NCAA Antitrust Risk Remains in Wake of $2.8 Billion Settlement

The NCAA’s flurry of litigation is far from over despite a $2.8 billion settlement designed to resolve antitrust claims brought by athletes fighting for pay over their name, image, and likeness.

Athlete plaintiffs late last week filed for preliminary approval of the landmark deal with the NCAA and its Power Five conferences, proposing back pay for hundreds of thousands of athletes in other sports across Division I—including football and basketball players.

But antitrust attorneys say the deal still gives the NCAA the power to restrain athlete compensation, opening the door to future lawsuits from schools, athletes, states’ attorneys general, and other parties to challenge the pay limits outlined in the settlement agreement.

“They still have in place a concerted restraint enforced by an association of businesses that operate commercialized college sports,” said Marc Edelman, an antitrust law professor at Baruch College’s Zicklin School of Business. “That is still very much an antitrust violation.”

Under the proposed deal, NCAA Division I schools will be able to provide their student-athletes with direct payments and benefits worth up to a cap of 22% of the Power Five schools’ average athletic revenue each year. That payment pool would be more than $20 million per school in the 2025-26 academic year and grow from there.

Football and men’s basketball class members seeking damages for use of their name, image, and likeness in broadcast media will receive the highest average payments, with an average amount of about $91,000.

Compensation Cap

But the cap of 22% is “still a cap” that wasn’t collectively bargained with the athletes, said Mit Winter, an attorney with Kennyhertz Perry who heads the firm’s sports law practice. He foresees the possibility of state attorneys general and the Department of Justice bringing future claims against the NCAA.

“It’s not going to resolve all their legal issues going forward—not by a long shot,” Winter said of the settlement.

The cap on compensation will lead Power Five colleges to compete for funding for their athletes, said Diana L. Moss, vice president and director of competition policy for the Progressive Policy Institute.

“That will by definition create incentives for members of that pool to be jockeying to maximize their position in the pool,” Moss said. “We’re looking at a wholesale redesign of the system of college sports in the United States.”

The NCAA didn’t immediately respond to inquiries.

NCAA President Charlie Baker and commissioners of the five conferences said in a joint statement last week that the settlement, in the US District Court for the Northern District of California, creates a “stable and sustainable model for the future of college sports.”

Athlete Representation

Athletes still in high school could bring new cases challenging the deal, Winter said. Without a labor union or collective bargaining unit in place, athletes are still at the mercy of the NCAA’s rules for compensation, he said.

“The unavoidable fact is that antitrust claims will remain an issue absent a settlement negotiated through a formal collective bargaining process or with otherwise sufficient representation of the various constituencies,” said Kate Roggio Buck, a partner in McCarter & English LLP’s sports and entertainment industry team. Buck and Winter don’t have clients in the cases.

A proposed class action against the NCAA by former University of Colorado football player Alex Fontenot and former college women’s basketball player Mya Hollingshed is also still pending. They claim the NCAA’s rules prohibit them from receiving a portion of the revenue earned from their labor.

Garrett Broshuis, attorney with Korein Tillery who represents plaintiffs in the Colorado case, said he is currently reviewing the agreement on behalf of clients but noted he has “concerns,” declining to elaborate.

Diverted Funds

Non-Power Five schools could also sue the NCAA over the settlement, objecting to being on the hook to help pay damages to Power Five football and basketball players.

“It’s a huge percentage of their budget that’s being taken from them and being paid to these Power Five athletes,” Winter said.

The Power Five conferences are the ACC, Big Ten, Big 12, Pac-12, and SEC, although the Pac-12 lost its autonomy status for 2024-25 after 10 of its 12 members departed for other conferences.

Last week, a California federal judge denied Houston Christian University’s bid objecting to the settlement and its motion to intervene. HCU plans to appeal the judge’s decision, said James Bryant, attorney for HCU and chair of the National Litigation Law Group.

The private school would be forced to divert around $3 million over 10 years toward athlete compensation, hurting students on financial aid who are working toward earning a college degree, Bryant said.

“Ninety-five percent of our students are on financial aid of some kind,” Bryant said. “We’re very careful about not diverting too much into sports.”

The plaintiffs are also represented by Hagens Berman Sobol Shapiro LLP and Spector Roseman & Kodroff PC. The NCAA is represented by Wilkinson Stekloff LLP and ArentFox Schiff LLP.

The case is In re College Athlete NIL Litig., N.D. Cal., No. 4:20-cv-03919, 7/26/24.