NIL Developments Pave Way for Athletes in California and Beyond (2)

California has long been a trailblazer in advancing athlete compensation rights, setting in motion a standard for the nation. In 2019, California passed the Fair Pay to Play Act that allowed college athletes to profit from their name, image, and likeness, a move that led other states to follow suit and triggered a groundswell for NCAA reform.

Additionally, the US District Court for the Northern District of California has been at the forefront of landmark student-athlete compensation cases, including O’Bannon v. NCAA, NCAA v. Alston, and House v. NCAA.

The initial House lawsuit consolidated three antitrust claims against the National Collegiate Athletic Association, in which active and former student athletes alleged that the NCAA and Power Five conferences (ACC, Big Ten, Big 12, Pac-12, and SEC) wrongfully prohibited them from receiving NIL payments.

On June 6, US District Court Judge Claudia Ann Wilken issued the final approval of the House settlement. The settlement provides guidance regarding prospective and retroactive athlete compensation in California and beyond.

The Settlement

The core of the settlement involves a payout by the NCAA and its Division I conferences of nearly $2.8 billion to a class of student athletes who competed from 2016–2024. California’s D1 athletes and others across the nation may recover from foregone NIL opportunities.

The settlement introduces a revenue-sharing mechanism through which universities can pay players directly. During the upcoming 2025–2026 academic year, schools can share up to $20.5 million with student-athletes. This amount may increase by 4% annually for 10 years.

One controversial aspect of the settlement is the imposition of strict roster limits. Now, every student athlete on every team will be eligible to receive scholarship aid. However, there will be fewer total roster spots available. Current student athletes who lost their roster spots because of the new limits may remain on the roster until they’ve exhausted their NCAA eligibility, but soon fewer total roster spots may be available.

Oversight and enforcement of the new rules will fall to the College Sports Commission LLC, a newly established, independent regulatory body. The CSC will oversee direct school-to-athlete revenue sharing, NIL compliance, adherence to sport-specific roster limits, and the handling of arbitration disputes—for athletes in California and nationwide. The CSC is a private LLC that reports to the Power Five; it’s not a nonprofit and isn‘t an NCAA subsidiary.

Whether from California or elsewhere, all athletes must self-report any NIL deals worth $500 or more via NIL Go. Deloitte built and will maintain the clearinghouse, NIL Go. If a deal raises red flags, CSC will notify the relevant parties. Arbitration may be triggered if an athlete or school disputes a flagged deal or it seems improper inducement has occurred. CSC will serve as the arbiter to ensure fair market value, fairness, and legitimacy, and should student-athletes or schools wish to further pursue a challenge, neutral third-party arbiters may be brought in.

California Schools

Compliance, Commitment, and Fundraising. There are only four Power Five schools in California. These institutions have begun to announce their intended course of action as changes begin to take effect in the upcoming school year.

The University of California, Los Angeles has announced its commitment to share the highest allowable amount of revenue with athletes each year. This suggests UCLA may follow the anticipated revenue-sharing distributions: Most of the money is likely to be distributed to football players and men’s and women’s basketball players. The other California Power Five schools have followed suit, stating their intent to share the maximum possible amount with student athletes and suggesting that divisions amongst different programs will align with the revenue each sport produces.

Unanticipated Consequences. The revenue sharing system presents an enormous, novel cost that athletic departments weren’t previously incorporating into their budgets. Some schools are changing fundraising strategies. Stanford University recently hosted a Coldplay concert to better monetize its stadium. University of California, Berkeley’s Chancellor Rich Lyons has committed to matching philanthropic gifts to the revenue-sharing pool. However, not all institutions have equal fundraising power.

Although the settlement may allow the Power Five schools in California to become highly competitive (for example, Nico Iamaleava, considered one of the most desirable prospects after he entered the transfer portal from the University of Tennessee, landed at UCLA), it may also exacerbate financial hardships in the athletic departments of non-Power Five schools.

California schools that occupy a less prominent place in college athletics have had to make tough decisions. California Polytechnic State University recently discontinued all swimming and diving programs, a decision caused by the school’s post-House financial reality. Last year, Loyola Marymount University discontinued six of its Division I programs to adapt to the advent of NIL and broader changes in college athletics.

Unanswered Questions. Key questions about the operation of the new system remain unanswered. How will a centralized NIL clearing house, employing a market value test, fairly and adequately handle state-specific markets, particularly when California is an entirely different economy from most other states?

California’s income tax structure could lead to lower net- NIL income compared to athletes who obtain similar deals in no- or low-income tax states. Time will tell whether NIL Go will take such factors into account when assessing fairness and market value for NIL deals.

The dust is far from settled. Congress introduced the Student-athlete Protections and Opportunities through Rights, Transparency, and Safety Act to set a federal standard to protect athletes’ rights. It’s uncertain whether Congress will ultimately adopt and enforce the legislation.

California and its major universities will likely continue developing creative solutions to ensure fair NIL compensation for student athletes. Schools and students would do well to continue monitoring developments in this exciting and evolving area recognizing and rewarding athletes’ rights.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Deborah Gubernick is an intellectual property and commercial litigation partner at Snell & Wilmer.

Hayden Burnight is a 2025 summer associate at Snell & Wilmer and a 2026 J.D. Candidate at the University of Notre Dame.

Write for Us: Author Guidelines