College Athletes Can Now Get Paid by Their Schools...But There’s a Catch
College athletes can now be paid directly by their schools, but new rules, salary caps, and buyouts are already creating chaos. Today we'll examine what just happened (and what’s coming next).
The recently approved House v. NCAA settlement represents one of the most significant changes in the history of college sports. Nearly everyone reading this email will be impacted, from the athletic director at a Division I school to fans frustrated by the transfer portal to parents just trying to help their kid earn a scholarship. It doesn’t matter who you are; if you have any interest in college sports at all, this is important.
In fact, this settlement is so important that today’s newsletter is going to break down everything you need to know about it. This took me a long time to put together, but it’s likely the most comprehensive breakdown you’ll find anywhere on the internet.
The $2.8 billion in backpay and future revenue-sharing agreements have garnered all the headlines, but the devil is in the details. This settlement will impact everything from how NIL deals get approved to roster limits and the future of Olympic sports.
Before we dig into the details, some background is helpful. This case was initially filed in 2020 by two former Division I athletes — Grant House, a swimmer at Arizona State University, and Sedona Prince, a women’s basketball player. House and Prince sought to challenge the NCAA’s long-standing rules limiting athlete compensation, particularly regarding Name, Image, and Likeness (NIL) rights and revenue sharing from sports broadcasts. Over time, the case was consolidated with two similar antitrust cases into a single proceeding that represented all Division I athletes.
It’s essential to note that antitrust cases in the United States frequently involve the awarding of treble damages, or triple damages, meaning the injured party receives three times the actual damages proven. So, with the NCAA facing tens of billions of dollars in potential liabilities, the NCAA and its five major conferences (ACC, Big Ten, Big 12, Pac-12, and SEC) negotiated a settlement to avoid a court judgment.
In May 2024, the NCAA’s Board of Governors approved a settlement framework. That framework was then presented to the court for approval, and after some adjustments, Judge Claudia Wilken officially signed off on it two weeks ago, ending the litigation.
Below is a summary of the key settlement provisions and terms, including how the $2.8 billion in back pay will be distributed, an examination of how schools plan to allocate their $20.5 million annual spending budget, the long-term effect of roster limits, and even Deloitte’s role in enforcing NIL rules. We also examine some ideas that could save Olympic sports by increasing athletic department revenue. Enjoy!