Former collegiate athletes sued the NCAA seeking financial compensation for the NCAA’s use of their name, image, and likeness (“NIL”). Those lawsuits include House v. NCAA, Hubbard v. NCAA, and Carter v. NCAA.[1] On October 7, 2024, Judge Claudia Wilken granted preliminary approval for a settlement between the NCAA, Power Five conferences, and student-athletes. The final approval hearing is scheduled for April 7, 2025.
The NCAA has proposed a global $2.576 billion settlement fund to compensate current and former Division 1 student-athletes who competed from June 15, 2016, to September 15, 2024. For more information, visit College Athlete Compensation.
The proposed changes that will impact the future of collegiate athletics includes: (1) the development of a revenue-sharing model that will allow NCAA institutions to compensate their student-athletes directly, (2) a substantial increase in oversight and regulations for NIL deals, and (3) increased scholarship and roster limits.
Revenue Sharing
Starting in the 2025-26 academic year, NCAA institutions that opt into the settlement can compensate their student-athletes directly. The permissive cap for the compensation is estimated to be $20-22 million for the 2025-26 school year, with gradual increases for successive school years. This permissive cap allows schools to distribute funds up to this cap to their athletes. Some commentators have questioned whether the permissive cap violates antitrust law because each school is agreeing to limit its NIL spend to $22 million, rather than what the free, competitive market may dictate.
NIL Deal Regulations
The settlement also includes strict guidelines for NIL agreements involving entities or individuals closely affiliated with a school. Those NIL deals, previously subject to few regulations, now must serve a valid business purpose related to promoting goods or services. These deals will be judged based on fair market value, and subject to review by a third-party “clearinghouse.” This change is purportedly geared toward preventing “pay-for-play” schemes.
Scholarship and Roster Changes
For some revenue-generating sports, like football and men’s and women’s basketball, scholarship allocation and roster limits increased. However, because an NCAA institution has an increased ability to award scholarship money to student-athletes, walk-on opportunities are projected to be less common. At smaller NCAA institutions, some non-revenue sports may struggle to meet the new requirements and compete on the same footing with the Power 5 conferences which may result in a reduction in participation opportunities.
Munck Wilson Mandala LLP is one of the nation’s only law firms with a dedicated NIL and sports law practice. Ahead of the curve, our team of legal professionals is equipped to address any legal matter related to sports law, intellectual property, or NIL. Whether you are a student-athlete vetting an NIL deal, a brand, university, or collective seeking to comply with rapidly changing laws, or in the midst of an NIL dispute, Munck Wilson Mandala is prepared to handle your legal needs.
[1] These lawsuits are consolidated under In re: College Athlete NIL Litigation, Cause Number 4:20-cv-03919-CW, pending in the United States District Court for the Northern District of California, Oakland Division (commonly referred to as “House” or “House v. NCAA”).