College Athletes are Getting Paid!
College athletics is fixed now......right???
They did it! The House Settlement has finally been approved in a Californian court that will allow athletes to be directly compensated by universities! The approval of the House Settlement is a landmark moment that further eliminates amateurism from the world of college athletics. So how will things change in the future?
What is the House Settlement?
The House Settlement is a settlement between former Arizona State swimmer, Grant House and the National Collegiate Athletic Association (NCAA), the organization that runs college athletics. House sued the NCAA in 2020 for violating his ability to make money off of his Name, Image, and Likeness (NIL) rights.
For most of history, NCAA athletes were banned from receiving money directly from the university or from making money off of their NIL rights. That changed in 2021 when the Supreme Court ruled unanimously against the NCAA’s practices that restricted West Virginia football player Shawne Alston from making money off NIL.
The NCAA would then legalize the ability for athletes to make money through third-party NIL endorsement deals. However, the NCAA was still preventing universities from compensating athletes directly.
In May 2024, the NCAA voted to settle the House lawsuit. As part of the settlement, The NCAA would allow universities to directly compensate athletes for their services and pay back damages to athletes who couldn’t benefit from NIL.
If you want to read a slightly more in-depth history of the NCAA battle with player rights and amateurism you can read my thesis here!
What changes come from the House Settlement?
The key changes are the following:
-Former athletes who participated between 2016 and 2021 will be compensated $2.75 Billion in damages. The damages allocated to each athlete will be determined by estimating NIL value lost during their collegiate athletic career.
- Universities will be allowed to pay $20.5 million to their current athletes. Universities will be able to decide how much they want to allocate to each program and each athlete.
- Sports will be limited in the number of athletes that they can bring on their roster. This will not affect current athletes already on a team.
- A new regulatory body called the College Sports Commission has been created. The organization will be run by the Southeastern Conference (SEC), Big Ten Conference (Big 10), Big XII Conference (Big 12), and Atlantic Coast Conference (ACC). The goal of the organization is to regulate the new “revenue-sharing” landscape and ensure that universities do not exceed the $20.5 million limit.
-The College Sports Commission will also have a NIL clearinghouse used to audit third-party NIL deals and ensure that they are of “fair value”. The clearinghouse will be run by Deloitte.
Great Ben! Surely this means that this whole saga about paying players is over.
Nope! Nothing can be simple in this day and age.
The entire system will likely continue to be subject to legal challenges, especially with regard to how NIL deals are regulated by the clearinghouse.
Additionally, there will be continued legal disputes over the labeling of student-athletes as employees, collective bargaining, and unionization.
There are appeals to Congress to intervene through a federal law that could control the madness.
President Trump will also be meeting with college sports leaders to discuss ways the federal government can get involved.
In one way, you could argue the settlement has created more legal uncertainty than ever before.
How will this affect the athletics landscape?
I’m going to be honest. I have no clue.
There are arguments that there will be less competitive balance within football and basketball but I think it’s hard to tell. Besides there was already large amounts of inequality between schools in the first place.
Sports outside of football and basketball will likely effected negatively. The vast majority of the money will go to football and basketball which will hurt the prominence and allure of the other sports that don’t get as much from the direct payments. There also is the danger that the NIL clearinghouse will start to unfairly restrict NIL deals for non revenue athletes that were not rejected before.
However, I don’t believe the NIL clearinghouse will survive for too long if that’s the case. There are so many enthusiastic donors looking to pay athletes to come to their schools that ultimately the clearinghouse will be challenged in litigation. A deal will most likely be nixed because it is valued too highly as opposed to a deal that is of lower than “fair value”. What likely happens is that the clearinghouse will nix a deal for being overvalued and then the College Sports Commission will get sued.
At the end of the day, even with the salary cap in place, the system will still be pushed to its limits by boosters looking to gain an edge. NIL payments have continued to grow since their introduction in 2021 and have shown no sign of slowing down. The introduction of the settlement just brings more questions as opposed to answers.
Will the settlement cause the payments to cool or will the free market win out?
Will we finally get collective bargaining?
Will Title IX regain its impact?
Will Congress get involved?
There are so many questions left to answer!