NCAA Board of Governors agrees to terms of multibillion-dollar settlement in House of Representatives class action lawsuit against NCAA: Sources

Written by Chris Vannini, Nicole Auerbach, and Justin Williams

The NCAA Board of Governors voted to approve the terms of what is expected to be a multibillion-dollar settlement in a House class action lawsuit against the NCAA on Wednesday, as did Big Ten presidents and chancellors, sources familiar with each decision confirmed to The athlete. The Board of Governors is the highest governing body of the NCAA. This comes a day after the leaders of the Big 12 and ACC did the same. It’s another step toward finalizing a settlement in the landmark case that will likely reshape the college sports business model. The remaining powers’ caucuses are expected to vote this week as well.

Details of the settlement are expected to include north of $2.7 billion in back pay that the NCAA will owe to former Division I athletes, as well as a future revenue-sharing model between power conference schools and athletes, according to sources familiar with the negotiations. The compensation, which was provided to Division I athletes dating back to 2016 as back pay for lost name, image and likeness (NIL) earning opportunities, will likely be paid out over 10 years through a combination of reserve funds and NCAA rebates ( NCAA). In future revenue distributions to conferences.

The payout model being voted on is a slightly modified version of the original breakdown put forward by the NCAA, a college official familiar with the proposal said. The athlete, with the NCAA expected to cover approximately $1.1 billion in damages, and the power conferences will be responsible for approximately 40 percent of the remaining damages. This is despite internal discord within the NCAA in recent days, with smaller, non-FBS Division I conferences arguing that the proposed funding plan places a disproportionate financial responsibility on them.

Revenue sharing would be an optional model for power conference programs, possibly next year, as 22 percent of those schools’ average annual revenues — or roughly $20 million annually — would be distributed directly to athletes.

If completed, a process that will take several months, the settlement would mark the next and most significant reform to the long-standing framework of amateurism in college sports.

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“The most important part of the settlement — and let’s face it, there’s still a lot of work to do there — is that it creates some clarity and some clarity on a whole set of issues that have been worrying everyone for a while,” NCAA President Charlie Baker said. Last week at the ACC spring meetings. “The other thing it does is it creates predictability and stability for schools. It creates tremendous opportunity for student-athletes.”

Once the NCAA and energy conferences agree to terms and both sides in the case sign on, the settlement will be submitted to Judge Claudia Wilkin of the U.S. District Court for the Northern District of California for preliminary approval. If granted, there would be a specific period of approximately 90 days during which those in the retroactive damages category would have an opportunity to opt out, and those in the future revenue-sharing category could object to the terms of the agreement. This is followed by a final approval hearing, at which point, if the judge agrees, the settlement officially goes into effect.

House v. The NCAA in 2020 before Judge Wilkin, the same judge who specifically ruled against the NCAA in the O’Bannon and Alston lawsuits. Grant House, a former Arizona State swimmer, and Sedona Prince, a former and current Oregon State women’s basketball player, are the named plaintiffs, represented by lead attorneys Steve Berman and Jeffrey Kessler.

It’s basically a two-part suit: one looking backward and one looking forward. The former seeks retroactive damages to none prior to the NCAA’s policy change in the summer of 2021, while the latter seeks an injunction that would force the NCAA and power conferences to lift rules barring revenue sharing from broadcast rights.

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In November, Wilken granted class action certification for the damages portion of the House case, expanding it to include any Division I athlete since 2016, under a four-year statute of limitations. This has dramatically increased the potential cost of damages in the case, which is scheduled to go to court in January 2025.

While the settlement would bring about significant change in college sports and for the NCAA, an organization that has long resisted compensating athletes, the NCAA is motivated to avoid taking the case to trial. If the NCAA loses at trial, it could suffer damages of up to $20 billion, according to documents obtained by Yahoo Sports that were circulated among power conference presidents and administrators, an amount that would have to be paid immediately and could force the NCAA to file for bankruptcy. . A loss at trial would also eliminate any existing restrictions on nothing and revenue sharing going forward.

“So, basically, if we win, there will be a complete free market in NIL, including streaming payments,” Kessler said.

The settlement would give the NCAA more input on payment structures for damages and revenue sharing, as well as some safeguards against other legal battles. Settlement of the House case would resolve Hubbard v. NCAA and Carter v. NCAA, two other high-profile antitrust cases in which Berman and Kessler represent plaintiffs in the Northern District of California, and hinder any additional antitrust complaints over the next decade. According to sources familiar with the settlement negotiations. This is an important aspect of the settlement terms for the NCAA, which has faced an onslaught of legal challenges in recent years.

Newly formed roster limits for power conference sports are also expected to be part of the settlement, with scholarship numbers set collectively by those leagues in the coming months.

Outstanding questions also remain beyond settlement about Title IX’s role in future revenue sharing, the future of third-party NIL groups and the ongoing debate over unionization efforts and employment status.

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(Photo: Mitchell Layton/Getty Images)