The landscape of college sports is set to transform significantly starting July 1, as a federal court approved a legal settlement that allows schools to directly pay their athletes. Judge Claudia Wilken among others indicated that this deal will lead to “ground-breaking changes” in the NCAA’s regulations concerning student-athlete compensation.
This decision marks the culmination of a fight that has persisted for over two decades, aimed at allowing players to gain a share of the revenues generated in an industry that has long deviated from its amateur origins. Many involved, including athletes and university officials, regard this approval as a fresh beginning rather than the conclusion of a long-standing battle.
Athletic departments at universities will have new financial freedoms under this settlement, allowing them to allocate an estimated $20.5 million in new payments to their athletes. This figure is derived from a formula that sets compensation at 22% of the average annual revenue from ticket sales, broadcast rights, and other financial streams at FBS-level schools. Furthermore, this cap is expected to rise regularly throughout the next decade, correlating with increased revenues, and potentially surpass $30 million annually by the end of the settlement term based on expectations noted by sports economist Daniel Rascher.
While schools have discretion over how to distribute these funds among their athletes, many major athletic programs suggest that the majority of this money will be directed towards football and men’s basketball players—up to 90% in some cases.
Additionally, athletes will retain the right to profit from their name, image, and likeness (NIL). A newly formed organization, referred to as the College Sports Commission, aims to uphold the integrity of NIL agreements, working to prevent boosters from using these deals as a guise for salary payments, a situation that has grown increasingly common in recent years. Unfortunately, numerous teams are already collaborating with booster collectives to find loopholes, leading to speculation that football and basketball programs may need to devise strategies to supplement salaries beyond the set limits in order to maintain competitive teams.
Despite this settlement resolving several federal antitrust lawsuits that threatened the NCAA’s financial stability, it does not eliminate the myriad of other legal challenges the college sports landscape faces. Agreements signed by athletes with their schools could inadvertently lend support to arguments within ongoing lawsuits advocating for some college athletes to be considered employees of their respective institutions.
The NCAA is still dealing with numerous legal disputes regarding policies dictating the duration of an athlete’s eligibility in college sports. Legal experts predict that this recent settlement could instigate a new wave of lawsuits. Areas such as the agreed-upon salary cap and the restrictions imposed by the College Sports Commission on athlete-third party deals may become focal points for future antitrust claims. Additionally, there are concerns surrounding potential violations of Title IX, which mandates gender equity, should schools disproportionately allocate the new payments to men’s sports teams.
Looking ahead, NCAA president Charlie Baker and other officials assert that the key to resolving these ongoing legal disputes lies with Congressional support for new legislation. Baker emphasized the necessity for a law to prevent athletes from being classified as employees and to furnish the NCAA with an antitrust exemption that would enable them to enforce regulations limiting players’ earnings.
In an open letter, Baker expressed confidence that the recent settlement would be seen as beneficial for student-athletes and as a comprehensive guide for legislative reform moving forward. Despite previous lobbying efforts yielding minimal success, the NCAA hopes that the substantial concessions made in this settlement will motivate quicker action from federal lawmakers.
On the other hand, a rising faction within the athlete community, alongside their advocates, believe that collective bargaining may offer a pathway to address the remaining legal issues. In contrast to professional sports that can negotiate salary caps and player transfer protocols through player unions, college athletes are currently unable to unionize due to their non-employee status. This lack of collective organization raises questions about the future legality of the limits established in this new settlement, especially in light of potential antitrust scrutiny.
Sedona Prince, a key plaintiff involved in the lawsuits that led to this settlement, articulated the sentiment that this development should serve as a catalyst for greater player representation and influence in college sports. Having recently concluded her college basketball career, Prince remarked on the monumental shift in the landscape. “We just walked into a new world,” she stated, reflecting on the settlement as groundwork for future advancements in player rights.
In light of this new framework, groups like Athletes.org are mobilizing to create player associations that could eventually evolve into unions, thereby providing athletes with a unified voice in negotiations.
As the battle for the future of college sports continues within courtrooms and legislative corridors, both players and university administrators are bracing themselves for the inevitable complexities that lie ahead. An evolution in college athletics has begun, but the journey to equitable treatment and representation for all athletes continues.
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