Thursday when a Colorado judge denied the NCAA’s request to move another antitrust case, Fontenot v. NCAA, to the same court that will decide Thursday’s settlement.

The decision leaves open the possibility that athletes who are part of the settlement class in the House case — that is, a Division I athlete dating back to 2016 — could opt out if they believe the Fontenot case might save them more money. The formula used in the House case calls for schools to share about 22 percent of their revenue with players; This number is much lower than what is offered by major professional sports leagues, which have agreed to share about 50 percent of revenues with players.

Ramoji Huma, a longtime advocate for college athletes, said more will be known about the settlement when it is presented to Judge Claudia A. Welkin. He added: “But I do not see that a settlement in this case can lead to comprehensive reform.”

The settlement consists of two components: back pay of name, image and licensing revenues that were denied to players before the rule change three years ago, including revenue from soccer broadcast rights; And a framework for paying athletes for those rights in the future.

What is not clear is who will get paid and how much.

The $2.8 billion in damages is tied to revenue generated almost exclusively by the major conferences in football and men’s basketball, whose athletes are one class of plaintiffs. Another category is women’s basketball players in major conferences. And the last chapter is everyone.

Going forward, the settlement means the schools can set aside about $20 million each to pay athletes once the 2025 football season begins.

Schools will have their own decisions on how to distribute payments to athletes. Does Michigan, for example, want to spend money on lacrosse and cross country teams, or invest almost all of the money in football and basketball? Does Chapter Nine require that funds be distributed equally between men and women?

A hint that a settlement might be reached came in December when Charlie Baker, the NCAA president and former Massachusetts governor, suggested that schools set aside at least $30,000 annually in educational trust funds for at least half of the school’s athletes. This was the first time the NCAA had approved the idea of ​​indefinite compensation.

This idea would have essentially created two classifications within Division I: those who could afford it and those who could not.

But now, the settlement is largely supported by schools that do not participate in major football matches. The 27 Division I conferences that were not named in the lawsuit are required to pay $990 million of the settlement through NCAA distributions from the men’s basketball tournament that will be withheld over 10 years.

Several schools learned of the arrangement as media outlets reported details of the settlement talks. They were briefed by the NCAA on May 6.

“The NCAA appears to bail out the biggest spenders, and conferences like ours are the ones paying for the majority of the settlement,” Ivy League Executive Director Robin Harris said. “The Ivy League is not being attacked by these allowances, and we are bearing the costs from the majority, so it is frustrating.”

The 22 conferences that cannot reach the College Football Playoff, which determines the national champion, offered an alternative funding model that reduced their contribution, but that plan was rejected. The NCAA Board of Governors approved the settlement agreement Wednesday night by a vote of 8-0 with one abstention, according to a person familiar with the vote.

“The fact that the settlement is a good thing is not lost on me,” said Julie Roe Lash, commissioner of the Horizon League. The men’s basketball champion, Oakland, upset Kentucky in the NCAA Tournament. “We needed a certain level of stability, but that doesn’t put things into perspective. From my perspective, this was a rushed process, it wasn’t comprehensive, which is troubling when you’re talking about a multi-billion-dollar decision.”