Settlement to Award College Athletes Damages – a Few Dollars to Over a Million

Thousands of former college athletes are set to receive payments ranging from a few dollars to over a million under a $2.78 billion antitrust settlement agreed upon by the NCAA and five power conferences. This deal also opens the door for schools to compensate athletes directly while attempting to regulate payments from boosters.

Details of the extensive plan were filed in federal court in the Northern District of California, a little over two months after the framework of the agreement was announced. However, the deal still requires a judge’s approval.

“College athletes will finally be able to share in the billions of dollars their compelling stories and dynamic performances have generated for their schools, conferences, and the NCAA,” the filing said. “This is nothing short of a seismic change to college sports following more than four years of hard-fought victories in this case.”

The full term sheet includes guidelines on roster caps for individual sports that will replace scholarship limits, monitoring and enforcement of new financial payments to ensure compliance by schools, regulation of third-party payments to athletes, and the distribution of nearly $3 billion in damages over the next decade.

The payouts will vary greatly, determined by the sport played, the duration, and the conference in which the athlete competed. While Division I athletes across all sports will be eligible for damages, the majority is expected to go to football and basketball players from power conferences, which generate most of the revenue through billion-dollar media rights contracts.

The settlement addresses three antitrust cases, including the class-action lawsuit House vs. the NCAA, which challenged NCAA compensation rules dating back to 2016. The plaintiffs claimed that NCAA rules denied thousands of athletes the chance to earn millions from the use of their names, images, and likenesses (NIL).

The NCAA lifted its ban on athletes earning money through endorsements and sponsorships in 2021.

The agreement does not resolve whether college athletes should be deemed employees, but it includes language suggesting the deal could change if collective bargaining becomes permissible under new laws or circumstances.

NCAA and college sports leaders continue to seek federal legislation to provide a unified framework, supersede state laws, and prevent future antitrust litigation.

“This settlement is an important step forward for student-athletes and college sports, but it does not address every challenge,” the commissioners of the Atlantic Coast Conference, Big Ten, Big 12, Pac-12, Southeastern Conference, and NCAA President Charlie Baker said in a joint statement. “The need for federal legislation to provide solutions remains. If Congress does not act, the progress reached through the settlement could be significantly mitigated by state laws and continued litigation.”

While federal help seems unlikely soon, college sports leaders hope the settlement will provide some certainty for schools and reduce legal challenges to the amateurism model.

Starting in 2025, the NCAA and conferences will amend their rules to allow schools to share up to about $21 million annually in athletic revenues with their athletes. This amount represents 22% of the average revenue generated through media rights contracts, ticket sales, and other sources by power conference schools. An audit system will monitor athletic revenue to ensure compliance.

Athletes are projected to receive $1.5 billion to $2 billion annually. All athletes will be eligible for the new financial benefits, but each school will determine how to distribute the money among sports. Compliance with Title IX gender equity rules will require federal clarification, and each institution will be responsible for adherence.

Replacing scholarship limits with roster caps could mean more athletic scholarship opportunities in Division I. For example, major college football teams will be permitted to have 105 players on scholarship instead of the current 85, though schools will no longer be required to give full scholarships to every football player.

The roster caps for sports like baseball (34), softball (25), and volleyball (18) will allow for more scholarships, though schools will not be required to meet the cap.

NCAA rules will also allow schools to be more involved in providing NIL opportunities for athletes, but athletes must report deals exceeding $600 to an outside clearinghouse. A public database will be created to help athletes assess fair market value.

Booster-funded NIL collectives will be subject to review to ensure deals are for valid business purposes. Violations could lead to eligibility penalties for athletes and sanctions for schools.

The plaintiffs in the House case are responsible for distributing damages, with about 19,000 power conference football and men’s basketball players set to receive an average of $91,000. Payments range from $15,000 to $280,000 for broadcast name, image, and likeness, with some athletes eligible for additional compensation.

A motion for preliminary approval will be filed, and if granted, a public website will be created for former college athletes to determine their eligibility for payments. The settlement is still months from final approval, with opportunities for objections and exclusions.

“We are moving forward in the right direction by giving college athletes what they have EARNED & DESERVE which has been long overdue,” said Sedona Prince, a college basketball player and one of the plaintiffs in the House case. “We still have a long way to go and I pray athletes ask more questions and demand more answers from the leaders at their schools, conferences, and the NCAA.”