Preparing players and lawyers for a new college sports landscape

May 2024 is poised to mark a pivotal shift in the landscape of collegiate athletics, as a significant proposed antitrust settlement could see the National Collegiate Athletic Association (NCAA) and major college conferences pay billions in damages and establish a new revenue-sharing system with our college athletes.

Leading industry figures are set to convene and cast their votes on the conditions of a groundbreaking potential agreement spawned by the House v. NCAA lawsuit. This agreement aims to establish a novel structure that empowers schools to distribute millions of dollars among their athletes moving forward. Additionally, it will reportedly create a fund exceeding $2.7 billion dedicated to compensating former athletes for lost wages pertaining to their name, image and likeness (NIL) and other injustices.

Let’s discuss how a potential settlement will set a positive precedent but could also overlook key items that need to be addressed to protect players.

The basics

The lead plaintiff in House v. NCAA is Grant House, a highly decorated swimmer for Arizona State University. House filed suit back in 2020, more than a year before the NCAA lifted its restrictions on college athletes’ ability to profit from their NIL and publicity rights.

He also seeks injunctive relief for current NIL policies that attorneys argue still limit the full scope of athletes’ publicity rights. Many other plaintiffs were added to the House lawsuit, and the NCAA knows that if it loses a class action the damages could be staggering. With $2.7 billion, at a minimum, on the line, the NCAA’s best option is to settle and establish new NIL governance that will compensate players and avoid additional litigation. Word on the street had it that last week plaintiffs and NCAA lawyers met in Dallas-Fort Worth to further their settlement discussions.

Terms and consequences

Terms of the settlement are currently being discussed, as the NCAA explained to its 32 Division I conferences in a memo distributed in May that cuts to its schools will help the association afford much of the $2.7 billion. Additional liquidity comes through available funds, insurance policies, and new revenues sources.

This is a pragmatic move, as NCAA Research indicated in a 2020 report that college sports generated $18.9 billion in revenues in 2019, with Division I play responsible for 96% of that large amount.

Another key term affects power conferences, which would have to agree to establish a new revenue-sharing system with our college athletes. Schools would need to spend up to $20 million annually to direct payments to athletes, while obeying Title IX laws.

This will have an impact on operational costs as well. For example, conferences like the ACC, Big Ten, Big 12, and SEC are committing about $300 million each over 10 years. This system would allocate about 22% of athletics revenue annually to our athletes, capped at around $25 million. Some stakeholders have complained about having to cut coaching staff as a consequence of affording their marquee players. Those same staffs have enjoyed multi-million dollar pay packages for years, earned on the backs of our athletes.

Decision makers need to weigh if and when a $1 million player whose career will last up to four years is worth sacrificing three or four assistants, trainers, or staff.

Potential legal risks

Plaintiffs’ lawyers should be paying very close attention to settlement announcements as well. This new system of governance, subsequently, would lead to the withdrawal of two other antitrust cases and nullify players’ rights to file future antitrust claims against the NCAA.

New requirements will be necessary to file a class action suit. Historically, just one athlete could front a case seeking to eliminate unlawful restrictions for all college athletes. The likely terms of the expected settlement would require attorneys looking to secure more benefits for our athletes to initially assemble and secure pledges from a broad coalition of players who opted out of the settlement. This requires a considerable amount of time and resources, and plaintiffs’ lawyers must be certain they have a case worth the clients’ time and reputation.

Will a settlement force Congress to make key plays?

ESPN reported in May that multiple sources from both chambers of the federal legislature indicated that even if the settlement is reached, it is “unlikely to spur any immediate action from Congress.”

“We have to see what those details are,” Rep. Lori Trahan (D-Mass.) told ESPN. Trahan is a former Division I volleyball player, and a member of the House Energy and Commerce Committee’s Innovation, Data, and Commerce Subcommittee that oversees college athletics policy. “I’m skeptical, particularly in an election year; it’s just not the highest priority right now.”

With this lack of urgency amid a presidential election year, it seems 2025 is the earliest a federal framework could be passed, even if a settlement is reached in House.

Players and lawyers should keep their sights set on the myriad federal frameworks that have been proposed.

For example, Rep. Trahan has introduced multiple bills related to college sports in the past two years, including the College Athlete Economic Freedom Act (CAEFA), which she reintroduced in 2023 along with Sen. Chris Murphy (D-CT).

Highlighted by “prohibiting colleges, conferences, and the NCAA from setting or enforcing rules that restrict this right or otherwise colluding to limit how athletes can use their NIL,” CAEFA is one of the more progressive recent bills introduced to Congress.

This bill could also be reintroduced again with a more centrist agenda, depending on the outcome of House settlement and whether Trahan is reelected. Other high-profile, bipartisan proposals include:

· Fairness In Collegiate Athletics Act

· College Athlete and Compensation Rights Act

· College Athlete Bill of Rights

· Amateur Athletes Protection and Compensation Act

· Student Athlete Level Playing Field Act

From revenue sharing and students’ ability to the liability limitations and restrictions on certain types of endorsements, each act covers a lot of ground while differing from the next. Any of these bills could seem more appealing to a new Congress in 2025.

Preparing for the new rules

The plaintiffs in House set a deadline of May 23 for the NCAA and conferences to agree to the deal, which will then require approval from the NCAA’s board of governors and each conference’s presidential board. If the parties agree, preliminary approval will be needed from Senior District Judge Claudia Wilken of California’s Northern District, followed by notifications to class members who can challenge the terms, which could take months.

Should a House settlement be reached, and the NCAA implements the aforementioned terms, it would usher in a new era of collegiate competition and equity among our college players who are largely responsible for billions of dollars in revenue.

A settlement and back pay to former players would go a long way to righting the wrongs of the past. Players, their families, and their lawyers should have their sights set on what is omitted from a new precedent, and their limited abilities to file new actions with regard to payments.

The need for our college athletes to hire sports lawyers is greater than ever, as navigating this shifting landscape is trickier than a flea flicker in the final seconds of the fourth quarter. The right legal counsel could help a player earn millions in endorsements and save just as much on long-term and strategic investments.