The NCAA is yet again faced with the question of if it wants to roll dice and possibly die on its “amateurism” hill or amend its stance in an effort to settle perhaps the biggest case in the history of college athletics. Last Thursday, Federal District Court Judge Claudia Wilken held a hearing on the preliminary settlement proposal in a case that has become known as House v NCAA. Per the NCAA, the hearing did not “go as the organization would have hoped”. This quote from NCAA President, Charlie Baker’s statement addressing the outcome of the hearing during which the judge did not approve the settlement proposal and instructed the attorneys to go back to drawing board on several points of concern in the settlement.
 

What is the House Settlement?

In May, the NCAA and the Power 5 Conferences (ACC, Big 10, Pac-12, SEC, and ACC) voted to approve a settlement in three antitrust cases the NCAA and Power 5 Conferences were facing. Those cases are, House v NCAA, Hubbard v NCAA, and Carter v NCAA. House sought damages for college athletes being denied the opportunity to receive NIL payments, broadcasting NIL payments, and the ability to be paid to be featured in video games. Hubbard sought damages for being denied Alston Award payments. Carter sought to implement an injunction to stop the NCAA from enforcing its pay-for-play rules. If the House case continues to trial, the NCAA could face up to $4.3 billion in damages. It is for this reason, that the NCAA and Power 5 Conferences worked with the attorneys representing the college athletes to reach a settlement agreement in these three cases.

Once the settlement agreement proposal was released, many began to regard the settlement as the settlement that would completely transform college athletics and hopefully prevent future related litigation. The settlement would require the NCAA and the Power 5 Conferences to pay $2.8 billion in damages over a 10-year period to 14,500 Division 1 athletes who played from June 15, 2016 until November 3, 2023. Current and future college athletes would benefit as the schools would be permitted to share roughly $23 million annually with their college athletes in a revenue sharing model. Soon after these details were released colleges began creating plans and making moves to prepare for settlement’s new world order in college sports.

In fact, I have had several conversations with those who work with college athletes asking how should they prepare for the new college sports model post House settlement? I started each of my responses with the same sentiment. That sentiment is that the first thing to note about the House settlement was that it had not yet been approved and therefore any preparation could be found to be a bit premature. Alas, here we are faced with the possibility that moves made in preparation for the settlement could be premature as Judge Wilken did not approve the settlement and sent the attorneys back to the drawing board.

Why was the Settlement Not Approved?

Judge Wilken has a few issues with the settlement that prevented her from approving the settlement. The biggest point of concern was the part of the settlement regarding NIL
Collective payments to college athletes. The settlement would allow the NCAA to limit and essentially control payments made to college athletes via NIL Collectives. The NCAA would be able to require that these types of deals receive approval before going into effect. This would give the NCAA the ability to prohibit these types of deals and to eliminate what the NCAA views as pay for play. Judge Wilken is concerned that allowing this would negatively affect the NIL market.

Since 2021, NIL Collectives have become a major part of college sports, especially football and men’s basketball. More than 80% of money being distributed to college athletes in NIL come from booster funded entities, NIL Collectives. In fact, earlier this year a federal judge entered a preliminary injunction stopping the NCAA from investigating NIL Collectives. The judge reasoned that college athletes being denied the opportunity to negotiate with NIL Collectives when they are initially being recruited or considering transferring denies the athletes of the opportunity to negotiate during their most marketable time. Through the settlement, the NCAA is attempting to regain some control and place limits on college athletes’ ability to enter deals with NIL Collectives. Judge Wilken sent the attorneys back to drawing board on this point as she does not understand why the NCAA is still trying to prohibit pay-for-play when the NCAA is going to allow their member colleges to pay their athletes for ticket sales, NIL, and media rights.

Judge Wilken has given the attorneys three weeks to amend the settlement proposal. However, it is unclear whether both sides can come to an amendable agreement. The NCAA’s attorney, Rakesh Kilaru made clear that any revision regarding booster/NIL Collective payments may be a deal breaker for the NCAA. However, the plaintiffs’ attorneys were willing to make the necessary amendments. If no agreement is reached, the plaintiff's attorneys are willing to go to trial. Again, the NCAA finds itself at an impasse where it must
decide of it wants to continue to die on its amateurism hill or amend the settlement proposal and avoid rolling the dice at trial.

While it remains to be seen what will happen, it is important to note the NCAA's history in similar situations. The NCAA has a history of holding on to its amateurism model at all cost. For example, the NCAA had an opportunity to settle the Ed’ O’Bannon case. In O’Bannon, the NCAA, EA Sports and Collegiate Licensing Company (CLC) was sued for using college athletes' likeness in college sports video games without paying them. EA Sports and CLC settled. The NCAA refused to settle, went to trial and lost. The NCAA also rolled the dice with the Alston case and lost. The NCAA appealed the case all the way to the United States Supreme Court and received a scathing blow as the Court made clear that the NCAA's rules are subject to antitrust law. Both O’Bannon and Alston was heard by the same judge that is presiding over the House case. We will all have to wait and see if the NCAA will roll the dice and go to trial or if they will amend the settlement proposal.

College and high school athletes have been granted the right to profit from their name, image, and likeness! Yayyyyyy!!! College and high school athletes can now enter NIL Deals. This is an exciting opportunity for college and high school athletes. However, there are certain topics that college and high school athletes and their parents need to know before entering any NIL Deal. Download by free NIL Contract Checklist for 5 contract terms to know! For more on college athletes' name, image, and likeness rights follow me on Twitter @esquire_coach and on Instagram and TikTok @the_esquirecoach. To receive updates from The Esquire Coach Blog directly to your email please subscribe below.