With the landmark House v. NCAA settlement tentatively set for a final approval hearing on April 7, the NCAA has released guidelines as to how it expects funds to be disbursed by member schools.
If the settlement is approved as expected, it will allow for the payment of both back pay to former student-athletes who competed prior to NIL rule changes and payment to current student-athletes. The back pay will consist of $2.78 billion and will be divided among Power Five schools, with non-football/basketball athletes eligible for about 5% of the funds.
As for payments to current student-athletes, under the terms of the settlement, a revenue-sharing model will be created that will result in payments made over the course of ten years. Schools and athletes will be given the option of paying 22% of their annual revenue (an average of about $23 million per Power Five school) directly to student-athletes, thus making college athletics analogous to professional sports. However, a school can elect to share any percentage of its athletic revenues as long as the total payout does not exceed $20.5 million annually. Schools can make the decision as to which student-athletes, if any, receive NIL payments.
In addition, under the settlement, the NCAA’s enforcement authority over third-party NIL deals will no longer extend to all third parties. Instead, restrictions will focus only on groups “of entities and individuals closely affiliated with the schools,” such as collectives. Any NIL deals involving these “associated entities or individuals” must be approved through a third-party clearinghouse. Student-athletes will be required to disclose NIL deals exceeding $600 in total to an as-yet designated enforcement entity, and their universities will be required to disclose all payments provided under the settlement. Any disclosed deals that are deemed to be impermissible by the new enforcement entity can be challenged by student-athletes through neutral arbitration.
Finally, on August 1, 2024, the NCAA introduced new scholarship protections, prohibiting schools from reducing, canceling, or failing to renew athletic scholarships in NCAA sports for athletic reasons, including injury, physical or mental illness, or athletic ability. The settlement will not alter any of the new scholarship guarantees.
The earliest schools can begin making payments under the new revenue-sharing model will be July 1, 2025. All offers must be contingent on final approval of the settlement, and deals may not extend past the time of a student-athlete’s eligibility, except for the use of content the student-athlete made during her eligibility.
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Article by Katherine Weaver
