What’s at stake with the House v. NCAA settlement? Goodbye amateurism, hello revenue sharing
By Lauren Merola, Ralph D. Russo and Justin Williams
College athletes are about to get paid — directly, by their universities.
That’s a California judge approves a landmark, multi-billion-dollar settlement of three separate antitrust cases against the NCAA and college sports’ power conferences. Judge Claudia Wilken of the Northern District of California gave preliminary approval to the settlement in October and will hold a hearing Monday — the day of the men’s NCAA Tournament championship game — before issuing a final decision.
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Whether that decision comes as soon as Monday remains to be seen. But if approved, schools will be permitted to directly pay athletes through about $20.5 million in revenue sharing during the 2025-26 athletic year, and the amateurism model that has ruled college sports for more than a century will nearly cease to exist at the Division I level.
In addition, nearly $2.8 billion will be set aside as back-pay damages for athletes dating back to 2016 who did not have the opportunity to be compensated for their name, image and likeness (NIL).
At a time when collegiate athletics faces more questions than answers, here’s what we know about the settlement and how it will reshape the landscape if it is approved.
What does the settlement do?
The settlement would resolve three separate antitrusts: House v. NCAA, Hubbard v. NCAA and Carter v. NCAA. “House” refers to former Arizona State swimmer Grant House, who brought a federal lawsuit in 2020 seeking damages for athletes who could not earn NIL money. The three lawsuits were among a flurry filed against the NCAA and its power conferences in recent years related to college athletes’ earnings.
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The NCAA had an incentive to settle because it could have owed as much as $20 billion in damages had it lost the House case.
The settlement’s wide-ranging effects would benefit former athletes while setting up a new revenue-sharing era for current athletes.
NIL compensation for current and former athletes
A major component of the settlement is nearly $2.8 billion in back-pay damages the NCAA will owe to current and former Division I athletes who competed since 2016, which the association plans on paying in installments over 10 years. (The statute of limitations went back to 2016 when the suit was filed.)
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Most of that money will go to power-conference football and men’s basketball players, given those media rights generate the most revenue among college sports.
Revenue sharing with current athletes
The settlement allows for a revenue-sharing plan that lets schools start directly paying players. It is expected to start at roughly $20.5 million and increase on an annual basis. (The annual number will be calculated as 22 percent of Power 5 schools’ average athletic revenue.)
Revenue-sharing payments are not a cap on how much money athletes can make under the settlement. They will still be permitted to sign independent sponsorship deals and receive NIL payments from approved third parties.
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Changes to scholarship limits
In another new development from the settlement, scholarship limits will be replaced by roster limits. Schools can allocate scholarship funds — partial or full — as they see fit, potentially allowing more athletes to fund more scholarships than before, but also eliminating potential roster spots for walk-ons or partial-scholarship athletes.
How could this change the current NIL system?
Two previous court cases — Alston v. NCAA and O’Bannon v. NCAA — set the table for the NCAA to remove restrictions on NIL payments in July 2021.
Quite predictably, NIL became a recruiting tool and a de facto pay-for-play device, but with fans and donors, rather than the universities themselves, footing the bill for players to represent their schools through NIL collectives, organizations that fundraised with the intent to direct that money to a school’s athletes through NIL deals.
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NIL deals have been mostly private transactions that don’t live in the public record. That could change as the settlement knocks out the last semblance of amateurism.
The settlement would put national NIL guidelines in place, mandating the recording of any third-party NIL payments over $600 to a clearinghouse run by the accounting firm Deloitte (more on that later).
NIL collectives will be impacted by the settlement as well. Some schools intend to absorb collectives (and any existing funds and resources) into the athletic department, or shutter them all together. Others are keeping the collective separate as another means to facilitate those outside, over-the-cap NIL deals.
What are schools doing to prepare for the settlement?
The short answer? Trying to find the $20.5 million a year for revenue sharing.
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The vast majority of schools are having to figure out where those revenue share funds will come from. Some schools are raising ticket and concession prices — what Tennessee is billing as a “talent fee.” Others are pushing fundraising campaigns. All are adjusting budgets in some fashion, trying to find any cuts or pockets of inefficiency that can be redirected toward the near-$20.5 million cap.
This will be easier for some schools than others — particularly those with the biggest budgets atop the Big Ten and SEC — but even the most well-resourced programs are having to adapt. And there are plenty of schools that won’t hit the top of that cap, at least not in Year 1.
Once those funds are earmarked, the next step is determining how to distribute those dollars. Most FBS schools that opt in plan to follow the formula used for the back-pay damages: 75 percent to football, 15-20 percent to men’s basketball, 5-10 percent to women’s basketball and whatever is left to Olympic and non-revenue sports. However, there are no stipulations for how the funds are allocated, as long as they stay under the cap. Which is already creating internal jockeying over which teams get how much.
Scholarships are a similar deal. Under the new roster limits, some schools are increasing the number of overall scholarships — Ohio State announced it will add 91 across all programs — while others are reducing or redistributing the number of available scholarships per sport, which is already impacting high school recruiting for non-revenue sports in particular.
Will this widen the gap between power and non-power conferences?
Yup! It’s simple: The richest programs will have the easiest time allocating revenue share and additional scholarships, along with finding ways to generate those over-the-cap NIL deals. It’s much more accessible for Power 4 schools, bringing in tens of millions of dollars a year in television revenue, to max out revenue sharing compared to the Group of 6, in the same way it’s much easier for schools like Ohio State or Texas to earmark that $20.5 million a year and orchestrate outside marketing deals for their star players.
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None of this guarantees success — we’ve already seen plenty of instances of programs investing NIL poorly, or without positive results. But the more money you have in college sports, the larger your margin for error.
On a more micro level, it will be interesting to see how different approaches and philosophies play out. Will the Big East have an advantage in basketball without needing to fund football? Will differences in distribution allotments between schools be reflected on the field and court?
But big-picture, the power conferences are best positioned to succeed in the House settlement era. Same as it ever was.
What’s next for the NCAA?
As college sports become more professionalized, at least at the highest levels of competition, the NCAA’s role as a governing body is diminishing.
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But it’s not going away.
The power conferences that were named defendants in the massive antitrust lawsuits covered by the settlement are in the process of creating a new enforcement and regulatory structure outside the NCAA. The new governing body will be responsible for overseeing NIL deals between athletes and third parties that don’t fall under the revenue-sharing agreements between schools and athletes.
Deloitte has been contracted to assess fair-market value of those deals. The new governing body will also be tasked with monitoring how much schools are spending in revenue sharing to ensure they stay under the agreed-upon cap.
The new body will also handle enforcement of the financial rules related to the so-called cap, investigations into possible violations and handing down penalties — essentially taking over an area of college athletics the NCAA has struggled to for decades to police: the influx of improper benefits.
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So what does that leave for the NCAA to do? Well, mostly run national championships in 91 sports sponsored by the association in three different divisions, including March Madness basketball. The NCAA will also still be charged with the standardization of playing and administrative rules for sports and overseeing the academic eligibility of athletes.
This article originally appeared in The Athletic.
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