In re: College Athlete NIL Litigation: Settlement Agreement Filed for Court Approval
Last week, the parties in three cases, House v. NCAA, Hubbard v. NCAA, and Carter v. NCAA, filed a 133-page settlement agreement requesting that Judge Claudia Wilken approve the parties’ settlement. Undoubtedly, there will be objections filed that will need to be addressed by the court prior to approval. As we recently saw in the UFC fighters antitrust $335 million settlement (Le v. Zuffa), courts can and do reject class action settlements requiring parties to go back to the drawing board.
The settlement agreement is dense and, frankly, changes the NCAA rules model as we know it. The following addresses some of the key points in the settlement agreement, which includes an agreed injunction, but certainly does not address every single issue in the proposed settlement agreement:
The backpay settlement compensates athletes in the class $2.75 billion over a 10-year period. The athletes in the class are athletes who were not able to take advantage of the legislation and policies permitting athletes to use their names, images, and likenesses for compensation. The compensation will not be paid equally and will be determined by an algorithm. Payments are expected to top out at a little north of $1.85 million.
The settlement backpay compensation will not be distributed equally amongst the involved sports – football, men’s basketball, and women’s basketball. It is expected that 75% will be paid to football players, 20% to men’s basketball players, and 5% to women’s basketball players.
Revenue sharing with athletes will be permitted with the likelihood that revenue will be shared for the first time during the 2025-26 academic year. Revenue sharing will equal 22% of specific categories of revenue including, ticket sales, media rights, NCAA distributions to colleges and universities, conference distributions, royalties, licenses, bowl revenues, guarantees. Ticket sales for suites, however, is excluded from revenue sharing as are donations. Revenue sharing calculations will be recalculated every three (3) years.
Rather than scholarship limits, sports will be subject to roster limits. All athletic scholarship limits will be eliminated.
College and universities may enter into exclusive or non-exclusive agreements with athletes for use of their NIL. Additionally, colleges and universities (or designees such as a marketing agencies and collectives) can serve as a third-party marketing agents for athletes.
Athletes have to disclose any NIL deal of $600.00 or greater to their colleges and universities. Colleges and universities are required to share such information with a designated clearinghouse and the counsel for the Plaintiffs.
The athletes covered by the settlement agreement have agreed not to contest the NCAA’s and colleges and universities’ right to broadcast and distribute athlete contests.
In the event a college, university, or athlete is disciplined as a result of the matters addressed in the settlement agreement, those disputes will be submitted to arbitration. Counsel for the parties have agreed to confer to select neutral arbitrators. If agreement cannot be reached, the arbitrator will be selected from the Sports Law Practice Group of JAMS. Arbitration awards may be challenged in federal court.
If the parties ultimately engage in collective bargaining, the terms of the settlement agreement may be incorporated into a collective bargaining agreement and/or the parties may agree to “additional, expanded or different benefits.”
If approved, it is expected that the settlement will go into effect in early 2025. For any questions, contact Christian Dennie at cdennie@denniefirm.com.
