College leaders, attorneys gearing up to 'clarify' but not amend booster language in House-NCAA settlement

Attorneys remain confident that the NCAA’s settlement in the House antitrust case will be approved by a California judge after they provide her clarity on key items.

Plaintiff attorneys, as well as lawyers for the defendants in the case from the NCAA and power conferences, are gearing up to each file briefs with the court as soon as this week, they told Yahoo Sports. The briefs are expected to address a range of issues that District Judge Claudia Wilken, of the Northern District of California, raised during a preliminary approval hearing in the case on Sept. 5.

Though she openly expressed support for the settlement, Wilken ordered the parties to re-examine portions of the case before she would approve the deal. She most notably found “problems” with language in the document that limits third-party compensation to athletes, especially from boosters or booster-led collectives.

“The judge had some questions. I think it was actually more of a lack of clarity,” said Jeffrey Kessler, one of the lead plaintiff attorneys in the case. “We expect to address those questions and we don’t expect it to be a problem for the judge to approve [the settlement] the next time we go back.”

Language relating to third-party endorsement (NIL) deals is expected to only be “clarified” and not amended or changed in a significant way, several college administrators told Yahoo Sports. Any significant change to language regulating third-party pay is described as a “non-starter” and would likely lead many within the industry to choose trial as an alternative.

This particular section of the settlement is at the “core” of the agreement, NCAA counsel contends. It requires any non-school, third-party NIL agreements with athletes to be approved through a yet-to-be-defined clearinghouse. The language specifically prohibits boosters from entering into deals with athletes unless the booster can prove that the pay is for a legitimate endorsement deal and is of “fair-market value,” something expected to be policed by the clearinghouse.

Changes to this would essentially eliminate one of the goals of NCAA and power conference leaders: to gain protection to enforce rules around NIL deals with athletes from boosters and other third parties.

Lead plaintiffs attorneys, Kessler and Steve Berman, have met with NCAA counsel in the days since the hearing as they strategize on an approach over an assortment of issues, including the third-party pay. When asked specifically about the third-party language related to boosters, Kessler said, “I think all of those issues can be worked out.”

Attorneys must file a response to the judge’s concerns by Sept. 26. Wilken has not yet set a hearing date and she might not, Kessler said. Wilken could issue a ruling after examining the briefs. However, many expect another hearing to be called where attorneys will present oral arguments defending the settlement terms, specifically the third-party language.

At the Sept. 5 hearing, Wilken took exception to the NCAA and power leagues planning to maintain their rule against “pay-for-play,” a long-time amateurism policy that prohibits boosters and other outside parties from paying athletes to specifically play sports. During the hearing, Wilken was left puzzled upon learning that the NCAA’s pay-for-play prohibition would remain despite the settlement permitting schools to directly share revenue with athletes.

She also expressed concern about how the NCAA and power conferences could enforce such a policy, questioning the ambiguous definition of a booster; the exact enforcement arm or entity for policing third-party deals; and the fact that a capped, school-led revenue-sharing model may mean some athletes who are now receiving uncapped booster money could see their pay decrease.

She told attorneys to “go back to the drawing board” to “fix” the language while keeping in mind “that taking things away from people doesn’t work well.”

If there is another hearing, the defense of the settlement from plaintiff attorneys Kessler and Berman is critical. Kessler made an interesting decision during the Sept. 5 hearing, telling the judge that the plaintiffs would be willing to strike the third-party enforcement section from the agreement.

It was a shocking revelation and one that left the NCAA counsel, Rakesh Kilaru, aghast. Kilaru told the judge that the language is “core” to the agreement and expressed doubt that a settlement would be reached if it was removed.

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The House case is but one of three cases — Hubbard and Carter are the others — that the NCAA is attempting to consolidate in a settlement as a way to limit future lawsuits. The Carter case may pose the trickiest of them all.

A separate antitrust case, Fontenot v. NCAA, which is similar to Carter and was filed before it, poses a threat to the consolidated settlement. The NCAA wishes for Fontenot’s claims to be resolved as part of the Carter case, but Wilken declined to do so earlier this month, sending the case back to its home in Colorado.

However, the bigger issue remains the clause in the settlement regarding third-party NIL deals — a bugaboo that many around the sport expected to be the target of scrutiny.

The settlement’s goal is to shift the payments to athletes from outside entities — such as boosters — to the schools themselves, permitting universities to all share the same amount of pool money with athletes on an annual basis. The pool’s cap — 22% of an average of power conference school revenues — will apply to all schools and will fluctuate based on built-in escalators and school revenue increases. Projections put the Year 1 cap at $20 million-$23 million.

Under the current system, most power conference booster collectives distribute between $5 million-$15 million annually to athletes. Several SEC football coaches told Yahoo Sports in July that, under the new revenue-share model, they anticipate distributing $12 million-$17 million to their football rosters.

Wilken did not question the pool or the fact that Title IX is not addressed in the settlement. She instead turned her attention to the clause prohibiting pay to athletes from boosters and the capped revenue sharing system.

She questioned not only the policing of that clause — “How are you going to enforce something like that?” — but she also took issue with the definition of a “booster” itself. She also suggested that athletes now making “large sums” from boosters could see a pay decrease under the new capped system — something that many in the industry do not expect.

Spearheaded by the power conferences, college leaders are vetting outside entities to manage and enforce the new revenue-sharing model. Third-party endorsement deals — those not from the schools — are to be submitted to a clearinghouse that then determines their validity.

This is another concept with which Wilken took issue. As Kilaru described the process during the Sept. 5 hearing, she vigorously shook her head, in clear disagreement that such a situation could exist.