NCAA Board of Governors approves terms of multi-billion settlement in House v. NCAA class-action lawsuit: Sources

By Chris Vannini, Nicole Auerbach and Justin Williams

The NCAA Board of Governors voted to approve terms of what is expected to be a multi-billion-dollar settlement in the House v. NCAA class-action lawsuit on Wednesday, as did Big Ten presidents and chancellors, sources briefed on each decision confirmed to The Athletic. The Board of Governors is the NCAA’s highest governing body. This comes one day after leaders from the Big 12 and ACC did the same. It’s another step toward finalizing a settlement in the landmark case that is likely to reshape the college sports business model. The remaining power conferences are expected to vote this week as well.

Settlement details are expected to include north of $2.7 billion in back-pay damages the NCAA will owe to former Division I athletes, as well as a future revenue sharing model between power-conference schools and athletes, according to sources briefed on the negotiations. The damages, made available to Division I athletes dating back to 2016 as back-pay for lost name, image and likeness (NIL) earning opportunities, would likely be paid out over the course of 10 years via a combination of NCAA reserve funds and reductions in future revenue distributions to conferences.

The damages payment model that is being voted on is a slightly tweaked version of the original breakdown put forth by the NCAA, a college administrator briefed on the proposal told The Athletic, in which the NCAA is expected to cover roughly $1.1 billion in damages, and the power conferences would be responsible for roughly 40 percent of the remaining damages. That’s despite internal dissension within the NCAA in recent days, as the smaller, non-FBS Division I conferences argued that the proposed funding plan puts a disproportionate financial responsibility on them.

The revenue sharing would be an optional model for power-conference programs, potentially as soon as next year, in which 22 percent of those schools’ average annual revenue — or roughly $20 million a year — would be distributable directly to athletes.

If finalized, a process that will take several months, the settlement would be the next and most significant overhaul to the long-standing framework of amateurism in college sports.

“The most important part about the settlement — and let’s face it, there’s still a lot of work to be done there — is it creates some clarity and some visibility on a whole bunch of issues that have sort of been roiling everybody for a while,” NCAA president Charlie Baker said last week at ACC spring meetings. “The other thing it does is create predictability and stability for schools. It creates a tremendous opportunity for student-athletes.”

Once the NCAA and power conferences agree on the terms and both sides in the case sign off, the settlement will be submitted to Judge Claudia Wilken of the U.S. District Court for the Northern District of California for preliminary approval. If that gets granted, there would be a set period of roughly 90 days in which those in the retroactive damages class have an opportunity to opt out, and those in the future revenue-sharing class can object to the terms of the agreement. That’s followed by a final approving hearing, at which point, if the judge approves, the settlement officially goes into effect.

House v. NCAA was filed in 2020 in front of Judge Wilken, the same judge who notably ruled against the NCAA in the O’Bannon and Alston lawsuits. Grant House, a former Arizona State swimmer, and Sedona Prince, a former Oregon and current TCU women’s basketball player, are the two named plaintiffs, represented by lead attorneys Steve Berman and Jeffrey Kessler.

It is essentially a suit in two parts: one backward-looking, one forward-looking. The first part seeks the retroactive NIL damages before the NCAA policy change in the summer of 2021, while the latter seeks an injunction that would force the NCAA and power conferences to lift rules blocking revenue sharing from broadcast rights.

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In November, Wilken granted class-action certification for the damages portion of the House case, expanding it to any Division I athlete as far back as 2016, under a four-year statute of limitations. This exponentially elevated the potential cost of the damages in the case, which is scheduled to go to trial in January 2025.

While a settlement would institute significant change in college sports and for the NCAA, an organization that has long resisted compensating athletes, the NCAA has motivations to avoid taking the case to trial. Were the NCAA to lose at trial, it could be on the hook for damages as high as $20 billion, according to documents obtained by Yahoo Sports that were circulated among power conference presidents and administrators, an amount that would have to be paid out immediately and could force the NCAA to file for bankruptcy. A loss at trial would also strike down any existing constraints on NIL and revenue sharing moving forward.

“So essentially, if we win, there would be a complete free market in NIL, including from broadcast payments,” said Kessler.

A settlement would give the NCAA more input on payment structures for the damages and revenue sharing, as well as some safeguards against other legal battles. Settling the House case would resolve Hubbard v. NCAA and Carter v. NCAA, two other high-profile antitrust suits in which the plaintiffs are represented by Berman and Kessler in the Northern District of California, and hinder any additional antitrust complaints over the next decade, according to sources briefed on the settlement negotiations. This is considered an important aspect of the settlement terms for the NCAA, which has faced an onslaught of legal challenges in recent years.

Newly configured roster limits for power-conference sports are also expected as part of the settlement, with specific scholarship figures to be decided collectively by those leagues in the coming months.

Lingering questions also remain beyond the settlement over Title IX’s role in future revenue sharing, the future of third-party NIL collectives and the ongoing debate over unionizing efforts and employment status.

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(Photo: Mitchell Layton / Getty Images)