NCAA settlement approved - schools now can (and will) directly pay athletes

[MU82]

From The AP:

A federal judge has approved terms of a sprawling $2.8 billion antitrust settlement that will upend the way college sports have been run for more than a century. In short, schools can now directly pay players through licensing deals — a concept that goes against the foundation of amateurism that college sports was built upon.

Some questions and answers about this monumental change for college athletics:

Q: What is the House settlement and why does it matter?

A: Grant House is a former Arizona State swimmer who sued the defendants (the NCAA and the five biggest athletic conferences in the nation). His lawsuit and two others were combined and over several years the dispute wound up with the settlement that ends a decades-old prohibition on schools cutting checks directly to athletes. Now, each school will be able to make payments to athletes for use of their name, image and likeness (NIL). For reference, there are nearly 200,000 athletes and 350 schools in Division I alone and 500,000 and 1,100 schools across the entire NCAA.

Q: How much will the schools pay the athletes and where will the money come from?

A: In Year 1, each school can share up to about $20.5 million with their athletes, a number that represents 22% of their revenue from things like media rights, ticket sales and sponsorships. Alabama athletic director Greg Byrne famously told Congress "those are resources and revenues that don't exist." Some of the money will come via ever-growing TV rights packages, especially for the College Football Playoff. But some schools are increasing costs to fans through "talent fees," concession price hikes and "athletic fees" added to tuition costs.

Q: What about scholarships? Wasn't that like paying the athletes?

A: Scholarships and "cost of attendance" have always been part of the deal for many Division I athletes and there is certainly value to that, especially if athletes get their degree. The NCAA says its member schools hand out nearly $4 billion in athletic scholarships every year. But athletes have long argued that it was hardly enough to compensate them for the millions in revenue they helped produce for the schools, which went to a lot of places, including multimillion-dollar coaches' salaries. They took those arguments to court and won.

Q: Haven't players been getting paid for a while now?

A: Yes, since 2021. Facing losses in court and a growing number of state laws targeting its amateurism policies, the NCAA cleared the way for athletes to receive NIL money from third parties, including so-called donor-backed collectives that support various schools. Under House, the school can pay that money directly to athletes and the collectives are still in the game.

Q: But will $20.5 million cover all the costs for the athletes?

A: Probably not. But under terms of the settlement, third parties are still allowed to cut deals with the players. Some call it a workaround, but most simply view this as the new reality in college sports as schools fight to land top talent and then keep them on campus. Top quarterbacks are reportedly getting paid around $2 million a year, which would eat up about 10% of a typical school's NIL budget for all its athletes.

Q: Are there any rules or is it a free-for-all?

A: The defendant conferences (ACC, Big Ten, Big 12, SEC and Pac-12) are creating an enforcement arm that is essentially taking over for the NCAA, which used to police recruiting violations and the like. Among this new entity's biggest functions is to analyze third-party deals worth $600 or more to make sure they are paying players an appropriate "market value" for the services being provided. The so-called College Sports Commission promises to be quicker and more efficient than the NCAA. Schools are being asked to sign a contract saying they will abide by the rules of this new structure, even if it means going against laws passed in their individual states.

Q: What about players who played before NIL was allowed?

A: A key component of the settlement is the $2.7 billion in back pay going to athletes who competed between 2016-24 and were either fully or partially shut out from those payments under previous NCAA rules. That money will come from the NCAA and its conferences (but really from the schools, who will receive lower-than-normal payouts from things like March Madness).

Q: Who will get most of the money?

A: Because football and men's basketball are the primary revenue drivers at most schools, and that money helps fund all the other sports, it stands to reason that the football and basketball players will get most of the money. But that is one of the most difficult calculations for the schools to make. There could be Title IX equity concerns as well.

Q: What about all the swimmers, gymnasts and other Olympic sports athletes?

A: The settlement calls for roster limits that will reduce the number of players on all teams while making all of those players — not just a portion — eligible for full scholarships. This figures to have an outsize impact on Olympic-sport athletes, whose scholarships cost as much as that of a football player but whose sports don't produce revenue. There are concerns that the pipeline of college talent for Team USA will take a hit.

Q: So, once this is finished, all of college sports' problems are solved, right?

A: The new enforcement arm seems ripe for litigation. There are also the issues of collective bargaining and whether athletes should flat-out be considered employees, a notion the NCAA and schools are generally not interested in, despite Tennessee athletic director Danny White's suggestion that collective bargaining is a potential solution to a lot of headaches. NCAA President Charlie Baker has been pushing Congress for a limited antitrust exemption that would protect college sports from another series of lawsuits, but so far nothing has emerged from Capitol Hill.

[Jay Bee]

Gonna be a big mess.. but will be interesting to see how things shake out. There are a number of angles, but one I'm interested in is the structure of arrangements... as to timing of payments and related services... can I, as a school, structure deals such that there is a fairly hefty retention bonus built it.. e.g., for college basketball, x% of your 2025-26 payments are subject to you not entering the transfer portal during the notification window... similar things are happening today with brokered deals... where funds are dangled in front of athletes.. and when they stay, boom,... big pay day.

I also want to create a company that makes it easy for fans to 'tip' players... e.g., Damarius goes off for 28 points and a crazy dunk en route to us beating UCONN.. and I'm several beers deep and want to 'thank him'.. I can, with a few clicks on my phone or computer, send him $100 for his efforts.... well, $100, less what my company takes for setting up this 'marketplace'.

[Jockey]

At least they have finally figured everything out.

I also presume that somewhere in this ruling that the law of Unintended Consequences was repealed.

[tower912]

That law is universal and eternal.

[Superfan]

I question how this impacts schools like MU that don't have the financial resources of the larger state schools in the SEC and Big 10 that capitalize on larger alumni bases and football revenue.  It will be a shame if the smaller private schools end up getting boxed out from getting and retaining the higher profile players.  I like the notion of multi-year contractual arrangements with players to curtail all the transferring that's going on.

[Zog from Margo]

College sports won't be the same for a number of reasons. I suspect one change will be that fans will be quicker to single out players for criticism. The fact that they are only college kids 18-23 will be outweighed by the fact that the players are professionals and many will be making more than most folks in the stands. Players that age in the NBA have certainly been subject to criticism.

[tower912]

MU fans never criticize players.

[The Sultan]

MU fans never criticize players.

I only started doing so when they put the last names on the jerseys.

[wadesworld]

I only started doing so when they put the last names on the jerseys.

I started doing that when NIL became a thing. A free education used to be worth something. Now they can get paid to entertain me? Unbelievable.

[wadesworld]

I question how this impacts schools like MU that don't have the financial resources of the larger state schools in the SEC and Big 10 that capitalize on larger alumni bases and football revenue.  It will be a shame if the smaller private schools end up getting boxed out from getting and retaining the higher profile players.  I like the notion of multi-year contractual arrangements with players to curtail all the transferring that's going on.

Good news is the small private schools don't have to pay 105 football players before they get to their basketball roster.

[WhiteTrash]

Good news is the small private schools don't have to pay 105 football players before they get to their basketball roster.

A CBS Sports article named the Big East a "Winner" in this due to that very reason. FWIW.

[MU82]

College sports won't be the same for a number of reasons. I suspect one change will be that fans will be quicker to single out players for criticism. The fact that they are only college kids 18-23 will be outweighed by the fact that the players are professionals and many will be making more than most folks in the stands. Players that age in the NBA have certainly been subject to criticism.

So Scoop game threads will get even more toxic? Now "fans" like joyless willie will be calling hard-working, team-oriented, defensive standouts "overpaid piles of dung"?

[MuggsyB]

Will there be academic requirements?

[Zog from Margo]

So Scoop game threads will get even more toxic? Now "fans" like joyless willie will be calling hard-working, team-oriented, defensive standouts "overpaid piles of dung"?

I think that's right. Think GB Packer fans reactions to Estus Hood and Dan Devine's dog.

[forgetful]

Two big aspects:

1. Colleges can't afford this. Most are barely breaking even, and college sports are already a significant net loss. There isn't just an extra $20M lying around.

2. This will be a bigger deal for small private schools, that can't transfer that much extra expense on a smaller student base.

3. State schools will transfer tax payer dollars to schools to offset the cost, putting them at even a bigger net advantage.

[TallTitan34]

I also want to create a company that makes it easy for fans to 'tip' players... e.g., Damarius goes off for 28 points and a crazy dunk en route to us beating UCONN.. and I'm several beers deep and want to 'thank him'.. I can, with a few clicks on my phone or computer, send him $100 for his efforts.... well, $100, less what my company takes for setting up this 'marketplace'.

[muwarrior69]

Is this the death of the NCAA and the birth of the College Sports Commission?

[The Sultan]

I think there are still too many unknowns to say anything definitively. It feels like the big conferences are still just winging it at this point.

[jfp61]

I also want to create a company that makes it easy for fans to 'tip' players... e.g., Damarius goes off for 28 points and a crazy dunk en route to us beating UCONN.. and I'm several beers deep and want to 'thank him'.. I can, with a few clicks on my phone or computer, send him $100 for his efforts.... well, $100, less what my company takes for setting up this 'marketplace'.

Gotta make them employees first. That way the first 25k is tax free if its cash.

[BrewCity83]

Two big aspects:

1. Colleges can't afford this. Most are barely breaking even, and college sports are already a significant net loss. There isn't just an extra $20M lying around.

2. This will be a bigger deal for small private schools, that can't transfer that much extra expense on a smaller student base.

3. State schools will transfer tax payer dollars to schools to offset the cost, putting them at even a bigger net advantage.

I think the key is that schools will pay "up to about $20.5 million".  The Power 6 will hit the cap.  The smaller schools will pay what they can, and will be able to lure lesser talent.  Just like before.

[The Sultan]

I listened to this podcast by John Ourand today about the changing role of the athletic director in a post-House world. The long and short of it is that you are likely going to see more movement from the professional sports world to the college one because of the resource allocation issues involved. Makes me wonder if MU had run its AD search a couple years later if they would make the same decision.

[TAMU, Knower of Ball]

I listened to this podcast by John Ourand today about the changing role of the athletic director in a post-House world. The long and short of it is that you are likely going to see more movement from the professional sports world to the college one because of the resource allocation issues involved. Makes me wonder if MU had run its AD search a couple years later if they would make the same decision.

I think they were well aware of what the landscape was likely to be when they made the hire.

[The Sultan]

I think they were well aware of what the landscape was likely to be when they made the hire.

Hmmm...