7 Billion Settlement

In a potential landmark decision, college athletes in California may soon receive direct payments from their schools as part of a $2.7 billion settlement. The agreement, if approved by a judge, would bring an end to years of controversy surrounding the issue of compensating student-athletes.

The settlement would involve the National Collegiate Athletic Association (NCAA) paying out damages over a period of 10 years to approximately 14,000 current and former athletes who were enrolled as student-athletes between 2016 and 2020. These athletes would be classified as plaintiffs in the lawsuit.

Additionally, the proposed agreement outlines a revenue-sharing plan that would provide active players with up to 22% of their schools' share of media broadcast and ticket sales. It is estimated that this could initially amount to over $20 million per year per school in most cases. As more lucrative TV deals are signed, this figure could potentially increase further. The revenue-sharing plan is expected to commence in the fall of 2025.

Initial details of the potential settlement agreement were first reported by Yahoo Sports. The issue of compensating college athletes has been a subject of intense debate in recent years, and it reached a turning point in 2021 when athletes were granted the right to profit from their own name, image, and likeness (NIL). This new agreement would add to the potential financial opportunities for athletes, on top of the payments they would receive from their schools.

Notable examples of college athletes benefiting from NIL deals include Shedeur Sanders, a Colorado quarterback and the son of NFL Hall of Famer Deion Sanders, who has NIL deals valued at $4.6 million. Similarly, basketball player Caitlin Clark had NIL deals worth $3.1 million before entering the WNBA, according to On3 data.

However, the potential for direct payments from schools could also have wider implications. Paul Haagen, a law professor at Duke University, believes that schools may be forced to cut programs that already operate at a financial loss due to the increased commercialization. Haagen predicts a greater intensification of commercialization in college athletics, which could make it more challenging for non-commercializable sports to compete.

The NCAA and its schools have faced multiple lawsuits seeking financial relief for athletes, leading them to view the proposed settlement as a means of averting a financial crisis. Notre Dame President John I. Jenkins described the settlement as a necessary measure to prevent the bankruptcy of college athletics.

Nevertheless, the settlement does not eliminate ongoing legal uncertainty. Title IX, which guarantees equal rights for female athletes, could become a subject of litigation as plaintiffs and their lawyers argue that schools may not be in compliance with the federal statute. This could potentially lead to further lawsuits against schools.

While the settlement addresses immediate compensation concerns, it is only a temporary solution, according to sports law attorney Darren Heitner. However, if approved, the agreement would mark a significant step forward in providing college athletes with direct payments, marking a new era in collegiate sports.