Sources: NCAA in talks to settle NIL antitrust case

The leaders of college sports are involved in “deep discussions” to reach a legal settlement that would likely lay out the framework for sharing revenue with athletes in a future NCAA business model, sources told ESPN.

The NCAA and its power conferences are defendants in an antitrust class action lawsuit, House v. NCAA, which argues that the association is breaking federal law by placing any restrictions on how athletes make money from selling the rights to their name, image or likeness. The case is scheduled to go to court in January 2025. If the plaintiffs win at trial, the NCAA and its schools could be liable to pay more than $4 billion in damages, which has motivated many leaders across the industry to seek a settlement.

Sources indicated that a turning point in the discussions, which have been ongoing, came last week in the Dallas area, where the power conference commissioners, their general counsels, NCAA president Charlie Baker, NCAA lawyers and the plaintiffs’ attorneys met. (They chose the Dallas area because they were already there for the College Football Playoff meetings, which were held in that area last week.)

While sources stressed that no deal is imminent, details about what a multibillion-dollar settlement could look like are expected to be shared with campuses in the near future. There are myriad variables to get to the finish line and still some obstacles and objections at the campus level, but sources indicate that progress has ramped up in recent weeks.

A settlement would provide some legal relief for a college sports industry that’s been peppered by lawsuits. It could also serve as a keystone piece to formulating a more stable future. With the settlement expected to cost billions in back pay for former athletes, it would likely also require the NCAA and conferences to agree to a system for sharing more revenue with some of the players moving forward.

Sources indicated the top-end revenue share number per school — once it’s determined — would be in the neighborhood of $20 million annually, although that’s yet to be settled. Whatever number is set by the settlement, individual schools will be able to opt in to share revenue up to that number with their student athletes at their discretion. (They could choose to share less, but not more.)

Texas A&M athletic director Trev Alberts, for example, recently told the Bryan-College Station Eagle that schools could be adding $15 million to $20 million to their budgets annually for what he termed a “new expense category” in college athletics.

What’s uncertain, for now, are the mechanics of how this could work. Do the schools buy the NIL of their athletes? How would Title IX be impacted?

The House case is one of four active antitrust lawsuits, all of which serve as a threat to some part of the NCAA’s remaining caps on how athletes are paid. In three of those cases, including the House case, athletes are represented by veteran sports labor attorney Jeffrey Kessler.

Kessler did not respond to a request for comment Monday. His co-counsel, Steve Berman, told ESPN on Monday: “Judge Wilken has told us that she expected us to be discussing settlement given the lengthy litigation over the issues and the parties’ familiarities with the strengths and weaknesses on each side. We are simply following the judge’s instructions and have nothing to report other than that.”

In an interview with ESPN earlier this month, Kessler declined to comment on any possible negotiations but said he felt a settlement was the quickest route toward transforming college sports.

“I can’t guarantee this, but I think [the defendants’] lawyers have told them they’re in all likelihood going to lose,” Kessler said. “If they lose, the damages are going to be gigantic. Further, they’ve been told that it’s much better for them to be active participants in settling and deciding their future lives and fate than it is to let the court impose it on them.”

The House case includes two separate classes of plaintiffs. The damages class is composed of former college athletes from the past several years who argue the NCAA owes them back pay for the money they could have earned if they had been allowed to sign NIL deals prior to 2021. The injunctive class includes current college athletes, who argue that any of the existing restrictions on what types of NIL deals athletes can sign are also illegal.

In court testimony, economic experts hired by the plaintiffs argued that the damages class missed out on more than $1 billion in NIL opportunities in the years leading up to 2021. In antitrust cases, the court makes the defendant pay triple the amount of actual damages as punishment if it has violated the law — hence the estimated $4 billion price tag of a legal loss.

“If we settle for the injunction class, it will involve an agreement of what the future will look like,” Kessler said. “If we settle for the damages class, that’s basically money for the past.”

Another pending antitrust lawsuit, Carter v. NCAA, which was also filed by Kessler, argues that the NCAA should not be able to keep schools from paying players directly for their performance. While the cases do not need to be settled together, it’s likely that both sides would want to reach an agreement that is substantial enough to keep them from ending up back in court for the Carter case in the near future. Sources indicated to ESPN that schools would likely want protection from future litigation as part of a settlement in the House case.

In professional sports, revenue sharing deals are typically reached through a collective bargaining agreement. While that might also be the route for college sports if schools decide to share more with players, there is some precedent for working out the details of labor agreements within the settlement of a lawsuit. The NFL, for example, settled a case with Reggie White in 1993 that established the rules for free agency and salary caps for the league. One of the lawyers who represented White in that case was Kessler.

Along with the threat of antitrust lawsuits, the National Labor Relations Board is also reviewing a pair of cases that aim to classify college athletes as employees and allow them to unionize.

NCAA leaders have remained firmly opposed to athletes becoming employees. However, Baker — who took over as the association’s president last March — said he wants to find ways for some schools to provide more to their athletes. He proposed in December creating a new subdivision of the wealthiest teams that would be required to pay at least half their athletes a minimum of $30,000 per year.

“If you look at what Baker has been out there doing, he seems to be very aware,” Kessler told ESPN earlier this month. “Some of his proposals he’s made in December — I’m not say it’s what we’d settle for — but it’s certainly moving in the direction of proposing to give much more compensation to the athletes. That’s what we’re advocating.”

The NCAA has also attempted for the past several years to convince Congress to create new rules to help govern college sports. Among the items it would like to see in a federal law is a clause that specifies that college athletes aren’t employees. Congress has thus far made no demonstrable progress on a bill, but a significant settlement that shows a commitment to future revenue sharing in the House case could convince some lawmakers to provide help to the NCAA.

Sponsored Content

Bet the World Cup in Wager.dm