Pending NCAA settlement sets up ‘most consequential week in the history of college sports’

On3’s Pete Nakos declared Monday morning that “it is the most consequential week in the history of college sports” before he and Andy Staples examined the legal showdown coming later this week.

The NCAA is dealing with a whale of a battle in court, where they are on the wrong end of a class-action lawsuit, House v. NCAA, in which the plaintiffs (student-athletes) are seeking billions of dollars in back pay for damages caused by the NCAA and the Power Five conferences (the defendants). The suit alleges those organizations violated antitrust law by not sharing broadcasting revenue with athletes and denying revenue opportunities for athletes through Name, Image and Likeness.

The courts previously ruled that the NCAA and conferences could not prevent NIL deals a couple years back — and now, former student athletes dating back to 2016 (as far back as the statute of limitations stretches) are using the class-action lawsuit to try and recover damages (payments) for what they missed out on due to unjust rules from the NCAA/conferences.

Yahoo Sports projected that the NCAA/conferences could be on the hook for up to $20 billion if they lose the case outright. However, there’s currently a settlement on the table with a price tag of just $2.77 billion paid out over several years, which also includes a future revenue-sharing model between the conferences/NCAA and the student-athletes.

Ross Dellenger of Yahoo Sports detailed the payouts of that settlement in this tweet here:

According to Andy Staples, the conferences and NCAA have this week to decide whether to accept that settlement.

“Basically, the conferences have until Thursday to decide if they want to accept this settlement in House vs. NCAA, which would basically change everything about the business model of college sports,” he explained on the On3 YouTube channel, detailing some of Dellenger’s breakdowns.

“It is a $2.7 billion settlement. The NCAA will cover a portion of that — 40%. The schools will cover a portion of that because they NCAA will withhold money that it would normally send to them, like NCAA Tournament money. Then, also, what is the future part of that?”

The future of revenue-sharing in college sports

After that question from Staples, Pete Nakos jumped in to break down what a future revenue-sharing model actually might look like as part of the settlement:

“So the future part of that is revenue-sharing in the range of about $22 million per year. My understanding is there’s also conversations in place for a new framework for power conferences when it comes to enforcement.”

To Staples, enforcement partially means setting a sort of salary cap.

“What they want in this settlement is… there’d be revenue-sharing, schools would be paying players directly, about $22 million per year for the power conference schools. They want to cap the amount. Now, you can still get NIL deals to supplement, but they want a cap, which is essentially what the pro leagues have.”

But there are still massive differences in how the pro leagues settle on a salary cap vs. the situation with student-athletes. However, the class-action lawsuit provides a possible solution, per Staples.

“The difference is the pro leagues collectively bargain those. So what they’re hoping — basically, they are trying to make it so you can opt into the class that sued the NCAA and the conferences. Future players can opt into the class or choose not to opt in. The hope among the plaintiff’s attorneys is that enough players will opt into the class that it deters any future lawsuit; the juice wouldn’t be worth the squeeze for lawyers in the future.”

So, if the plaintiffs (student-athletes) and defendants (conferences/NCAA) can agree on a revenue sharing model as part of this class-action lawsuit settlement, then future athletes can become part of that “class” who settled the suit in order to participate in revenue-sharing. While that’s not really collective bargaining like the actual pro leagues, it may be as close as the student-athletes and NCAA can get.

Small conference pushback

While there’s optimism this settlement will go through, some smaller conferences are pushing back on the proposed model that Dellenger laid out.

“We also kind of saw our first bit of opposition this week,” said Nakos. “Big East commissioner Val Ackerman sent out a letter to membership where she outlined how she’s in opposition of the Big East giving $5-7 million annually towards the settlement, and the reason is there’s 32 Div. I conferences and the Big East is 22nd of the 32 that are non-FBS.”

Staples understands the frustration from leagues like the Big East but believes there’s some leverage at play here.

“There’s two sides to this, but one side of it: it’s very easy for the Big East to make their case, like, ‘We’re not even defendants in this case and you want to take money away from us to pay for this thing?’ And the power conferences are saying: ‘Well yes, because that money is partially because of us that you were getting it in the first place. We have to foot a far more substantial portion of the bill.’”

If anything derails the settlement, Andy Staples believes it could be this disagreement between the larger and smaller conferences.

“That’s going to be a fight. That’s the fight going way back that has probably hung up any sort of progress along these lines forever. I do wonder: does that not hasten this schism where we have the power schools say, ‘We can’t keep doing this, you guys and us have completely different interests, why are we doing this?’”

Dissenters like Ackerman could pose a threat to the settlement this week, since the NCAA needs majority approval to go through with the current proposal, according to Pete Nakos.

“So the NCAA Board of Governors is expected to meet and vote on Thursday on the settlement. But for the Board of Governors to get there, from my understanding, all these conferences are going to have to sign off,” Nakos noted.

“It does not need to be a total agreement, but obviously, there needs to be a majority. Do enough of these non-FBS conferences come together and decline the settlement? I’m not forecasting that, but that’s what would have to happen for this to be hung up for the time being.”

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