The approval of the House settlement should bring some needed stability to the college sports landscape.
At least in theory.
Since the advent of NIL, many have contended that college athletics have gone off the rails, to use a popular idiom.
Be it pay-for-play, tampering, mass player movement, particularly in football and men’s basketball — they can largely be traced back to NIL and a lack of regulation, i.e. rule enactment and enforcement, regarding the money that student-athletes receive because they play college sports.
The House settlement is an attempt to end all that. Not end player compensation, but rather bring some uniformity and regulation to how student-athletes are compensated.
The key portions of the settlement are as follows:
- Former student-athletes who didn’t collect compensation for NIL from 2016-2024 because of prior rule restrictions by the NCAA will be awarded a combined $2.8 billion retroactively. That sum will be paid out over 10 years, with a distribution plan that will consider the sport the student-athletes played, among other things.
- Schools will continue to provide traditional benefits to student-athletes, like free tuition, room and board, etc. But schools will also be able to use up to 22% of the annual athletic revenue (or nearly $21 million) to compensate players. Those limitations are projected to increase 4% annually and will be recalculated every three years.
Put simply, if the House settlement is approved, every Power conference school (and Group of Five schools that opt-in to the settlement) will have the same percentage budget with which to pay student-athletes.
NIL will still exist, but the playing field will be level — at least more level than it is currently.
The remaining holdup for approval of the settlement rests on the proposed handling of roster limits, with a decision from U.S. District Judge Claudia Wilken expected sometime in the coming days or weeks.
Let’s say the House settlement is approved, though. The defendants (the NCAA, Power conferences and the Pac-12) satisfied Wilken enough that she signs off on the settlement. That’s it, right? College athletics will enter a new era of stability in which student-athletes are rightfully compensated but the unregulated mess that currently is will go away. Right?
While the approval of the House settlement would allow the NCAA and its member schools to move forward with some fairly dramatic changes to the sport, arguably the most notable being rules compliance being taken out of the hands of the NCAA, there are a lot of indications that it is merely a step in the direction toward more regulation of college sports — a step that is likely to be challenged in federal court again and again.
Here are the areas where the House settlement is likely to be challenged.
Title IX
Arguably the biggest issue looming when it comes to the House settlement is Title IX law.
Part of the education amendments passed in 1972, Title IX “prohibits discrimination based on sex in education programs and activities that receive federal financial assistance.” That, per the U.S. Department of Education, includes equal athletic opportunity.
That has been interpreted to mean equal treatment of men and women in terms of number of sponsored sports at universities, plus equal amounts of publicity, and equal recruitment support for both the men’s and women’s athletic programs.
There is also an argument about equitable NIL payments for men’s and women’s sports, according Karen Weaver, for Forbes. A wide belief exists that lawsuits await if/when schools set aside the majority of revenues allotted for student-athletes to male basketball and football players.
Per the law firm of O’Melveny & Myers, the House settlement tries to skirt around Title IX issues — revenue sharing in particular — but the settlement’s solution “may in and of itself violate Title IX.”
Additionally, the damages portion of the settlement, the $2.8 billion being allotted to former student-athletes, could also become a Title IX issue, depending on how the damages — to whom — are paid out.
Adding to it all, the Trump Administration recently determined that NIL agreements would be treated “as a form of athletic financial assistance” which would make all NIL payments to student-athletes fall under Title IX law, meaning there would be a need for equality in the money given to men’s and women’s student-athletes.
As USA Today’s Steve Berkowitz put it: “It is widely anticipated among college-sports officials that, if the settlement is approved and schools move ahead with plans to allocate their NIL payments to athletes in a manner that provides most of that money to football and men’s basketball players, a Title IX lawsuit will result.”
Recent legislation in multiple states
Title IX isn’t the only potential issue with the House settlement, however.
Many states have now passed legislation that exempts their universities from some, if not all, of the regulations proposed in the House settlement.
Take Tennessee, for instance.
Recent legislation passed there “prohibits all of the House settlement’s limits on NIL compensation (salary cap, collective restrictions, etc.) unless they’re part of a federal law, valid court order, or determined to be exempt from antitrust law,” per Mit Winter, an attorney at Attorney at Kennyhertz Perry LLC.
Put even more simply, “schools (in Tennessee) don’t have to abide by any rules that come from the House settlement, or any new rules the NCAA tries to create,” Outkick/Fox sports reporter Trey Wallace writes.
It isn’t just Tennessee, though.
Georgia and Virginia have both passed legislation that “allows in-school states to pay players directly for their NIL rights — without fear of NCAA retribution — regardless of whether the settlement is approved,” per John Wright, a Smith Business Law Fellow at Ave Maria School of Law.
Count New Jersey in the mix, too.
The House settlement will attempt to establish some degree of uniformity across the college sports landscape, but in every state that has laws passed that contradict terms of the settlement, well, lawsuits will ensue in a hurry.
If it feels like state legislatures are actively working against attempts to regulate college sports with the House settlement, well you aren’t alone.
“As one smart AD said to me recently ‘We have to agree to be governed or we won’t be,’” USA Today’s Dan Wolken wrote. “If states are going to interfere with the terms of the settlement, might as well just chuck it in the trash and start over.”
New NIL clearinghouse
Named NIL Go, a new entity — clearinghouse — is primed for creation if the House settlement is approved.
Its purpose? To review all third-party NIL deals involving student-athletes.
Part of the reason for the clearinghouse to ensure that schools aren’t directly compensating athletes via NIL, in addition to revenue-sharing.
More notable, though, the clearinghouse is supposed to make sure that student-athletes are compensated fairly.
Deloitte, one of the more notable accounting firms in the country, will review all submitted NIL deals, per Yahoo Sports.
There are plenty of issues with this, however.
For one, most NIL deals have a confidentiality clause in them, per prominent attorney Tom Mars. Lawsuits are almost certain to come up as student-athletes will be required to submit their NIL deals to the clearinghouse, in direct conflict with agreed to deals.
“I wonder how anyone thinks they can induce an athlete to breach their contract so that Deloitte can review it without exposing themselves to a lawsuit for tortious interference with a contract,” Mars writes.
Then there’s this: Estimates earlier this spring by Deloitte suggested that “70% of past (NIL) deals from booster collectives would have been denied, while 90% of deals from public companies would have been approved,” wrote Yahoo Sports’ Ross Dellenger.
That falls in line with the goal of the clearinghouse regulating NIL — making sure more monied schools can’t just go beyond the revenue sharing cap by using NIL. The idea that that will be accepted, though, is a different story altogether.
“The lawsuits against this clearinghouse are going to come so fast,” The Athletic’s Chris Vannini wrote. “Some of the collective deals will shift to rev-share, but nobody with the ability to spend more is actually going to believe in a “cap” if the NCAA doesn’t have antitrust exemptions, just like now."
In a memo sent out a little over a week ago detailing the role of the clearinghouse, it was noted that Deloitte won’t actually block any NIL deals, rather it will flag the ones that it deems to be pay-for-play, per Forbes’ Amanda Christovich.
“If a deal is flagged by the clearinghouse as pay-for-play, the athlete can still accept it,” Christovich wrote. “Just with the understanding there’s a risk of eligibility concerns.”
That will also probably lead to lawsuits, Winter wrote.
“If an athlete deal with an associated entity isn’t cleared by Deloitte the athlete can still move forward with deal. And it’s then up to schools/NCAA/the new enforcement entity to say they’re ineligible. Which is when lawsuits will start.”
Will the House settlement hold up?
There are other potential issues with the House settlement. Most notably, it doesn’t attempt to tackle whether or not student-athletes will become employees of universities, which is a significant impending issue for college athletics, Weaver wrote.
There is also the issue of the Power Four conferences — the ACC, Big 12, Big Ten and SEC — attempting to get affiliated schools to sign away their right to sue/challenge the House settlement if it is approved, per Dellenger.
In many ways, the House settlement is an attempt to bring some regulation back to college athletics, but more and more, it looks like it will fail on that account, with the only way forward being collective bargaining with student-athletes and/or federal legislation.