NCAA’s $2.78 billion settlement with colleges to allow athlete payments gets preliminary approval

If finalized, the deal would allow the biggest schools to establish a pool of about $21.5 million in the first year to distribute money to athletes through a revenue-sharing plan.

by Eddie Pells, Associated Press

Published Oct. 7, 2024, 4:21 p.m. ET

A judge granted preliminary approval Monday to the $2.78 billion legal settlement that would transform college sports by allowing schools to pay players.

U.S. District Judge Claudia Wilken released an order setting a timeline for a deal that would put millions of dollars into the pockets of college athletes, who can begin applying for payment on Oct. 18.

A final hearing is set for April 7, 2025, the day that one of college sports' biggest moneymakers, March Madness, comes to a close with college basketball's national title game. If finalized, the deal would allow the biggest schools to establish a pool of about $21.5 million in the first year to distribute money to athletes through a revenue-sharing plan. Athletes would still be able to cut name, image and likeness deals with outside groups.

Former college athletes from as far back as 2016 would be able to apply for their share of $2.576 billion set aside to help them recoup money they could've made from NIL deals, which weren't allowed until 2021.

“We are pleased that we are one step closer to a revolutionary change in college athletics that will allow billions in revenue sharing,” said plaintiff attorney Steve Berman.

The judge's approval comes 11 days after attorneys tweaked wording in the original settlement agreement to address Wilken's concerns. The main change involved getting rid of the word "boosters" and replacing it with a better-defined description of whose potential NIL deals would be subject to oversight by a neutral arbitrator once the deal goes through.

That did not, however, strike to the heart of the settlement, which sets up a revenue-sharing arrangement between schools and athletes who, for decades, played for scholarships, a few expenses and little else, while coaches and athletic departments brought in millions. The $21.5 million figure comes from the 22% of average revenue that power conference schools generate through media rights, tickets and other sources. It will be recalculated periodically through the 10-year window the agreement covers.

Not every school will chip in the full amount. Those that will are hurrying to find ways to replace what they’ll pay out to athletes. They worry it could impact their overall sports programs, especially the “nonrevenue” sports that play an outsized role in populating U.S. Olympic rosters.

“We are thrilled by Judge Wilken’s decision to give preliminary approval to the landmark settlement that will help bring stability and sustainability to college athletics while delivering increased benefits to student-athletes for years to come,” NCAA President Charlie Baker said. “Today’s progress is a significant step in writing the next chapter for the future of college sports.”

In addition to creating a payment system, the settlement sets up a framework to regulate future NIL deals and replaces scholarship caps with “roster limits,” which will grow to 105 for football, the biggest sport at most major universities, and also the sport that brings in the most money while incurring the most expense.

This settlement resolves three major antitrust lawsuits filed against the NCAA, including one spearheaded by Grant House, a former swimmer at Arizona State. Berman’s law firm says the value of new payments and benefits to college athletes is expected to exceed $20 billion over 10 years.

“For far too long, these athletes have been deprived of their economic rights in an unjust system that will now, finally, be fundamentally reformed,” plaintiff attorney Jeffrey Kessler said in a news release that was part of the court filings.

Still unknown is how long the terms of this deal will last. Litigation regarding the rights of players to unionize and potentially be considered employees remains unsettled. Meanwhile, the NCAA is pushing for federal legislation to knit together a streamlined policy for NIL, which is currently regulated by a patchwork of state laws, legal settlements and NCAA rules.