On June 6, 2025, U.S. District Judge Claudia Wilken approved the landmark House v. NCAA settlement, a resolution of three major antitrust cases (House, Carter and Hubbard) that fundamentally transforms college sports by allowing schools to pay student-athletes directly starting July 1, 2025.
Three Pillars of Change
The House settlement establishes three fundamental
changes to college sports.
First, it provides $2.8 billion in back-pay damages, to be paid
over 10 years, to approximately 184,000 former Division I athletes
who competed from 2016 onward, compensating them for lost name,
image and likeness (NIL) opportunities under previous NCAA
restrictions. The NCAA will shoulder over $1.1 billion of the
damages, while the Power Four, the Pac-12 and other Division I
conferences will cover the remainder through various financial
mechanisms.
Second, the settlement creates an unprecedented revenue sharing
system allowing participating schools to directly pay
student-athletes up to 22% of the average revenue derived from
media rights, ticket sales and sponsorships generated by the SEC,
the Big Ten, the Big 12, the ACC, the Pac-12 and Notre Dame. For
the 2025 – 2026 academic year, this cap is set at $20.5
million per institution, with projected annual increases reaching
an estimated $33 million by 2035. Crucially, third-party NIL deals
(deals between school-affiliated NIL collectives and
student-athletes) do not count toward the cap. Third-party NIL
deals are exempt because they do not constitute direct financial
arrangements between the school and the student-athlete.
Third, the settlement replaces scholarship limits with sport-specific roster limits. Under the previous system, sports like baseball were restricted to 11.7 scholarships despite having rosters of up to 34 players, forcing partial scholarships to be distributed across teams. Now, schools can provide full scholarships to all rostered players within the new roster constraints. Judge Wilken delayed settlement approval due to her concerns that roster limits would cause some student-athletes to lose their spot on their current teams. The parties subsequently revised the settlement to include protections for these student-athletes, allowing them exemptions to continue playing at their current schools or schools they transfer to.
New Governance Structure
To oversee this transformation, the Power 5 conferences established the College Sports Commission (CSC), an independent regulatory body led by Bryan Seeley, a former U.S. Department of Justice attorney and longtime MLB investigations chief. The CSC will operate two systems. First, as to revenue sharing, all participating schools will be required to use the CSC's College Athlete Payment System (CAPS) to allocate and track revenue sharing payments. Second, as to third-party NIL deals, CSC is partnering with Deloitte to launch NIL GO, a centralized reporting system requiring all Division 1 athletes—regardless of whether or not their school has opted in to revenue sharing—to disclose all third-party NIL deals above $600 to assess whether the deals reflect fair market value as opposed to NIL deals disguised as pay-for-play arrangements.
Unresolved Legal Questions
However, the House settlement does not address several
critical legal issues—three stand out. First, the question of
whether Division I athletes are employees within the meaning of the
Fair Labor Standards Act remains unresolved. Instead, this issue is
being addressed in a pending case, Johnson v. NCAA, before
a federal district court in Pennsylvania.
Additionally, while Judge Wilken rejected all Title IX-based
objections at the settlement's final approval hearing, multiple
female student-athletes have already appealed the settlement's
approval, arguing that the back-pay damages distribution allocating
90% of past NIL compensation for football and men's basketball
players violates Title IX. This appeal has consequently delayed
payment distribution.
Last, while the settlement resolves certain antitrust claims, it
does not provide blanket antitrust immunity for the NCAA. Future
legal challenges could target issues not covered by the settlement,
such as graduate student eligibility rules or transfer
restrictions. Further, student-athletes who opted out of the
settlement preserved their antitrust claims and sued the NCAA,
alleging such antitrust claims in the ongoing Hill v. NCAA
case. The NCAA would potentially gain antitrust immunity if
student-athletes were recognized as employees and formed unions,
thus allowing collective bargaining agreements that would be
protected under labor law exceptions to antitrust laws. However,
the NCAA has remained unwavering in its position that
student-athletes do not constitute employees.
As to these legal issues, college sports leaders have continued
pushing for congressional intervention, seeking either narrow
antitrust exceptions or comprehensive federal NIL legislation to
provide clearer regulatory frameworks. However, federal legislation
has repeatedly stalled over the years, and political realities
suggest continued uncertainty.
Financial Pressures
Not all institutions will participate in revenue sharing. The Ivy League has already declined, choosing to preserve its amateur model. On the other hand, institutions opting into revenue sharing will face significant financial pressures to fund the expected $20.5 million annual payments. Athletic departments are already reconfiguring budgets, intensifying fundraising efforts and hiking student fees. Some institutions are contemplating eliminating varsity sports or downgrading them to club status as cost-cutting measures. And these post-House challenges coincide with broader challenges in higher education, including declining enrollment, reduced government funding and restrictions affecting international students. As financial pressures mount, athletic programs will need innovative revenue strategies to stay competitive, making private equity a possible solution.
Conclusion
The House settlement marks both an ending and a
beginning for college sports. It concludes decades of legal battles
over student-athlete compensation while ushering in a new era
featuring a hybrid model that blends traditional college sports
with professional compensation structures.
This new framework will likely face ongoing legal challenges and
practical hurdles as it is implemented. Whether the system can
balance the competing interests of universities, student-athletes,
regulators and other stakeholders remains uncertain and will be
determined through real-world applications and future court
decisions. Early signs of this new landscape are already emerging.
The University of Wisconsin recently sued the University of Miami,
alleging that Miami "intentionally interfered and
tampered" with defensive back Xavier Lucas' two-year deal
after Wisconsin's collective had made a substantial payment to
Lucas. This case could set a precedent for how schools can enforce
anti-tampering provisions within revenue sharing contracts,
reflecting the complex new realities facing college sports moving
forward.
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