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NCAA and Power Five conferences agree to allow schools to pay players

The proposed settlement would also include $2.8 billion in damages for former and current college athletes.

The NCAA, the Power Five conferences and attorneys for plaintiffs in three antitrust lawsuits involving college athlete compensation on Thursday agreed to a proposed settlement that would provide a nearly $2.8 billion damages fund for current and former athletes and fundamentally change the way current and future athletes are paid to play their sports.

The SEC and Pac-12 conferences approved the deal on Thursday, sources familiar with the proceedings told USA TODAY Sports. The sources spoke on condition of anonymity because the process is ongoing and the parties must work out a formal version of the proposed agreement and seek court approval for it. Thursday's moves followed approval by the other three conferences and two NCAA governing boards earlier this week.

“I'm thrilled it worked out,” Steve Berman, one of the plaintiffs' lead attorneys, told USA TODAY Sports as he said he was submitting a letter to the court overseeing the cases. “When we started this, I never dreamed of this day. It's a revolutionary moment in college sports.”

According to a summary of the proposed settlement terms first published by Yahoo! Sports and ESPN and later obtained by USA TODAY Sports, the NCAA would fund the damages fund over 10 years and schools would begin sharing future revenue with athletes. More than half of the money for the damages fund would come from cuts in NCAA distributions to all Division I schools and conferences.

Multiple sources have told USA TODAY Sports they expect the proposed rule to add at least $20 million annually to the budgets of athletic departments, which pay their athletes the maximum allowable total amount, which will be below a cap to be determined and then increased over time.

Athletes would also continue to be permitted to accept money for activities related to the use of their name, image and likeness (NIL), including but not limited to endorsements and personal appearances.

In a joint statement, the NCAA and the commissioners of the Power Five conferences said, among other things, that the agreement was “an important step in the ongoing reform of college sports that will benefit student-athletes and provide clarity in college sports across all divisions for years to come. This agreement also provides a roadmap for college sports leaders and Congress to ensure that this unique American institution can continue to provide unmatched opportunities to millions of students.”

NCAA officials said Thursday night that they would continue to focus on preventing athletes from being classified as employees of schools, an issue that is the subject of another ongoing lawsuit and complaints being pursued before the National Labor Relations Board.

NCAA officials said they also wanted to ensure that the schools and association would not face legal consequences if they abide by the proposed settlement. Because the proposed settlement caps the amount of money paid to athletes, it may lead to them continuing to seek some form of antitrust protection.

As for the damages awarded to former and current athletes, one of the lawsuits could result in payments to athletes going back to 2016. That date is four years before the original lawsuit was filed, within the retroactive period permitted under antitrust law.

Berman said the settlement amount will be divided into different groups based on various criteria. For example, one group would be based on the television money that would have gone to the athletes if there were no NCAA salary caps; another group would be based on money related to video games. Payments will also depend on factors such as the number of years an athlete was on a team. Berman said football and basketball players eligible to receive money from the damages fund will likely receive tens of thousands of dollars, if not more.

What happens next?

The proposed deal must now receive preliminary and final approval from U.S. District Judge Claudia Wilken. She will also consider a request from the plaintiffs' attorneys for fees and costs, which are typically based on a percentage of the damages amount. A preliminary settlement proposal is expected to be submitted within 30 to 45 days. As part of the overall approval process, athletes – presumably represented by other attorneys – will have the opportunity to appeal. The approval process will likely take months.

There is already another ongoing antitrust case against the NCAA and the conferences that could potentially raise objections to the proposed settlement. On Thursday, U.S. District Judge Charlotte Sweeney in Denver denied a request by the NCAA and the conferences to move that case from Colorado to California.

Had Sweeney granted the motion, the NCAA and the conferences likely would have sought to consolidate that lawsuit with one of the lawsuits covered by the proposed settlement.

However, Berman said he and co-lead counsel Jeffrey Kessler would pursue legal strategies to ensure the plaintiffs' claims in the Colorado case are covered by the proposed settlement. An NCAA representative expressed confidence Thursday night that the Colorado case would not be an obstacle to the proposed settlement. Berman said if the approval process goes smoothly, he hopes athletes could begin receiving checks from the damages pool in fall 2025.

How did we get here?

The concept of college athletes being compensated in this way was anathema to even the wealthiest athletic departments 15 years ago, when Berman's Seattle-based firm Hagens Berman Sobol Shapiro LLP filed the first in a series of antitrust lawsuits. Back then, athletes were essentially only allowed to receive scholarships consisting of tuition and mandatory fees, books, room and board.

Since then, college sports revenues, as well as coaches' and administrators' salaries, have soared. According to their most recent federal tax filings, the Power Five conferences combined for just over $3.55 billion in total revenue in fiscal year 2023. Georgia football coach Kirby Smart recently signed a contract that will pay him $13 million annually. And former Texas A&M football coach Jimbo Fisher is getting more than $77 million in severance pay after being fired by the university last November.

Meanwhile, many college sports officials in the major leagues have slowly – and under considerable pressure from federal courts and state legislatures – warmed to the idea of ​​finding ways to give their athletes greater advantages.

In 2019, the California legislature passed a measure to make it easier for college athletes in that state to earn money from their NIL, and Governor Gavin Newsom signed it into law. Several other states passed similar measures, and the NCAA changed its rules regarding athlete compensation from NIL activities in July 2021.

In court, the NCAA lost a case on behalf of former UCLA basketball player Ed O'Bannon and another on behalf of former West Virginia football player Shawne Alston. That case culminated in a unanimous Supreme Court decision that said the NCAA could not place limits on education-related benefits for athletes.

The proposed settlement would end a lawsuit on behalf of the plaintiffs, led by former Arizona State swimmer Grant House. As part of the lawsuit, Wilken granted class action status to the athletes in November 2023. They sought damages based on the share of television rights money and social media revenue they allegedly would have received had the NCAA's previous restrictions on NIL compensation not existed.

Lawyers for the NCAA and the associations wrote in their lawsuits that the athletes are seeking more than $1.4 billion. The lawsuits did not specify whether that figure includes the tripling of damages that occurs in successful antitrust cases. If not, more than $4.2 billion would be at stake in the case.

The settlement would also cover two other cases. One of them, on behalf of former Oklahoma State football player Chuba Hubbard, involved a claim for damages from the Alston case based on the value of educational benefits athletes said they would have received had there been no NCAA limits, which could have tripled to more than $900 million.

The other case, filed on behalf of former Duke football player DeWayne Carter, could have been more devastating for the NCAA and the associations. Like the case that was pursued in Colorado, it seeks an injunction prohibiting any NCAA rules that prevent such an open market — essentially creating a formalized pay-for-play system in which athletes can be paid by their schools for their athletic performance.

Due to the amount of possible compensation, the damages in both cases could be even higher than in the proceedings before the House of Representatives.

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