Nengsu Kenfack, Stamps Todd and Brown: NCAA’s $2.8 Billion Athlete Revenue Settlement Receives Final Approval
Not only does Judge Claudia Wilken’s final approval of the In re: College Athlete NIL Litigation settlement provide $2.576 billion in damages for settlement class members, it changes the rules of the game for current and future student-athlete compensation. This monumental change in college sports impacts many players in the collegiate sports industry. First and foremost, it impacts past, present and future college athletes. Second, the changes will impact the National Collegiate Athletic Association (NCAA); athletic conferences; universities; name, image and likeness (NIL) collectives; boosters; and NIL sponsor companies. Finally, even college sports fans could foreseeably pay higher concession prices and non-athlete college students could see “athletic fees” added to tuition costs to cover the total costs of the settlement deal. With payments potentially beginning as soon as July 1, 2025, everyone involved is scrambling to figure out how these changes will affect their position in the game. With that in mind, this article outlines some of the immediate questions following the settlement.
Can universities pay student-athletes directly now?
Yes, up to a certain amount. The NCAA rules will now allow schools to provide direct benefits and compensation to Division I student-athletes up to a yearly pool cap, which starts at $20.5 million in the 2025-2026 school year and grows to $32.9 million by the 2034-2035 school year. How that $20.5 million gets allocated in a world where top quarterbacks—who have already been reported to earn $2 million per year in NIL compensation in past years and are looking for more—would take up at least 10% of a school’s total pool cap remains to be seen.
What does the settlement do for past college athletes?
Student-athletes who competed on Division I teams between June 15, 2016, and September 15, 2024, fall into one of three categories of settlement classes: (1) Football and Men’s Basketball Class; (2) Women’s Basketball Class; or (3) Additional Sports Class. A $1.976 billion NIL Settlement Fund will be distributed to those settlement class members per specific allocations in the settlement agreement.
Are any rules governing NIL collectives changing?
Yes, NIL collectives and individual boosters must still adhere to strict rules on NIL payments to student-athletes, but those rules are changing. The NCAA can only prohibit an NIL collective or booster from making NIL payments to college student-athletes if the payments are not for a “valid business purpose” related to the promotion or endorsement of goods or services and compensated “at rates and terms commensurate with compensation paid to similarly situated individuals with comparable NIL value who are not current or prospective student-athletes at the Member Institution.” See Injunctive Relief Settlement (IRS) Art. 1, §1(c). Notably, similarly-situated individuals are not limited to other student-athletes at other schools, so, as currently presented, fair market value may be determined by considering celebrities or professional athletes too. NIL collectives and boosters can also make indirect NIL payments to student-athletes by making contributions to the school, which can then funnel payments to the student-athletes.
Can companies still sponsor NIL deals with student-athletes outside of NIL collectives? What about enforcement of third-party NIL restrictions?
The NCAA can no longer prohibit NIL payments to student-athletes by any third party. Third-party deals worth $600 or more will run through a Deloitte-run clearinghouse called NIL Go, which will determine whether the deal is a fair price for whatever service the athlete is providing (because third-parties still cannot pay student-athletes for playing their sport—they must be giving a social media shoutout, appearing in an ad, etc.). Deloitte estimated that 70% of third-party deals in the NIL era would have been denied by NIL Go.
In yet another mirror to professional sports, forced arbitration is another big change to third-party NIL deals. Until now, the NCAA has had sole authority to make enforcement decisions and resolve disputes about prohibitions on third-party NIL payments, but going forward, disputes arising out of enforcement of third-party NIL restrictions must be resolved via neutral arbitration. See IRS Art. 6, § 2.
What is the College Sports Commission? Can it legally bind schools?
The College Sports Commission is the new enforcement entity in charge of deciding what “fair market value” is, tracking NIL payments, and potentially doing so in a quicker and more transparent manner than the NCAA did. Reports say that the Atlantic Coast Conference (ACC), Big Ten, Big 12, and Southeastern Conference (SEC) have drafted a document to prevent their member schools from relying on state laws to work around the College Sports Commission’s enforcement of the new rules. The document would bind schools to enforcement policies even if such policies contradict the laws of the state where the school is located. According to reports about the current version of the document, signing it would waive the school’s right to challenge the College Sports Commission in court, replacing court with arbitration. States could theoretically take action against a school violating their state laws, setting up more legal challenges to this framework.
Will roster limits change?
Yes, the NCAA will eliminate the number of scholarship limits and could result in more than 115,000 additional scholarships available to Division I student athletes each year. Before the final approval hearing on the settlement agreement, schools had made difficult decisions to significantly reduce the size of rosters for certain sports like swimming in order to comply with the earlier version of this settlement agreement. After the final approval hearing, however, the agreement was modified to allow settlement class members whose roster spots would have been taken away to be exempt from roster limits at any Division I school for the duration of their college sports careers. Class counsel and schools must now work to identify affected athletes to comply with this portion of the ruling. Among the impacts of this change: affected athletes who transferred to a different school because their roster spot would have been taken away can transfer back to their original school.
What legal challenges are on the horizon?
While this settlement agreement ushers in certainty in many aspects, it also leaves the door open for countless legal challenges from nearly everyone involved. What counts as a “valid business purpose” that a collective or booster can make an NIL payment for? What remedies does a company or student-athlete have if the new NIL Go clearinghouse denies their proposed deal? If a school agrees to follow the College Sports Commission’s enforcement authority even if it violates their state law, can the state take any action against the school? Will Congress step in with nationwide legislation? Judge Wilken denied objectors’ requests to delay implementation of the settlement agreement and IRS pending appeals, so the newest era of paying college athletes starts now. Game on.
Can universities pay student-athletes directly now?
Yes, up to a certain amount. The NCAA rules will now allow schools to provide direct benefits and compensation to Division I student-athletes up to a yearly pool cap, which starts at $20.5 million in the 2025-2026 school year and grows to $32.9 million by the 2034-2035 school year. How that $20.5 million gets allocated in a world where top quarterbacks—who have already been reported to earn $2 million per year in NIL compensation in past years and are looking for more—would take up at least 10% of a school’s total pool cap remains to be seen.
What does the settlement do for past college athletes?
Student-athletes who competed on Division I teams between June 15, 2016, and September 15, 2024, fall into one of three categories of settlement classes: (1) Football and Men’s Basketball Class; (2) Women’s Basketball Class; or (3) Additional Sports Class. A $1.976 billion NIL Settlement Fund will be distributed to those settlement class members per specific allocations in the settlement agreement.
Are any rules governing NIL collectives changing?
Yes, NIL collectives and individual boosters must still adhere to strict rules on NIL payments to student-athletes, but those rules are changing. The NCAA can only prohibit an NIL collective or booster from making NIL payments to college student-athletes if the payments are not for a “valid business purpose” related to the promotion or endorsement of goods or services and compensated “at rates and terms commensurate with compensation paid to similarly situated individuals with comparable NIL value who are not current or prospective student-athletes at the Member Institution.” See Injunctive Relief Settlement (IRS) Art. 1, §1(c). Notably, similarly-situated individuals are not limited to other student-athletes at other schools, so, as currently presented, fair market value may be determined by considering celebrities or professional athletes too. NIL collectives and boosters can also make indirect NIL payments to student-athletes by making contributions to the school, which can then funnel payments to the student-athletes.
Can companies still sponsor NIL deals with student-athletes outside of NIL collectives? What about enforcement of third-party NIL restrictions?
The NCAA can no longer prohibit NIL payments to student-athletes by any third party. Third-party deals worth $600 or more will run through a Deloitte-run clearinghouse called NIL Go, which will determine whether the deal is a fair price for whatever service the athlete is providing (because third-parties still cannot pay student-athletes for playing their sport—they must be giving a social media shoutout, appearing in an ad, etc.). Deloitte estimated that 70% of third-party deals in the NIL era would have been denied by NIL Go.
In yet another mirror to professional sports, forced arbitration is another big change to third-party NIL deals. Until now, the NCAA has had sole authority to make enforcement decisions and resolve disputes about prohibitions on third-party NIL payments, but going forward, disputes arising out of enforcement of third-party NIL restrictions must be resolved via neutral arbitration. See IRS Art. 6, § 2.
What is the College Sports Commission? Can it legally bind schools?
The College Sports Commission is the new enforcement entity in charge of deciding what “fair market value” is, tracking NIL payments, and potentially doing so in a quicker and more transparent manner than the NCAA did. Reports say that the Atlantic Coast Conference (ACC), Big Ten, Big 12, and Southeastern Conference (SEC) have drafted a document to prevent their member schools from relying on state laws to work around the College Sports Commission’s enforcement of the new rules. The document would bind schools to enforcement policies even if such policies contradict the laws of the state where the school is located. According to reports about the current version of the document, signing it would waive the school’s right to challenge the College Sports Commission in court, replacing court with arbitration. States could theoretically take action against a school violating their state laws, setting up more legal challenges to this framework.
Will roster limits change?
Yes, the NCAA will eliminate the number of scholarship limits and could result in more than 115,000 additional scholarships available to Division I student athletes each year. Before the final approval hearing on the settlement agreement, schools had made difficult decisions to significantly reduce the size of rosters for certain sports like swimming in order to comply with the earlier version of this settlement agreement. After the final approval hearing, however, the agreement was modified to allow settlement class members whose roster spots would have been taken away to be exempt from roster limits at any Division I school for the duration of their college sports careers. Class counsel and schools must now work to identify affected athletes to comply with this portion of the ruling. Among the impacts of this change: affected athletes who transferred to a different school because their roster spot would have been taken away can transfer back to their original school.
What legal challenges are on the horizon?
While this settlement agreement ushers in certainty in many aspects, it also leaves the door open for countless legal challenges from nearly everyone involved. What counts as a “valid business purpose” that a collective or booster can make an NIL payment for? What remedies does a company or student-athlete have if the new NIL Go clearinghouse denies their proposed deal? If a school agrees to follow the College Sports Commission’s enforcement authority even if it violates their state law, can the state take any action against the school? Will Congress step in with nationwide legislation? Judge Wilken denied objectors’ requests to delay implementation of the settlement agreement and IRS pending appeals, so the newest era of paying college athletes starts now. Game on.
