What’s New
The National Collegiate Athletic Association and the five most lucrative athletic conferences approved a plan this week to pay their athletes directly, a monumental step that could change college sports — and shake up the institutions that house them — for generations to come.
The plan is part of an agreement that would settle three antitrust lawsuits — House v. NCAA, Hubbard v. NCAA, and Carter v. NCAA — if it’s approved by a federal judge. It includes a $2.75-billion payment to former athletes who sued the association and the so-called power conferences for back pay for the rights to their names, images, and likenesses. The burden of the payment will be shared by Division I colleges and issued over 10 years.
But the most lasting change, if approved, is the part of the agreement that allows for revenue sharing with future athletes. Under the terms of the agreement, universities in the Atlantic Coast, Big Ten, Big 12, and Southeastern Conferences will have the option of paying 22 percent of the average revenue of a power-conference institution per year to their players, representing a cap of roughly $20 million in the first year, according to a news release shared by the lawyers who represented the athletes.
“We have been marching down this long legal road seeking economic justice in college sports for more than a decade,” wrote Jeffrey L. Kessler, one of the lawyers, in the release. “But the time to bring a fair compensation system to college athletes has finally arrived.”
In a joint statement, the leaders of the NCAA, the Atlantic Coast Conference, the Big Ten, the Big 12, the nearly defunct Pac-12, and the Southeastern Conference wrote that the settlement agreement was an important step in reforming college athletics.
“This settlement is also a road map for college-sports leaders and Congress to ensure this uniquely American institution can continue to provide unmatched opportunity for millions of students,” they wrote. “All of Division I made today’s progress possible, and we all have work to do to implement the terms of the agreement as the legal process continues.”
What to Watch For
Many details of the settlement still must be decided, and the federal judge overseeing the three cases, Claudia Wilken of the U.S. District Court in Oakland, Calif., who has presided over previous antitrust cases that the NCAA lost, will have to approve the final agreement for it to take effect.
“It is not clear whether Judge Wilken will approve this settlement,” said Marc L. Edelman, a law professor at Baruch College of the City University of New York, in an email. “The payment to former college athletes, to me, is more than reasonable. But the forward-looking arrangement that fixes college-athlete revenue share at a fixed amount does not seem to resolve the underlying antitrust problem. It is still wage-fixing, irrespective of whether wages are fixed at zero or a somewhat higher number.”
There are salary caps in professional sports, he said, but they were the result of bargaining by unions representing players. That is not the case here.
We have been marching down this long legal road seeking economic justice in college sports for more than a decade.
Meanwhile, Division I colleges will have to figure out how to afford the damages. A large portion of the money will reportedly come from future distributions that the NCAA makes to its member institutions. The Division I colleges that are in the non-power conferences have already objected to the settlement, Yahoo News reported, because the payments will mostly not go to their athletes but to those who played in the four or five most prominent conferences.
It’s not clear how easily colleges in the power conferences will be able to make the revenue-sharing payments if the settlement is approved. A handful earn enough revenue that this new budget item will come without much pain, but many are likely to struggle to adapt.
The Stakes
For starters, the financial consequences of the settlement could be felt on all parts of campuses that have Division I athletics programs.
But aside from the huge sums, the settlement represents the first time the universities that operate big-time sports have agreed to share with athletes the revenue they have helped generate. For decades, the NCAA has fiercely insisted that the athletes are “amateurs,” not professionals who should be paid.
But recently, as payments to the top conferences from TV deals have grown into the billions and coaches’ salaries have ballooned, Division I athletes in high-revenue sports such as football and basketball have pushed for the right to share some of the proceeds. The public and the courts have listened and increasingly sided with them in their quest to be compensated for their time on the field.
It was this pressure, in part, that finally resulted three years ago in colleges’ allowing current players to earn money from their names, images, and likenesses. Still, the NCAA clung to its ban on direct pay from colleges — until now.
Now the most powerful institutions in college sports have been forced to acknowledge and accommodate that changing landscape. And more challenges not addressed by the settlement, including efforts to classify players as employees who can form unions, remain.
