NCAA and leagues sign $2.8 billion plan to set the stage for dramatic changes in college sports

The NCAA and the nation's five largest conferences have agreed to pay nearly $2.8 billion to settle a series of antitrust lawsuits, a momentous decision that paves the way for a groundbreaking revenue-sharing model that could send millions of dollars directly to athletes as early as the fall 2025 semester.

The Pac-12 was the last conference to sign off on the proposal when university administrators voted to adopt it on Thursday, according to a person with direct knowledge of the outcome.

The Southeastern Conference presidents and chancellors unanimously approved the deal on Thursday, another person with knowledge of the decision told The Associated Press. Both spoke on condition of anonymity because an official announcement between the Pac-12, SEC, Big Ten, Big 12, Atlantic Coast Conference and NCAA is still being prepared.

The other organizations had already voted for approval earlier in the week, before the Thursday deadline set by the plaintiffs' lawyers.

The deal still needs to be approved by the federal judge overseeing the case, and there could be objections, but if it goes through, it will mark the beginning of a new era in college sports, where athletes are paid more like professionals and colleges can compete for talent through direct payments.

The details of the plan signal the end of the amateurism model that dates back to the NCAA's founding in 1906. In fact, the days of the NCAA penalizing athletes who drove promoters' cars ended three years ago, when the organization lifted restrictions on endorsement deals funded with so-called name, image and likeness money.

These days, it's not far-fetched to imagine seasons in which a star quarterback or promising junior player on a college basketball team not only lands high-paying NIL contracts, but also has $100,000 in tuition money in the bank to play.

Numerous details still need to be worked out, but the agreement calls for the NCAA and conferences to pay $2.77 billion over 10 years to more than 14,000 former and current college athletes who say now-defunct rules prevented them from earning money from advertising and sponsorship deals dating back to 2016.

Some of that money will come from NCAA reserves and insurance, but while the lawsuit specifically targets five conferences with a total of 69 schools (including Notre Dame), dozens of other NCAA member schools will receive smaller distributions from the NCAA to cover the massive sum.

The brunt of the settlement will ultimately be borne by schools in the Big Ten, Big 12, Atlantic Coast and Southeastern conferences, each totaling about $300 million over 10 years, the majority of which will be paid to future athletes.

The Pac-12 is also part of the agreement, with all twelve schools sharing responsibility, although Washington State and Oregon State will be the only remaining league members after the other ten schools leave in the fall.

PAYMENT OF ATHLETES

Under the new compensation model, each school will be allowed (but not required) to provide up to $21 million in revenue annually to share with athletes, but the cap could be raised as revenue increases.

Athletes in all sports would be eligible for payments and schools would have the freedom to decide how the money would be distributed among sports programs. Scholarship restrictions based on sport would be replaced by roster restrictions.

Whether the new compensation model will be subject to Title IX gender equality law is unknown, as is whether schools will be able to carry out NIL activities in-house as hoped, displacing the sponsorship groups that have emerged in recent years to pay athletes. Both issues could lead to further lawsuits.

THE CASE

The federal class-action lawsuit at the heart of the settlement, House v. NCAA, was scheduled to go to trial in January. The suit, filed by former Arizona State swimmer Grant House and Sedona Prince, a former Oregon basketball player and now TCU player, alleges the NCAA and the five wealthiest associations wrongfully denied athletes access to endorsement money.

The lawsuit also argued that athletes were entitled to a share of the billions of dollars the NCAA and its conferences earn through media rights agreements with television networks.

Faced with political and public pressure and the prospect of another court defeat that college sports officials say could result in damages of up to $20 billion, NCAA and conference officials are recognizing a principle that has long been central to sports: colleges do not pay athletes any money directly for their games beyond a scholarship.

This principle has been violated several times over the last decade.

Notably, in 2021, the Supreme Court unanimously ruled against the NCAA in a case involving education-related benefits. While the narrow focus of the Alston case did not bring down the college sports system, the harsh criticism of the NCAA's amateur model opened the door for more lawsuits. Justice Brett Kavanaugh, a former Yale athlete, put it bluntly: “The bottom line is that the NCAA and its member colleges are squeezing the pay of student-athletes who collectively generate billions of dollars in revenue for colleges each year.”

THE OTHER CASES

The settlement is also expected to cover two other antitrust cases facing the NCAA and major conferences that challenge athlete compensation rules. Hubbard v. NCAA and Carter v. NCAA are also currently before judges in the Northern District of California.

A fourth case, Fontenot v. NCAA, could cause complications because it is still being tried in a Colorado court after a judge denied a motion to join him with Carter. Whether Fontenot will be part of the settlement is unknown and important because the NCAA and its conferences do not want to be liable for further damages should they lose in court.

“We will continue to pursue our case in Colorado and look forward to hearing the terms of a proposed settlement once they are actually made public and presented to a court,” said George Zelcs, an attorney for the plaintiffs in Fontenot.

Overhaul of college sports

The settlement is groundbreaking but not surprising. College sports have been heading in this direction for years, with athletes receiving more and more financial benefits and rights that they say were long overdue.

In December, NCAA President Charlie Baker, the former Massachusetts governor who has been in office for 14 months, proposed creating a new Division I level of athletics in which the schools with the most resources would be required to pay at least half of their athletes $30,000 a year. That proposal, like many other possibilities, is still being discussed.

The agreement does not solve all of college sports' problems. The question remains whether athletes should be considered employees of their schools, something Baker and other college athletes are fighting against.

Some sort of federal legislation or antitrust exemption is likely needed to codify the terms of the settlement, protect the NCAA from future litigation and preempt state laws that seek to undermine the organization's authority. The NCAA currently still faces lawsuits challenging its ability to govern itself, including setting rules to limit multiple transfers.

Federal lawmakers have indicated they would like to take action, but although several bills have been introduced, none have moved forward.

Despite the unanswered questions, one thing is clear: college sports will become more and more similar to professional sports than ever before.

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Follow Ralph D. Russo on and listen at http://www.appodcasts.com

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