The structure of college sports is about to change. Get ready for schools to start paying athletes directly.
Thursday night, NCAA President Charlie Baker issued a release alongside the major college sports conferences, including the ACC and SEC, announcing an agreement to a landmark settlement in a case involving athlete compensation. The deal would set aside nearly $2.8 billion in backpay to thousands of current and former college athletes while also setting up a system that would allow schools to pay up to $20 million per year to their athletes.
It's the latest massive turn in how college sports has traditionally been run. Student athletes were permitted to enter name, image and likeness (NIL) deals starting in 2021, which led to college football and basketball stars (and players in all sports) getting paid legitimately for the first time. That has led to the return of EA Sports' beloved video game with the soon-to-be-released College Football 25.
What will this latest development mean? Are Florida, FSU and other schools across the country going to start paying its stars in time for the 2024 college football season? Here's what we know.
What is House vs. NCAA?
The case is one of many lawsuits the NCAA faced regarding NIL rights. Former Arizona State swimmer Grant House filed the antitrust lawsuit against the NCAA in 2020, which was later joined by former TCU basketball player Sedona Prince and became a class-action lawsuit.
The former athletes argued that the former NIL rules and NCAA bylaws illegally suppressed athletes' earning potential. Many of those rules have since become obsolete since the 2021 Supreme Court decision in NCAA v. Alston opened the doors for states to allow college athletes to sign NIL deals.
And even those contracts aren't fair compensation, athlete advocates claim. While some athletes, such as former Iowa basketball star Caitlin Clark and current Colorado quarterback Shedeur Sanders, have been able to earn millions of dollars in endorsem*nt money, that's paltry compared to the amount of money generated by the NCAA's gargantuan broadcast deals, for which the athletes argued they deserved compensation.
For instance, Texas quarterback Arch Manning has an NIL valuation worth $2.4 million, according to On3. But the SEC, Texas' conference starting this fall, signed a 10-year deal with ESPN worth $3 billion that kicks off this year. The Big Ten is getting $8 billion from its broadcast deal with NBC, Fox and CBS that began in 2023. And while the student athletes are the stars of those shows, they have traditionally been ineligible to receive a cent from those massive contracts.
What does the NCAA settlement mean?
Simply put, that's going to change. The settlement agreed to by the NCAA, the Power Five conferences and the plaintiffs' lawyers would put about $2.75 billion into a pool to be dispersed among eligible current and former college athletes over 10 years.
Of greater impact, though, is the agreement to allow schools to pay athletes directly for the first time since the NCAA was founded in 1906. Thursday night's release stated the revenue-sharing plan would be worth 22% of the average of power-conference program revenues in the first year of the settlement. That number is expected to be about $20 million per school, and that number will rise as program revenues do.
Are colleges allowed to pay athletes?
Not just yet. The federal judge overseeing the case first has to sign off on the settlement. The payments to current athletes would then be permitted starting in the fall of 2025.
Colleges can choose not to use the full allotment. They can even choose not to use it at all. But they should know that other colleges will, and they should remember that it's easier than ever for student athletes to transfer.
How much will college athletes be paid to play sports?
The specific numbers remain to be seen. Once the settlement is approved by a judge, schools will reportedly get about $20 million per year to distribute to their athletes. How much goes to those playing big-money sports (football and basketball) and how much gets distributed between male and female athletes is likely to be a point of contention going forward.
Is this related to the FSU lawsuit vs. the ACC?
The ongoing legal fight between Florida State and the Atlantic Coast Conference is not affected by Thursday's settlement. FSU is suing its conference over its restrictive media rights deal and its supposed $572 million exit fee. A hearing in Leon County, Florida, is set for June 18, while the school has asked the North Carolina Supreme Court to review the case filed in that state by the ACC.
What other lawsuits does the NCAA face related to paying players?
The NCAA still faces several lawsuits from former athletes, the most significant of which is the push through the National Labor Relations Board to classify college athletes as school employees. That would give players access to health benefits and would let them unionize, among other things.
There is also Fontenot v. NCAA, which is going through the courts in Colorado. The Athletic lays out the details of that suit, which "is also seeking class-action certification and has asserted that rules prohibiting 'pay for play' compensation violate antitrust law."
Can you accept money as a college athlete? How much money can athletes make with NIL?
Since the Supreme Court ruled in 2021 that the NCAA's rules restricting benefits to athletes was unconstitutional, student athletes have been allowed to profit off NIL deals. That money is typically handled by NIL collectives, which organize funds from a program's donors and pay the athletes from there. According to Business Insider,80% of moneygoing toward NIL comes from collectives, with the rest coming from brand deals.
According to On3's NIL valuation tracker, the highest NIL earner is Colorado quarterback Shedeur Sanders, son of FSU legend and Buffaloes head coach Deion Sanders. The site lists Sanders' NIL valuation at $4.6 million. It is important to note that, while the NIL industry isworth an estimated $1 billion annually, according to NIL company Overdorse, On3's tracker lists only 25 athletes nationwide worth $1 million in NIL valuation. And college football reporter Ross Dellenger has reported that the average Power 5 football playermakes about $10,000 to $50,000through NIL collectives.
