NCAA signs off on deal that would change landscape of college sports — paying student-athletes

A major change could be coming for college athletes — they may soon start getting paid.

A tentative agreement announced Thursday by the NCAA and the country’s five biggest conferences to a series of antitrust lawsuits could direct millions of dollars directly to athletes as soon as fall 2025.

The nearly $2.8 billion settlement, which would be paid out over the next decade to 14,000 former and current student-athletes, “is an important step in the continuing reform of college sports that will provide benefits to student-athletes and provide clarity in college athletics across all divisions for years to come,” NCAA President Charlie Baker said in a joint statement Thursday night with the commissioners of the ACC, the Big 10, the Big 12, the Pac-12 and the SEC.

The federal judge overseeing the case must still sign off on the agreement, but if it is approved, it would signal a major shift in college sports in which students would play for compensation, not just scholarships, exposure and opportunities.

“This landmark settlement will bring college sports into the 21st century, with college athletes finally able to receive a fair share of the billions of dollars of revenue that they generate for their schools,” said Steve Berman, one of the lead attorneys for the plaintiffs. “Our clients are the bedrock of the NCAA’s multibillion-dollar business and finally can be compensated in an equitable and just manner for their extraordinary athletic talents.”

The NCAA and power conferences called the settlement a “road map” that would allow the uniquely American institution to provide unmatched opportunity for millions of students and write the “next chapter of college sports.”

The case, which was set to go to trial early next year, was brought by a former and a current college athlete who said the NCAA and the five wealthiest conferences improperly barred athletes from earning endorsement money. Former Arizona State swimmer Grant House and Sedona Prince, a former Oregon and current TCU basketball player, also contended in their suit that athletes were entitled to a piece of the billions of dollars the NCAA and those conferences earn from media rights agreements with television networks.

Michael McCann, a legal analyst and sports reporter at Sportico, told NBC News the case has two components that “move away from amateurism” — one that deals with how players are paid for the past loss of earnings, including money they could have made for name, image and likeness.

“The going forward part is that colleges can opt in, conferences can opt in, as well, to pay players, to share revenue with them, to have direct pay, and that would be of course a radical from the traditions of college sports,” McCann said, adding many would say that change is warranted. “Now the athletes, at least at some schools, will get a direct stake.”

The Washington Huskies and the Michigan Wolverines during the College Football Playoff national championship game in Houston on Jan. 8.Logan Riely / Getty Images file

Terms of the deal were not disclosed, though some details have emerged in the past few weeks. They signal the end of the NCAA’s bedrock amateurism model that dates to its founding in 1906. Indeed, the days of NCAA punishment for athletes driving booster-provided cars started vanishing three years ago when the organization lifted restrictions on endorsement deals backed by so-called name, image and likeness, or NIL, money.

Now it is not far-fetched to look ahead to seasons when a star quarterback or a top prospect on a college basketball team not only is cashing in big-money NIL deals but also has a $100,000 school payment in the bank to play.

A host of details are still to be determined. The agreement calls for the NCAA and the conferences to pay $2.77 billion over 10 years to more than 14,000 former and current college athletes who say now-defunct rules prevented them from earning money from endorsement and sponsorship deals dating to 2016.

Some of the money would come from NCAA reserve funds and insurance, but even though the lawsuit specifically targeted five conferences that comprise 69 schools (including Notre Dame), dozens of other NCAA member schools would get smaller distributions from the NCAA to cover the mammoth payout.

Schools in the Big Ten, the Big 12 and the Atlantic Coast and Southeastern conferences would end up bearing the brunt of the settlement at a cost of about $300 million apiece over 10 years, the majority of which would be paid to athletes going forward.

The Pac-12 is also part of the settlement, with all 12 current schools sharing responsibility even though Washington State and Oregon State will be the only league members left by this fall after the 10 other schools leave.

In the new compensation model, each school would be permitted but not required to set aside up to $21 million in revenue to share with athletes per year, though as revenues rose, so could the cap.

Athletes in all sports would be eligible for payments, and schools would be given the freedom to decide how the money is divvied up among sports programs. Roster restrictions would replace scholarship limits by sport.

McCann said the back pay would disproportionately go to some sports — such as football and basketball.

“The schools that I think that are certainly big football schools will probably opt in because they’re going to want to compete, they’re going to want to get the best players, because college football generates a lot of revenue,” he said. 

Whether the new compensation model is subject to the Title IX gender equity law is unknown, along with whether schools would be able to bring NIL activities in-house as they hope and squeeze out the booster-run collectives that have sprouted up in the last few years to pay athletes. Both topics could lead to more lawsuits.

“There are all sorts of areas of turbulence that could present themselves,” McCann said of roadblocks that could arise.

The settlement is expected to cover two other antitrust cases facing the NCAA and major conferences that challenge athlete compensation rules. Hubbard v. the NCAA and Carter v. the NCAA are also in front of judges in the Northern District of California.

A fourth case, Fontenot v. NCAA, creates a potential complication, as it remains in a Colorado court after a judge denied a request to combine it with Carter. Whether Fontenot becomes part of the settlement is unknown, and it matters because the NCAA and its conferences don’t want to be on the hook for more damages should they lose in court.

“We’re going to continue to litigate our case in Colorado and look forward to hearing about the terms of a settlement proposal once they’re actually released and put in front of a court,” said George Zelcs, a plaintiffs’ attorney in Fontenot.

The solution agreed to in the settlement is a landmark but not surprising. College sports have been trending in this direction for years, with athletes receiving more and more monetary benefits and rights they say were long overdue.

In December, Baker, the former governor of Massachusetts who has been on the job for 14 months, proposed creating a new tier of Division I athletics in which the schools with the most resources would be required to pay at least half their athletes $30,000 per year. That suggestion, along with many other possibilities, remains under discussion.

The settlement would not make every issue facing college sports go away. There is still a question of whether athletes should be deemed employees of their schools, which Baker and other college sports leaders are fighting.

Some type of federal legislation or antitrust exemption would most likely still be needed to codify the terms of the settlement, protect the NCAA from future litigation and pre-empt state laws that attempt to neuter the organization’s authority. As it is, the NCAA still faces lawsuits that challenge its ability to govern itself, including setting rules limiting multiple-time transfers.

“This settlement is also a road map for college sports leaders and Congress to ensure this uniquely American institution can continue to provide unmatched opportunity for millions of students,” the joint statement said. “All of Division I made today’s progress possible, and we all have work to do to implement the terms of the agreement as the legal process continues. We look forward to working with our various student-athlete leadership groups to write the next chapter of college sports.”

Federal lawmakers have indicated they would like to get something done, but while several bills have been introduced, none have gone anywhere.

Despite the unanswered questions, one thing is clear: Major college athletics is about to become more like professional sports than ever before.