Preliminary Approval of NIL Settlement
Judge grants approval of preliminary settlement regarding three NCAA court cases, resulting in $2.8 billion in damages awarded to past and present collegiate athletes.
NIL or Name, Image, and Likeness has been a significant topic of discussion in college athletics over the last several years. NIL allows collegiate athletes to earn revenue directly from their universities through brand partnerships, merchandise collections, and opportunities within their universities directly. Before 2021, college athletes could not profit from their brands while playing university sports.[1] In 2021, the NCAA established new rules allowing collegiate athletes to earn money through brand deals, school collectives funded by boosters, and other opportunities.
The recent NIL preliminary settlement granted by Judge Claudia Wilken of the U.S. District Court for the Northern District of California will provide increased opportunities to collegiate athletes, allowing them to compensate monetarily through NIL.[2] Additionally, it will compensate athletes who were unable to profit through NIL during their college experience. The settlement covers Power Five men’s football and basketball players, Power Five women’s basketball players, and all other Division I athletes. Any athlete who played from 2016 onward within one of these three categories will be covered in the settlement and can file objections or opt-out until January 31, 2025.[3]
The settlement involving antitrust lawsuits, including House v. NCAA, Hubbard v. NCAA, and Carter v. NCAA, was established on the grounds that such NCAA restrictions limited the potential earnings of college athletes throughout the past several years.[4] The case pertains to the NCAA, Power Five athletic conferences, and plaintiff student-athletes.[5] Judge Wilken initially rejected the original settlement in May of 2024, but granted preliminary approval of the amended settlement that followed. If the settlement is fully approved, the NCAA will pay around $2.8 billion in damages to qualifying athletes. Once the settlement is finalized, schools will be able to pay their athletes up to $22 million per school, on an annual basis.[6] The final hearing to approve the settlement is set to take place on April 7, 2025. The revenue-sharing plan established in the approved preliminary settlement creates a 10-year plan where the NCAA and its member schools can share around 22% of their annual revenue with athletes. The revenue-sharing plan and the large athlete-pay model of sports revenue are projected to reach $32.9 million within the next 10 years. These improvements in college athletics represent a step closer to “pro-style” sports.
Assuming the settlement is finalized in the coming year, the result of such a deal will change the lives of many collegiate athletes throughout the country. For athletes who didn’t make it to the pros, these settlements could significantly impact their futures. The compensation athletes will receive will range from hundreds, thousands, to even millions of dollars, depending on each athlete’s situation. Their opportunities to work with brands, profit from NIL, and develop their own personal brands will come with legal complexities that they will need to navigate carefully. For example, athletes must navigate contractual agreements, negotiate their potential revenues from schools and brands, and abide by NCAA rules while navigating NIL. Potential issues could arise, including antitrust laws, intellectual property, Title IX, NCAA waivers, and other legal concerns. Although the upcoming settlement and preliminary approval expands opportunities for college athletes and compensates them for lost wages, it will come with additional complexities that must be managed appropriately. After the finalization of the settlement in the spring, the world of NCAA athletics will change drastically for athletes, schools, brands, and businesses.
Will this distract from the exceptional education these athletes are receiving? Or will it incentivize athletes to stay in school longer and obtain higher degrees so they have more time to profit from NIL?
