How will the NCAA’s House settlement impact Kentucky college sports? It’s complicated.

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The consensus is that NCAA sports at the power conference level reached a transformative moment last week.

Yet the details on the impending changes are murky.

What we know is that rather than risk having to pony up a potential $4 billion in damages as a result of three separate antitrust suits filed by ex-athletes, the NCAA and the major college sports conferences agreed to settlement terms.

If accepted by U.S. District Court Judge Claudia Wilken, the settlement agreement will provide $2.75 billion in damages to former Division I athletes who played from June 15, 2016, until November 3, 2023. Those athletes were denied by the rules in place at that time of the chance to benefit from their names, images and likenesses.

Of greater future significance, the settlement also gives college athletics departments the right to spread some $22 million a year in revenue-sharing money among their athletes. Major-college sports programs could start paying that money to their players as early as the 2025-26 academic year.

If these changes come to pass, what will they mean for college sports in Kentucky? Though much is unknown, we are going to try to answer some common questions.

So who will be paying the $2.75 billion to the former athletes?

According to Ross Dellenger of Yahoo Sports, the NCAA will pay 41% of the damages ($1.1 billion) while the NCAA Division I schools will fund the other 59% ($1.65 billion).

The schools from the five power conferences — the ACC, Big Ten, Big 12, Pac-12 and SEC — will pay a combined figure of some $664 million. The other 27 non-power conferences will pay some $990 million.

Why did the college sports hierarchy agree to pay so much money up front rather than contesting the lawsuits in court?

If what is commonly referred to as the “House settlement” goes through, the NCAA and the big-time conferences will settle three different antitrust cases they were likely to lose in court.

House v. NCAA was brought by ex-Arizona State swimmer Grant House (and others) and asserted that the NCAA and Power Five conferences were violating antitrust law by preventing conferences from sharing broadcasting and other revenues with players.

Hubbard v. NCAA was brought by ex-Oklahoma State running back Chuba Hubbard (and others) and sought damages for college athletes who were not allowed to receive education-related benefits.

Carter v. NCAA was initiated by former Duke defensive tackle DeWayne Carter (and others) and claimed the NCAA and Power Five conferences were violating antitrust law by preventing individual schools from offering athletes financial benefits beyond their scholarships.

Does this mean there will be no more major lawsuits vs. the NCAA and/or the high-level college sports conferences?

It does not.

Presently, there is a fourth antitrust suit, Fontenot v. NCAA, brought by ex-Colorado running back Alex Fontenot (and others) that is not part of this settlement.

The claims in the Fontenot case are similar to those in Carter v. NCAA and assert that “amateurism rules” that prevent college athletes from benefiting from “pay for play” agreements violate antitrust laws.

As will be addressed below, it is also possible that some components of the proposed House settlement may themselves lead to further litigation.

Why are so many players (and their attorneys) going after the NCAA on antitrust grounds?

In the 2021 case NCAA v. Alston, the U.S. Supreme Court ruled 9-0 against the college sports governing body’s attempt to prevent schools from providing extra education-related benefits — think free laptops, musical instruments, paid post-graduate internships, etc. — to athletes.

While concurring in the unanimous decision, Justice Brett Kavanaugh wrote a withering critique of the NCAA’s concept of “amateurism.”

“Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate,” Kavanaugh wrote. “And under ordinary principles of antitrust law, it is not evident why college sports should be any different. The NCAA is not above the law.”

Since Kavanaugh’s concurrence, the NCAA’s model of “amateurism” has been perceived as all but legally dead.

Will Kentucky’s NCAA Division I schools have enough money to share revenue with their athletes?

According to the U.S. Department of Education’s Equity in Athletics database, the University of Kentucky athletics department had a budget of $166,220,830 for fiscal year 2023 (the most recent data available).

Had UK been sharing some $22 million with its athletes in that fiscal year, that would have been roughly 13.24 percent of the overall UK sports budget. So presumably, Kentucky would have needed to either grow its revenue by that amount; cut spending in other areas by that amount; or do some combination of both in order to cover the new expense.

The University of Louisville in 2022-23 had an athletics budget of $152,601,594. A $22 million outlay in revenue sharing with athletes would have comprised 14.42 percent of the U of L sports budget.

Among the commonwealth’s other NCAA Division I schools, budget realities will make any revenue sharing with athletes difficult. For 2022-23, the athletics budgets at Kentucky’s other D-I universities were:

Western Kentucky $25,400,653; Eastern Kentucky $23,088,272; Murray State $18,977,450; Bellarmine $14,268,191; Northern Kentucky $13,135,573; and Morehead State $9,349,505.

So if power-conference schools suddenly need to come up with $22 million in additional revenue, who is likely to feel the pain from that effort?

Layoffs from athletics department staff could be one result. In April, Texas A&M athletics laid off more than a dozen staff members, including several highly compensated administrators. New Aggies athletics director Trev Alberts told the Bryan-College Station Eagle the “reorganization related to existing and emerging threats to our business model.”

The facilities “arms race” may slow. The “need” to, say, have a waterfall in one’s football training facility would seem less in an era when recruits are likely more concerned about their earning potential should they choose your school than what over-the-top amenities a university has on offer.

Fans/boosters could bear some of the cost in the form of higher ticket prices and/or required “donations” to buy season tickets.

As a worst-case scenario, it’s possible that individual sports programs could be dropped as a cost-slashing move. Due to Title IX considerations, men’s sports that do not produce revenue would seem most vulnerable.

In the revenue sharing with athletes, will all players be paid the same?

That probably will be at the discretion of individual schools but it seems unlikely.

Essentially, schools will be asking players to sign over their NIL rights in exchange for revenue-sharing money. Obviously, the more famous a player is, the more their NIL rights should be worth.

For instance, had revenue sharing existed during the current school year, it would have been hard for Iowa to justify paying a third-string football offensive guard the same thing that nationally celebrated women’s basketball star Caitlin Clark received.

What are the Title IX ramifications of the proposed revenue sharing?

Title IX of the U.S. Government’s Education Amendments of 1972 states that “no person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving federal financial assistance.”

Since its implementation, that edict has opened dramatic new opportunities for women to participate in scholastic and intercollegiate sports.

Whether Title IX applies to the revenue sharing proposed in the House settlement is a much-debated topic.

If power conference schools have $22 million in revenue sharing available to distribute to athletes (a figure that comes from 22% of an average power conference school’s athletics revenue), does it have to be shared $11 million each with men’s and women’s athletes at individual schools?

Or should that money go disproportionately to athletes from the sports, football and men’s basketball, whose lucrative television rights essentially pay for the rest of major college athletics?

It was mentioned above that the House settlement could lead to more lawsuits. How so?

If universities do not distribute revenue sharing funds 50-50 with their male and female athletes, it seems inevitable that they will face Title IX lawsuits.

Yet if the universities are seen as trying to artificially limit the potential earnings of football and men’s basketball players by seeking to prevent their reaping their fair market value, they may again find themselves in court defending against new antitrust accusations.

What will happen to booster collectives that have arisen during the name, image and likeness era to, essentially, pay players?

There seems to be a push for universities to bring collectives “in house” and try to transition them into marketing arms designed to help players generate NIL revenue. That would give universities — and presumably, the NCAA — greater oversight of commercial agreements entered into by players.

Also, there is talk of a new enforcement apparatus that will seek to determine whether players are entering into “genuine NIL deals” (which would be allowed) or whether they are just accepting “pay for play” payments from boosters (which would not be allowed).

(Skepticism is probably warranted over the ability of the college sports hierarchy to draw such NIL distinctions in a way that will pass legal muster.)

Meanwhile, if it is judged that Title IX requires splitting revenue sharing 50-50 between men’s and women’s athletes, then schools are probably going to need other funds in addition to the $22 million in revenue sharing to provide fair market value to their football and men’s basketball players.

That could provide a rationale for booster collectives to continue to operate much as they are now.

Does sharing revenue with college athletes make them employees of the schools?

As an institution, college sports says the answer to that question is no.

However, this is another area where the NCAA and the major conferences may have gotten themselves into a legal pickle.

It seems clear that the powers that be in college sports are desperate to attach some kind of cap onto to what players can earn.

However, barring the U.S. Congress granting college sports an antitrust exemption, the only way any kind of “earning cap” on college athletes seems likely to stand up in the courts is if it is collectively bargained.

Yet you would presumably have to recognize the athletes as employees to enter into collective bargaining with them.

For the Kentucky Wildcats, will there be competitive implications from the world potentially created by the House settlement?

Let’s hypothetically set aside Title IX considerations, and say the $22 million in revenue sharing is distributed at Southeastern Conference universities on the basis of market popularity.

In the football-mad SEC, it seems likely that most schools would dedicate much of their revenue-sharing capacity to that sport.

At Kentucky, the eight-time NCAA champion men’s basketball program has long been the university’s sports flagship. However, in the current era of college athletics, it is football that drives conference alignment and is the most vital program to an athletic department’s overall financial profile.

Given those dual realities, deciding how to dole out the $22 million in revenue sharing between football and men’s basketball could become a major headache for UK athletics administration.

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