Universities are now allowed to begin paying their student-athletes directly, altering the current collegiate landscape and marking the beginning of a new era in college athletics.
On Friday night, 75-year-old California Northern District Judge Claudia Wilken approved the deal between the NCAA, its Power 4 conferences (SEC, Big Ten, Big 12 and ACC) and lawyers representing all Division I athletes. The House v. NCAA settlement ends three separate federal antitrust lawsuits, which all claimed the NCAA was illegally limiting the earning power of college athletes.
“Despite some compromises, the settlement agreement nevertheless will result in extraordinary relief for members of the settlement classes. If approved, it would permit levels and types of student-athlete compensation that have never been permitted in the history of college sports while also very generously compensating Division I student-athletes who suffered past harms,” Wilken said as part of the 76-page opinion.
The House settlement will pay thousands of former athletes who played from 2016 to 2024 $2.8 billion in back pay for lost name, image and likeness (NIL) compensation.
Although paychecks can begin to be distributed from schools to athletes on July 1, the official start of the settlement implementation takes effect immediately.
“This is new terrain for everyone…Opportunities to drive transformative change don’t come often to organizations like ours. It’s important we make the most of this one,” NCAA president Charlie Baker said in a statement released Friday night. “We have accomplished a lot over the last several months, from new health and wellness and academic requirements to a stronger financial footing. Together, we can use this new beginning to launch college sports into the future, too.”
Every school is permitted, but not required, to share up to a certain amount of revenue annually with its athletes. According to the settlement agreement, this cap is calculated by taking 22% of the average of certain power school revenues — most notably ticket sales, television earnings and sponsorships.
The cap in the first year — July 2025 through June 2026 — is projected to be $20.5 million.
While the 22% cap will remain the same throughout the 10-year settlement agreement, the cap money figure will rise based on built-in escalators, with a 4% increase in the second and third years, scheduled recalculation after each third year and additional cash flows into athletic departments.
A new non-NCAA enforcement entity, an LLC mainly managed by the power conferences, will oversee and enforce rules related to the revenue-share concept.
The company, College Sports Commission, will be headed by a CEO and a head investigator for enforcement matters. The organization announced the hiring of MLB executive Bryan Seeley as its CEO on Friday night.
The commission will be required to ensure that schools remain under the cap and that third-party NIL deals with athletes are not booster-backed deals that have been prevalent over recent years. An enforcement staff is also expected to be hired to investigate and enforce rules related to cap circumvention, tampering and other subjects and will be required to levy stiff penalties.
Another aspect of the agreement is a Deloitte-run NIL clearinghouse that will have to approve all third-party NIL deals of at least $600 in value. The “NIL Go” clearinghouse will use a fair market value algorithm to create compensation ranges for third-party deals.
