How the House v. NCAA settlement could affect college athletics and local universities

While AJ Rudowitz was attending Temple’s Beasley School of Law, he wrote a law review, a scholarly publication that focuses on legal issues, on the NCAA potentially losing an antitrust lawsuit and being forced to compensate student athletes.

This was back in 2015, and there were lawsuits at the time — such as O’Bannon v. NCAA — that led Rudowitz, a former basketball player at Stonehill College who had a professional career in the EuroLeague, to believe that college sports were heading in that direction.

And he was right. In 2021, the NCAA passed its interim policy for name, image, and likeness, which marked for the first time that college athletes could receive compensation through commercials, endorsements, merchandise deals, and more.

But the rules and regulations are ever-changing, and the recent House v. NCAA settlement, which has yet to be approved, could add a greater impact on college athletics.

“It really is the Wild West right now,” said Rudowitz, who’s a senior trial associate at Duane Morris LLP with a focus on the sports, health care, and life sciences industries. “There’s no black-letter laws on NIL. [There aren’t] any caps, any limits. There are state laws out there that are in effect on NIL, and they apply to the athletes and schools in that specific state.

“Not only do we have a law that is overall changing based on different cases that come out, but each state has their own NIL law, too, which makes it really difficult for athletes to navigate.”

Rudowitz shared his thoughts on the settlement, what college athletics could look like in the future, and how local universities have been affected by NIL.

Besides athletes making money, NIL also has affected the way school’s recruit students, whether they are incoming freshman or in the transfer portal.

But the NCAA rules currently forbid universities from directly paying athletes, so students have to work with collectives, which are independent organizations that fundraise and distribute NIL agreement payouts to those athletes.

“In today’s college sports world, money talks,” Rudowitz said. “There used to be transfer rules where athletes had some restrictions on their ability to transfer that has been ruled as anticompetitive, and it’s been lifted so athletes are able to transfer schools as much as they want.”

» READ MORE: It’s time to retire the idea of the ‘amateur athlete’ | Editorial

Athletes currently cannot transfer midseason, but Rudowitz believes that could change.

“Without the transfer rules in place, it does make it tough on schools to keep their best players and keep them happy,” he said. “Money also becomes a huge issue for players when they enter the transfer portal because they’re looking for ‘What am I going to do next year?’”

On May 23, the NCAA and the remaining power conferences — the Atlantic Coast Conference, Big Ten, Big 12, and Southeastern Conference — agreed to broad settlement terms on a major lawsuit that included former Arizona State swimmer Grant House, TCU women’s basketball player Sedona Prince, and former Illinois football player Tymir Oliver as plaintiffs.

The three claimed that before rule changes in 2021, the NCAA and the major sports conferences wrongly prevented athletes from earning money off their celebrity because it didn’t have a revenue-sharing model.

If it’s approved by a federal judge, the settlement will pay approximately $2.78 billion over 10 years to more than 10,000 current and former students who played Division I sports in 2016 or later. Each school also would share about $20 million a year with its athletes.

“This was the next step in this upward escalator of lawsuits and antitrust lawsuits going against the NCAA,” Rudowitz said. “This was going to be the big one because it dealt with not only prohibiting athletes from earning NIL but also it dealt with TV revenues, which is big money for the NCAA and the major conferences.

“The NCAA had always relied on defense of amateurism, and that helped give them immunity to these antitrust lawsuits because it was said to be a pro competitive benefit that we’re not going to allow payment because amateurism. That defense is no longer as strong. Football and men’s basketball, there’s billions of dollars being generated, and all of those stakeholders are being compensated — universities, the NCAA, television stations, the coaches — except for the athletes.”

If the settlement is approved, it would mark the first time that schools would be able to compensate their student-athletes, but there’s also concerns of how it will affect smaller universities as well as nonrevenue-generating sports.

Some suggest that nonrevenue sports, like swimming, gymnastics, lacrosse, and track and field, could get cut by universities because they have to help cover the $2.78 billion. Also, Rudowitz said Title IX has not been mentioned in the settlement, so there’s worries about its effect on women’s sports.

» READ MORE: Using corporate dollars to entice student-athletes is the goal of this new Temple NIL initiative

“You might see some nonrevenue-generating sports turn into club teams, and that might be a way forward,” Rudowitz said. “Private equity is also very interested in getting into college sports. There’s a lot of talk of private equity taking ownership of conferences, investing in teams and in athletic programs in general because it provides the schools and conferences with an infusion of cash to take care of this back pay issue and to help fund their NIL endeavors.”

Philadelphia’s Division I universities will be impacted by the House settlement. These schools already have to compete in the NIL market to attract top athletes, and there could be an upside with being located in a major city.

The settlement’s approval would mean universities are allowed to directly solicit local companies to enter into partnerships with athletic programs. In Philadelphia, where there’s a handful of large businesses, Rudowitz said, the programs could raise funds through logos on courts and fields, naming rights to stadiums and arenas, and logos on jerseys.

“The universities are incentivized to generate revenue through these means,” he said. “Then direct that revenue to their athletic programs to assist them in the recruiting world.”

It’s hard to determine what’s in store for college athletics, but in the next two to three years, it certainly will look different.

Rudowitz believes schools will look similar to how professional sports teams operate, and the NCAA could become obsolete if the power conferences decide to move football and basketball out of it and into an employment model.

“That would allow the athletes to become employees,” Rudowitz said. “The NCAA has been under attack for the last four or five years. They’ve been losing a lot of these battles, and all these battles have been antitrust battles, so if the House settlement does not pass, I can see the Power 4 conferences breaking away, likely to be private equity-backed, and the athletes can become employees.”

» READ MORE: St. Joseph’s athletics is working to stay competitive as NIL rules evolve. Here’s how.

Rudowitz suggests student-athletes who are trying to navigate NIL seek representation to ensure they’re not being taken advantage of and that they understand contract terms.

“I think athletes need people who are looking out for them,” he said. “Not to say that the schools are not going to look out for the athletes — but they need people who are looking out solely for their best interests and not where there might be a conflict of interest.”