The NCAA and its schools are considering a proposed solution to one of the largest looming obstacles remaining for a landmark settlement of the association's antitrust cases, which could shape the future of major collegiate sports in America.
With the college sports industry aiming to avoid future antitrust lawsuits, the terms of a settlement would establish an annual process giving new players a chance to opt in or object to revenue-sharing terms currently being negotiated as part of the emerging framework for the future business model of the NCAA's top schools.
The NCAA and its most powerful conferences are in the thick of working toward settling the House v. NCAA case this month, with sources saying leagues are planning to vote on a proposed deal by May 23. ESPN spoke to more than a dozen legal and industry experts in college sports this week to better understand the ongoing negotiations.
The tentative terms of the settlement include the NCAA paying more than $2.7 billion in past damages as well as setting up a system for its most powerful conferences to share a portion of their revenue with athletes moving forward. One major obstacle to reaching a settlement has been finding a way for the NCAA and its schools to protect themselves from future lawsuits, including potential claims they would be colluding to cap player compensation without using a collective bargaining agreement.
Steve Berman, the co-lead counsel representing athletes in the House case, told ESPN he and his team have proposed a solution that would extend the class-action settlement on an annual basis. In this scenario, athletes would receive a notice each year providing them with the opportunity to object to the terms of the revenue-share agreement. Berman said those athletes would then have the chance to attend a hearing and persuade the judge that the revenue-share arrangement was unfair in order to push for a change.
"Each year we would have a hearing where any new athlete who wasn't previously bound [by the settlement] can come and object," Berman said. "They would have to come and say, 'I don't think this is fair.' That would be a hard burden to prove."
An NCAA spokesperson did not respond to a request for comment. Some athlete organizers say they are skeptical a rolling annual opt-in mechanism would be enough to dissuade future players from filing lawsuits to push for a bigger share of money in future years.
Sources say revenue sharing with athletes would begin, at the earliest, in the summer of 2025. The settlement would also serve to resolve three other active antitrust lawsuits against the NCAA.
The details of a settlement and their implications on how schools spend their money remain in flux. But with leagues expected to vote within the next two weeks, details are growing more clear as leaders in the industry weigh their options and sort through several remaining questions about how a future business model will work.
Why would an annual hearing be necessary?
In professional sports, the amount of revenue a league shares with its players is typically negotiated through a collective bargaining agreement between the league and a players' union. Collective bargaining agreements completed with a certified union are exempt from antitrust challenges in court. That legal protection would not apply, however, in college sports if athletes are not deemed to be employees when schools start sharing their revenue.
The NCAA and its schools have been firmly opposed to a model where athletes are viewed as employees.
There are multiple pending cases in front of the National Labor Relations Board where athletes and their advocates are arguing that players should be employees and have the right to unionize, but those cases could take years to reach a conclusion. Others such as the College Football Players Association -- one of several groups seeking to organize college athletes -- have proposed asking Congress to create a special status for college athletes that would allow them to collectively bargain without being employees. But again, Congress has been slow to reach consensus on any federal legislation that could help chart a course forward for college sports despite several years of requested help from the NCAA.
The current House case is a class-action lawsuit that applies to all current Division I college athletes. That means future college athletes would not be bound by the terms of a settlement reached this year. Berman and his colleagues are hoping that giving each incoming group of new players an option to join the class will provide the schools with enough confidence that their agreement will be hard to challenge with future litigation.
What are the chances of a settlement happening?
There are so many moving parts that nothing is definitive, but sources from both sides of the case appear to be optimistic they are making substantial progress toward a settlement.
The NCAA has worked furiously toward settling, including agreeing to pick up the more than $2.7 billion in past damages over the next 10 years. If the case goes to trial and a judge rules against the NCAA, the association and its schools could be on the hook for more than $4 billion in damages.
Sources told ESPN that NCAA president Charlie Baker was in Washington, D.C., on Thursday meeting with more than a half-dozen Senators, a previously scheduled trip where he's staying engaged with current Senate leaders about potential future legislation.
The belief in the industry is that all the power conferences have the majority votes to settle, which will be up to their schools' top administrators. There are a few individual schools that are skeptical of settling -- some of those overlap with the schools that supported the idea of forming a new "super league" that would radically reshape the entire structure of college athletics. While some believe a more complete overhaul is needed, sources told ESPN there's essentially zero chance of a super league emerging in the near future.
To the majority, the idea of a league deciding to battle Berman and fellow lead attorney Jeffrey Kessler in court and face billions in damages isn't too appetizing -- especially with the NCAA paying the back damages.
Here's the breakdown of the landscape, according to multiple industry sources: The Big Ten is generally on board with settling. The SEC has some detractors of settling but is trending to a majority. The Big 12 is expected to follow along. There's some dissension in the ACC, which has amplified why Florida State and Clemson are suing to leave the league, but sources say it's unlikely the ACC will end up voting against it.
It's also important to note here that a vote for settling doesn't mean all of the key details will have been ironed out. The notion of capping the size of a team's roster as part of this new business model, for example, has generated buzz in athletic director and coaching circles. But details like what a football roster would be capped at -- and the fate of walk-ons -- are not expected to be decided until after the vote, per sources.
"It's so early in that conversation, it's hard to speculate," a source said. "There's a lot more work there. You want to build consensus across multiple conferences."
Also, any potential help from Congress that Baker is courting wouldn't come until well after the settlement.
"It gives us a better hand to play with Congress," an industry source said. "They were looking for something from us. This injects a lot in that conversation. This is a good start."
How much money will schools be spending on future payments to athletes?
Sources told ESPN that while terms could change, the current proposal would create a spending cap for each power-conference school based on 22% of the average media rights, ticket sales and sponsorship revenue of each power-conference school. Sources say they expect that cap number to be nearly $20 million per school. Schools would not be required to spend that much money on their athletes but would have the option to share up to that $20 million figure with them.
The cap number could change every few years to reflect changes in the overall revenue of schools. It's not clear whether some money the schools already provide to their athletes -- such as an academic reward of roughly $6,000 commonly referred to as Alston payments -- would count toward that cap. Multiple sources did tell ESPN that donations from boosters are not included in the revenue formula.
How will they divide that money among their athletes?
There are no specific provisions in the proposed settlement that spell out how schools should distribute money to athletes, according to sources. Each individual school would be responsible for deciding which athletes to pay and sorting through the uncertainty around how that money would apply to Title IX regulations, per multiple sources.
Title IX requires colleges to provide equal opportunities for men and women to compete in varsity sports and provide equitable benefits to those athletes. The law, written long before athletes were earning money beyond their scholarships, does not clearly state how the federal government views direct payments to athletes. Does equitable treatment require a school to give the same dollar amount to men and women athletes in the new revenue-share model? Or would the payments be viewed more as a benefit that could be proportional to the money generated by each sport? Would scholarship dollars and additional revenue-share dollars be considered in the same financial category when balancing the Title IX ledgers?
"The truth is, no one knows," a source told ESPN on Friday.
While the Department of Education or Congress could provide answers proactively, neither has demonstrated any urgency to do so at this point. Specific interpretations of Title IX often come through litigation, and in this instance, a group of athletes might need to file a lawsuit about how their school is handling these direct payments to establish clarity.
Until then, the most conservative approach for schools to ensure Title IX compliance would mean evenly splitting the new revenue-share dollars between men and women athletes. Sources say some schools might try to balance the overall spending by increasing scholarship opportunities on their women's teams, but it remains unclear whether that would satisfy Title IX regulations. Others might seek a competitive advantage in football recruiting, for example, by arguing that equitable treatment for athletes in the case of revenue sharing should be based on the revenue their sports generate.
Sources also said the settlement won't require schools to share money with all athletes or share it evenly among athletes -- leaving those decisions up to individual athletic departments as well.
What happens to collectives and NIL payments?
According to a source, the settlement does not include any provision that would put an end to the booster collectives that currently serve as the main vehicle for paying athletes. School officials hope a settlement will create a way to strengthen the NCAA's ability to enforce its rules, including its rule that requires NIL payments to be for a player's market value as opposed to the current system, which frequently serves as a workaround for "pay-for-play" arrangements. However, drawing a distinction between those two types of payments would remain a difficult, nebulous task. Any attempt to completely eliminate the NIL collective market would take a substantial change in federal law provided by Congress.
The NCAA has created new rules this spring that allow schools to be more directly involved in finding NIL deals for their athletes. New state laws are also opening doors for the schools to use their own money to pay for an athlete's NIL rights as opposed to those funds coming from a third party. The extent to which each school continues to be involved in finding NIL opportunities for its athletes in a future with revenue sharing could vary significantly.
"The feeling in the industry is that collectives are going to be forced to stay outside the universities, and it will become more of a discrepancy of the haves and have-nots," said an industry source. "If you bring collectives in, any money raised would count toward the cap. But schools can hit the cap and still have collectives as third parties. That's the fear, and why there needs to be regulation."
What does this mean for major college basketball and leagues outside power conferences?
It's still relatively uncertain how this would impact major college basketball schools outside of the power conferences.
Schools in the Big East, which is the most prominent basketball-forward league in the country, haven't been given any formal guidance on how a settlement would trickle down to their level.
The prevailing sentiment is that leagues outside the power conferences named in the lawsuit, including basketball-forward leagues, will have the opportunity to opt into the same 22% revenue-share formula, which would be applied to their specific revenue.
The most expensive men's college basketball rosters heading into next season are commanding $5 million to $7 million in NIL payments, per sources. It's too early to determine whether leagues outside the power football conferences will be able to pay that much through revenue sharing.
The uncertainty about how the power conferences will settle the antitrust claims is leaving many administrators outside those leagues in what they describe as a difficult situation.
"All of the Group of 5 is in a wait-and-see mode, which is a precarious situation," one source told ESPN. "It is extremely tough to lead athletic departments, universities and conferences and plan for the future -- whether that be facilities, NIL, etc. -- when you have no seat at the table to make the rules that will impact you."