FCS school challenges House v. NCAA settlement proposal: What Houston Christian’s motion may mean for case

Houston Christian University filed a motion to intervene in the House v. NCAA lawsuit on Thursday, arguing that HCU’s financial interests were not adequately represented by the proposed terms of the House settlement agreed to last month.

The motion, if granted, could signify the first of many objections from smaller universities that felt they did not have a sufficient voice in a potentially historic reshaping of college sports.

HCU’s motion to intervene stems from dissension that arose in the weeks before the proposed settlement, with smaller Division I schools and conferences arguing a lack of input in the settlement negotiations and disproportionate financial responsibility. The House settlement terms, which have yet to be submitted to the judge for preliminary approval, include a future revenue-sharing model directly from schools to athletes as well as $2.75 billion in back-pay damages the NCAA will owe to former Division I athletes who were previously barred from earning name, image and likeness (NIL) compensation. An overwhelming portion of those damages are expected to be distributed to former power-conference athletes, according to sources briefed on the settlement.

“We’re in a position where we believe this raises some issues of fiduciary responsibility,” HCU general counsel Tyler Boyd told The Athletic. “We first and foremost want our interests to be heard.”

Houston Christian, formerly known as Houston Baptist University, is a Division I school and FCS football program that competes in the Southland Conference. According to the proposed settlement terms, over the course of 10 years, the NCAA would be responsible for paying out roughly $1.2 billion of the back-pay damages using reserve funds, or roughly 41 percent of the total $2.75 billion. The power conferences would be responsible for about 25 percent in withheld future revenues, the Group of 5 for about 9 percent, FCS schools — such as HCU — for about 12 percent, and non-football DI schools about 12 percent, all based on the share of DI revenue distributions conferences received from 2016 to 2024.

For non-FBS football conferences without the benefit of lucrative television-rights contracts, those percentages represent a more significant financial burden. One Division I commissioner previously estimated to The Athletic that non-FBS conferences could be on the hook for $2.5 million per year in withheld revenues to help cover the NCAA’s back-pay costs, which can amount to as much as 25 percent of the annual distributions some universities receive from the NCAA. That’s despite antitrust lawsuits such as the House case seeking damages largely as restitution for the billions of dollars collected via those power-conference media deals.

Multiple administrators from the 22 non-FBS conferences, collectively referred to as the CCA22, previously told The Athletic they were not briefed on the House settlement discussions until last month, after the financial structure of payouts had already been formulated. In late May, before the proposed settlement agreement, representatives from the CCA22 submitted a formal request to the NCAA’s Board of Governors and Division I Board of Directors to either delay a final decision on the financial breakdown or adjust it to a more proportionate rate of revenue reductions for each conference, but to no avail.

“I understand this change will not be easy to manage, but given the challenges facing college sports over the last few decades, change is inevitable,” Baker wrote in the letter sent to NCAA membership last month regarding the proposed settlement terms.

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HCU’s motion to intervene seeks a legal intervention in a settlement the university argues will unfairly “divert funds from academics to athletics” due to the NCAA’s withholdings and would negatively impact its students, athletes and non-athletes alike.

If granted, the motion would essentially add HCU as a defendant alongside the power conferences and NCAA at-large, which could open the door for other universities to do the same and potentially send the settlement back to the negotiating table.

Broadly, HCU’s efforts further illustrate the many divisions and oppositions among NCAA institutions, and why the organization has often struggled to appease such a wide-ranging membership. HCU was technically represented as a defendant in the House suit by the NCAA, which voted to approve the settlement agreement via the Board of Governors and Division I Board of Directors. Yet the motion makes clear the school did not feel properly advocated for in negotiations.

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Representatives in the House plaintiffs did not immediately respond to a request for comment, but Steve Berman, one of the lead plaintiff attorneys, told USA Today via email: “There is no settlement that has been finalized or filed, so I question how this school can intervene in opposition to something that is not done.”

Berman continued: “Contrary to what is claimed, there is nothing in the settlement that requires Houston Christian University to spend any more in the future; rather, it gives universities the choice to spend on its athletes under a more free and fair system. If HCU doesn’t want to do so, it doesn’t have to.”

A source briefed on HCU’s decision to file the motion to intervene told The Athletic that doing so now, before the settlement terms are officially submitted or approved, was the best opportunity to object to the settlement as agreed to and be given a more adequate voice in the negotiations.

In a statement provided to The Athletic on Friday, the NCAA said: “This proposed settlement is a massive step toward creating a future for all three NCAA divisions that is fair, stable and sustainable, while also ensuring that providing educational opportunities for all student-athletes remains a foundational element of college athletics. The proposal also allows for significant flexibility by allowing Division I schools to direct additional financial benefits to student-athletes based on each school’s specific priorities and financial abilities if they chose to. The future revenue reductions will be spread equitably across all of Division I with the national office and A5 taking on 66 percent of the cost and for the average non-A5 school, this revenue reduction will account for approximately 1-2 percent of a school’s athletics funding.”

The impact of HCU’s motion will be determined by whether Judge Claudia Wilken, who is presiding over this case in the Northern District of California, ultimately grants the intervention. It is also possible that other universities could file similar motions before the judge delivering a decision on HCU, and that the judge could collectively decide on multiple motions to intervene, a source familiar with the case told The Athletic.

“We believe that this case raises the issues of financial responsibility for the mission of the university, including those funds that could be directed away from university operations. Because it impacts the university as a whole and the students who are attending the university that are not student athletes. The intervention really represents the interests of those who we serve as our students.”

(Photo: Mitchell Layton / Getty Images)