Thousands of college athletes can now sue for part of a multibillion-dollar settlement aimed at paying athletes a share of college revenue generated from their performances.
The proposed $2.8 billion settlement stems from a landmark case involving allegations that numerous current and former athletes were wrongfully denied compensation for the use of their name, image and likeness (NIL).
Historically, college athletes were not allowed to receive compensation other than scholarships and limited expenses. That all changed in 2021, when new rules and state laws allowed athletes to earn money for the commercial use of their images through brand deals and agreements with school bands funded by fans and alumni.
The settlement, which resolves several lawsuits against the NCAA and major athletic conferences, could further upend the landscape of college sports and ultimately lead to colleges paying athletes directly.
The settlement applies to athletes who have competed since 2016. The biggest payouts from the $2.8 billion fund will likely go to football players, while the largest individual amount could be as high as $1.85 million.
Among the athletes poised to receive big checks if the deal goes through, some have gone on to — or will go on to — high-paying careers in the NFL and NBA, but many others have not. For this latest group of athletes who have earned virtually nothing during their sports careers, the payments could be life-changing, according to lawyers involved in the case.
The agreement still has legal hurdles to clear, but a judge gave preliminary approval last week, opening the door for the claims process to begin. The settlement website is now live and those eligible will begin receiving notifications on Friday.
The issue is most often referred to as the House v. NCAA settlement, but the settlement will also resolve two other antitrust cases.
Distribution of persons receiving payments from the settlement
The agreement identifies three key groups of athletes: Power Five men’s football and basketball players, Power Five women’s basketball players and all other Division I athletes. (The Power Five refers to the NCAA’s most prominent conferences at the time: the Atlantic Coast, Big Ten, Big 12 and Southeastern, as well as the now much smaller Pac-12.)
Plaintiffs’ attorneys estimate average payouts will be $135,000 for men’s football and basketball players and $35,000 for women’s basketball players. Other athletes will be eligible for smaller payments, ranging from hundreds to thousands of dollars, and in some cases even less. More than 400,000 athletes are potentially eligible to make claims.
Why are these three sports, and football in particular, so popular? Sports other than basketball and football “bring no benefit to conference media contracts,” the court said, and for that reason other athletes are not entitled to a share of the largest share of broadcast media compensation. , which Power 5 basketball and football players were allegedly wrongfully denied.
Jim Kavale, chairman of the Athletes.org players’ association, says someone like Saquon Barkley, who played football at Penn State and is now a star running back for the Philadelphia Eagles, would likely receive a significant payout because he was defensive workhorse. in a high-income program. (He likely won’t be the highest paid, however, as Money’s analysis of the proposed calculation formula suggests that slightly younger players in more valuable positions, such as fullback, could benefit even more.) On the other hand, some Olympic athletes will only receive ” A few hundred dollars,” says Kavale.
The exact payout — which is based on a formula developed by University of San Francisco professor Daniel Rusher, an expert in the economics of college sports — will depend on the school attended, as athletes who played on college teams brought in higher earnings, leading to higher earnings. bigger check. The number of athletes who played or competed also matters. In football this is measured in snapshots. In basketball, everything is based on minutes.
Power Five football players will be paid a portion of the money based on the value of the players’ respective positions (typical NFL player salaries are used to measure this), so quarterbacks will likely receive more from the settlement than running backs. In basketball, the equations include performance statistics that show how many extra wins a player has scored for his team.
The other part of the formula determines how much athletes should receive for lost video gaming opportunities, but that’s a relatively small piece of the overall pie.
When will athletes receive payments?
Individual athletes won’t know the amount they are entitled to receive in compensation until at least December, said attorney Luke Fedlum, partner and head of the sports law practice at Porter Wright in Columbus, Ohio. Any payments will be paid annually for a period of up to 10 years.
Fedlam, who is not an attorney in the case, also stressed that the agreement is still in the preliminary stages and athletes will have the opportunity to opt out of it to preserve their rights to pursue their own lawsuit against the NCAA or the five major conferences named as defendants. .
A final approval hearing is scheduled for April 7, but even if it is approved, there will likely be appeals. “The question here will be, what will be done to ensure that student-athletes get what they deserve from this agreement?” says Fedlam.
Fedlam says there is already a group willing to appeal because of issues related to Title IX, the federal law that requires equal treatment for men and women involved in camp athletics. Some student-athletes will likely feel that they deserve more and should be paid more, which could lead to appeals and withdrawals. “There’s still a long way to go,” he says.
While an appeals process has yet to be developed, many in the sports world are celebrating the historic nature of the settlement.
What else does the settlement do?
The $2.8 billion amount is intended to retroactively compensate for alleged damages from the loss of television and marketing rights. But a separate—and potentially more significant—part of the agreement creates a roadmap for the future of compensation in college sports through revenue sharing.
Under this model, many colleges would be able to spend up to $22 million annually on paying athletes, and they would be able to allocate that money as they see fit. About 70 schools will be able to use that maximum budget as early as next summer, Kavale said, which would be a game-changer for college athletics. Over the next 10 years, college athletes could earn between $15 billion and $20 billion through revenue sharing.
What kind of deals are athletes currently earning through third-party deals? That would be “the icing on the cake,” he says.
More money:
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