NCAA Faces Potential Billion Dollar Lawsuit Regarding Student-Athlete Compensation

NCAA Settles Lawsuit Agreeing To Compensate Former Student-Athletes $2.8B

After decades of denying student-athletes the benefits of being compensated for their name, image, and likeness (NIL), the NCAA (National Collegiate Athletics Association) has agreed to a $2.8 billion settlement in the lawsuit, House v. NCAA.

According to Forbes, the association that makes the rules for collegiate athletics and the Power Five conferences that operate under them, the ACC, Big 12, Big Ten, Pac-12, and SEC have agreed to settle the case that may have cost the NCAA a potential $4 billion in treble damages if the case had proceeded to go to trial.

The conferences and the organization plan to compensate former student-athletes with the agreement and use 22% of the average Power 5 school’s revenues going forward. That comes to more than $20 million annually per school for future revenue sharing. Based on that number, it will also go up as the revenue increases. There will no longer be a cap on scholarships allowing athletic departments to spend more.

“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, Hagens Berman managing partner and co-founder, in a written statement. “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 earliest that this change can take place could be Fall 2025. It has to be approved by Judge Wilken who is assigned to the case. However, the settlement could be appealed by athletes or schools within the NCAA if presented to the U.S. Court of Appeals for the Ninth Circuit and/or up to the U.S. Supreme Court.

Former students/athletes covered by this settlement (they would have to opt in) are estimated to be 14,500 Division I athletes who played from June 15, 2016, until  November 3, 2023, the date the class was established in the case. Eligible former students covered would be those who could have received money for commercial use of their NIL, video games, and broadcasts if it was allowed by the NCAA. The $2.8 billion part of the settlement is for those who qualify to receive payment. The judge will determine how much of the settlement (25-35%) will go to the plaintiffs’ attorneys.

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