Yahoo Sports Why this is a massive month for the future of college sports
More changes are coming to college sports. Or more accurately, some major, major changes should be kick-started next week, when the NCAA and power conferences are set to vote on whether to settle an antitrust lawsuit that could cost them more than $2.7 billion in damages.
A settlement in House v. NCAA is expected. That much is clear. But beyond those damages - which would be paid to past athletes who sued over not being compensated for the use of their name, image and likeness (NIL) in television broadcasts - a settlement would also establish a system for schools to share revenue directly with athletes for the first time. According to multiple reports, revenue sharing would be a choice for each school and initially capped around $20 million per year. And that’s where everything would get more complicated.
“When a number like $2.7 billion gets thrown around in a settlement, and a number like $20 million a year gets thrown around as the number that the school can directly share with the athletes, kids and parents are going to care, and they’re going to have a lot of questions,” said Jim Cavale, the founder and CEO of Athletes.org, one of the organizations hoping to represent athletes in future bargaining talks. As of now, though, discussions have not included collective bargaining rights for athletes, meaning the plaintiffs’ lawyers are negotiating the next iteration of college sports.
“They’re going to be asking the schools: Why $20 million?” Cavale continued. “Who gets what? How much does football get? How much does each player get? What about Title IX? Scholarships?”
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‘Athletes are going to get paid’
If the sides agree on a settlement in the near future, the process would be far from over. Judge Claudia Wilken would have to approve it. From there, it would still take months to iron out the finer points. And if a House settlement does establish revenue sharing - which would include money from television deals, ticket sales and sponsorships - it wouldn’t begin until the fall of 2025.
In the meantime, here’s a look at how and why this month became such an inflection point (based on conversations with more than a dozen people in the industry, including conference commissioners, athletic directors, athlete advocates and lawyers, among others):
-- The House defendants - the NCAA, SEC, Big Ten, ACC, Big 12 and Pac 12 - want to settle for two main reasons. The first is that, if they go to trial in January and lose, any damages would be tripled and they would be on the hook for a much bigger number than $2.7 billion. And the second is that, in that scenario, the damages would probably be due right away. According to Yahoo Sports and ESPN, the proposed settlement would allow the NCAA and its schools to instead pay the damages out over a 10-year period. The NCAA, conferences and schools much prefer that avenue.
-- Because the potential damages are so high, and because a trial loss could bankrupt the NCAA, the plaintiffs have leverage to also negotiate for a revenue sharing model for current and future athletes. Again, this would be optional for schools, though the idea is it would be necessary to stay competitive in at least football and men’s and women’s basketball. According to Yahoo Sports and ESPN, proposed revenue share caps - that $20 million figure - were calculated by taking about 22 percent of the average power conference school’s main revenue streams (including TV money and ticket sales, excluding donations). It is expected that the caps would rise with revenue over time.
-- House is not the only major antitrust case facing the NCAA. That’s very important here. Jeffrey Kessler, one of the lead plaintiffs’ attorneys, is also the lead lawyer for Hubbard v. NCAA (which seeks back compensation for before athletes were allowed to receive education-related payments) and Carter v. NCAA (which challenges current rules about athlete compensation). The House settlement would include both Hubbard and Carter, according to multiple people familiar with the discussions. But another antitrust case, Fontenot v. NCAA, matters, too.
The plaintiffs in Fontenot, also seeking billions in compensation for television broadcasts, have a different legal team from the three other suits. Earlier this week, though, Yahoo Sports reported that a hearing scheduled for Thursday for Fontenot will focus on whether to consolidate with them. That’s also, as of this weekend, the reported deadline for the NCAA and power conferences to vote on whether to settle House. If all four cases are wrapped into the House settlement, the NCAA and power conferences could in theory be better protected from similar litigation in the future.
“The two most important voices are the college athletes and Jeffrey Kessler,” said Chase Griffin, a UCLA quarterback who testified in Congress on behalf of athletes in January. “The schools, these conferences, they are getting killed in court. The settlement is coming soon. ... Athletes are going to get paid. Now at this point it’s just about the logistics. There really is not much overhaul that needs to happen. The budgets are there.”
“It’s this month or it’s going to trial,” Kessler said of settling House. He declined to discuss the Fontenot case, because he’s not working on it, or any specific settlement details. But based on what has been publicized, college sports leaders are already bracing for what would remain unresolved.
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‘A big rush job’
Those uncertainties include how revenue would be distributed school by school; how Title IX applies; how donor-funded NIL collectives would fit into this new model; how much antitrust protection the NCAA, schools and Congress would actually have after a settlement; and the still-burning question of whether athletes will become employees at some point down the line. House has nothing to do with employment. But between federal court and the National Labor Relations Board, multiple cases could make athletes employees, meaning athletes could be eligible for minimum wage, additional employee benefits and workers’ compensation in the future.
On the Title IX implications for a House settlement, Arthur Bryant, a leading Title IX lawyer, said there is no gray area when it comes to whether male and female athletes should receive the same amount of money in a revenue sharing model: “Title IX requires equal treatment of male and female athletes. How much money is involved, whether teams or programs are making money or losing money, doesn’t matter.”
And on just how much antitrust protection a settlement would offer the NCAA, the answer is murky at best. Any agreement would only initially apply to current athletes. There would be nothing to stop an incoming freshman from suing over, say, the proposed revenue sharing caps. But according to an ESPN report, Kessler and Steve Berman, the other lead plaintiffs’ attorney in House, believe they have solved that problem with an opt-in system.
Every fall, incoming athletes would have the choice to opt into the revenue sharing agreement or challenge it in a hearing. Berman told ESPN: “They would have to come and say, ‘I don’t think this is fair.’ That would be a hard burden to prove.”
Before this option emerged, athlete advocates and antitrust experts figured that if the NCAA got protection from immediate litigation, it would have come in one of two forms: Baking the settlement terms into a collective bargaining agreement (which would have always been difficult because college athletes are not unionized), or a congressional bill that included some level of antitrust protection (which the NCAA has been lobbying for unsuccessfully for years).
Four different officials, at the conference and school level, were dubious about whether the opt-in system would prevent future compensation-related lawsuits. But if House, Hubbard, Carter and Fontenot were all resolved together - then the opt-in system were put in place - one power conference official in favor of settling said: “That could mean 10 years of much better protection than we’ve had. That counts for a lot.”
“This is becoming a big rush job, and that’s a big red flag,” said Jason Stahl, founder and executive director of the College Football Players Association. “The NCAA wants to rush it for obvious reasons because they don’t want to go to trial. But it’s starting to seem like everyone wants to. This [opt-in system] feels like a lot of hope and wishful thinking, like: ‘We can get this to fly, we can get this to fly.’ But it could create new problems in addition to the problems we already have.”
Stahl is in the camp advocating for collective bargaining. He and the CFBPA, which Stahl hopes would represent college football players at the bargaining table, recently pitched a congressional bill that would grant athletes collective bargaining rights without making them employees. It’s another tough needle to thread, though Stahl said he believes it would favor athletes and help get everyone past an evident sticking point. Cavale’s Athletes.org, which has more than 3,000 current athletes signed up as members, has proposed a similar model in the past. The CFBPA’s membership is a mix of current and former football players, and its number of active athletes is in the “low hundreds,” according to Stahl.
Cavale, long a champion of revenue sharing, is upping the volume on his calls for collective bargaining between athletes and their schools - or their conferences - right after the sides settle House. Despite viewing each other as competition to represent athletes, he and Stahl agree that caps shouldn’t be set without current athletes in the room. As of now, it doesn’t seem they will get that wish. Stahl also wonders why hard caps should exist at all, floating a model in which schools could spend past a soft cap and pay some sort of overage fees. Administrators argue that, with scholarships and other benefits, the athletes’ revenue share would actually be much higher than the proposed 22 percent for direct payments.
“We haven’t heard the NCAA or their colleges say they’re ready to agree to collective bargaining,” Kessler said, contrasting the House settlement talks with when owners of professional sports teams wanted to settle past antitrust cases with a CBA. “The difference is on the defense side.”
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Looking forward
Earlier this month, Stahl traveled to Washington and discussed the collective bargaining idea with eight congressional offices across the Senate and House. That same day, NCAA President Charlie Baker was also meeting with lawmakers in Washington. The NCAA and power conferences have spent a lot of time and lobbying money on Capitol Hill in the past two years. Even with a settlement looming, that’s not expected to slow down. No, the NCAA is more likely to hit the gas on its lobbying efforts, bringing a new angle to its plea for congressional help: We cleaned up our act with revenue sharing, now please help us finish the job.
At the top of the NCAA’s wish list, now that it couldn’t score an antitrust exemption before the House case came to a head: a special status for college athletes that says they cannot be employees; and a preemption of state laws that would allow the NCAA to set rules without being superseded or sued by individual states. In early March, the NCAA temporarily changed NIL recruiting rules because of a court decision in Tennessee. In April, Virginia announced that, starting July 1, in-state schools can directly pay athletes through NIL deals.
That is currently against NCAA rules. Virginia’s attorney general appears to be daring the NCAA to try to enforce them.
But should the settlement happen as planned, the NCAA’s work wouldn’t stop in Washington. Its Division I membership has never been more stratified. For example, non-power-conference administrators are frustrated with the models for how the House damages could be paid out. Because the NCAA is footing the entire bill, a large chunk will come out of the March Madness television money that is annually distributed to conferences big, small and everything in between. But because the NCAA and power conferences were sued - and because the main class of plaintiffs are power conference athletes - nonpower-conference officials feel the major conferences should shoulder even more of the load, perhaps dipping into their massive College Football Playoff revenue.
The NCAA has nothing to do with the CFP, thus none of that money will be used to pay damages. Smaller conferences know that, even if they object to an economic setup that insulates CFP cash from the biggest financial liabilities for House. ESPN reported Friday that more than half of the damages are expected to come from NCAA tournament revenue distribution.
To be clear, the power conferences would handle a larger share. The latest document sent to schools, reported by Yahoo on Friday, said they would be responsible for 40 percent of the damages compared with 17 percent for the Group of Five and 2 percent for the smaller leagues. The nonpower conferences are just much more reliant on NCAA tournament payouts for year-to-year expenses. When factoring in legal fees, revenue sharing with athletes and additional scholarships if the settlement expands football rosters, power conferences could be looking at around $30 million a year while the damages are being paid out, according to Yahoo.
Some of that is a choice. Some of it is not. Regardless, administrators are ready to know just how much money they need to carve into their budgets for the next decade, even if they don’t love the answer.
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