NCAA to allow Power 5 conferences to pay players in unprecedented agreement
In an unprecedented move, the NCAA and its five power conferences have agreed to allow schools to make direct payments to players for the first time in the history of college sports.
For the first time in the history of college sports, the NCAA has agreed to allow its Power Five conferences to pay players directly.
Law firm Hagens Berman and Winston & Strawn LLP announced jointly with the NCAA and the Power Five conferences — the Big Ten, SEC, Pac-12, Big 12 and ACC — a "landmark antitrust class-action settlement" that will provide "billion of dollars in backpay damages and tens of billions of dollars in future revenue-sharing to college athletes."
The revenue-sharing plan would allow each school to share up to around $20 million per year with athletes.
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The Power Five conferences all voted to accept the general terms of the agreement with the NCAA.
"In the first year of the settlement, each school can share 22% of the average Power Five school’s revenues, which is currently projected to be significantly more than $20 million per school, per year," the law firm’s statement said. "These new payments and benefits come in addition to scholarships, third-party NIL payments, health care and other benefits that college athletes already receive, and schools can choose to make the new payments and benefits to athletes playing any Division I sport."
As college revenues rise each year, benefits and payments to athletes will also grow, according to the settlement.
"Over the 10-year settlement period, attorneys estimate that the total value of new payments and benefits that may be shared with college athletes will exceed $20 billion, making it one of the largest antitrust class-action settlements in history," the statement said.
Steve Berman, Hagens Berman managing partner and co-founder, added, "This landmark settlement will bring college sports into the 21st century, with college athletes finally able to receive a fair share of the billions of dollars of revenue that they generate for their schools. "Our clients are the bedrock of the NCAA’s multibillion-dollar business and finally can be compensated in an equitable and just manner for their extraordinary athletic talents."
The settlement was also negotiated with Winston & Strawn co-executive Chairman Jeffrey Kessler.
As part of the settlement, Division I athletes dating back to 2016 who wish to receive a share of the settlement are not permitted to sue the NCAA for other antitrust violations, according to ESPN. And if they’re a part of House v. NCAA, Hubbard v. NCAA or Carter v. NCAA, they must drop their complaints.
This may just be the beginning of how college sports are about to evolve. There are still other legal issues to hash out, including athletes' interest in becoming employees and possibly unionizing.
"We recognize that we're just on the front end of this entire process," Illinois athletic director Josh Whitman, who serves as the chair of the NCAA's Division I Council, said via ESPN. "There's a lot to be sorted out as we try to really wrap our arms around some of the details that we're putting in place now."
Judge Claudia Wilken, who is presiding over the three cases against the NCAA, will reportedly be alerted by the parties involved with final details in court over the next 30 days.
Wilken can reject the settlement terms, or athletes could opt out and join another pending antitrust case.
Berman told ESPN there are more than 10,000 former and current athletes who stand to gain from the $2.7 billion in damages that would be paid out. A sports economist has put together a "series of formulas" that will determine how the money is divided.
With NIL and the transfer portal creating a free-for-all in college athletics, athletic directors also told ESPN they are "hopeful the settlement lays the groundwork for a system where success on the field is less dependent on which schools can spend the most money."
"I think we have a chance right now to really reshape the model in the most meaningful way of any of our lifetimes, and maybe the most meaningful way there has ever been," Whitman noted, via ESPN.
There are still questions that need answering regarding the future of college sports, but this first-of-its-kind agreement could be the foundation for schools to regain control of college sports.
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