NCAA Settlement Sets Aside Rule Banning Student Athletes From Accepting Outside Prize Money

On April 29, the NCAA agreed to a proposed class action settlement, requiring it to make both monetary payments and major rule changes on student athletes’ ability to receive prize money prior to college enrollment.¹ The proposed settlement now awaits final approval in the U.S. District Court for the Middle District of North Carolina.²

In Brantmeier, et al. v. NCAA, the plaintiffs alleged under Section 1 of the Sherman Act that the NCAA’s rule that student athletes could lose eligibility if they accepted prize money from third parties when competing in non-NCAA events before enrolling in college was an unreasonable restraint on trade.³ The plaintiffs contended that NCAA member schools are economic competitors that compete for athletes, media revenue, recruiting advantages, and market prestige.⁴ By agreeing through the NCAA to limit the amount of compensation athletes could receive, the schools allegedly imposed a collective compensation restraint similar to wage-fixing in traditional labor markets.⁵

As part of the proposed settlement, the NCAA will set aside its rules on student-athlete eligibility surrounding prize money and pay more than $2 million to the classes, plus attorney’s fees and other administrative costs totaling over an additional $2 million.⁶

The NCAA has historically defended its rule banning athletes who take prize money prior to college enrollment as necessary to preserve amateurism and maintain consumer demand for college sports. That argument has steadily weakened following the Supreme Court’s 2021 decision in NCAA v. Alston⁷ and the major class action settlements from 2025 in In re College Athlete NIL Litigation, including House v. NCAA⁸, Hubbard v. NCAA⁹, and Carter v. NCAA¹⁰.

In Alston, the Court unanimously held that the NCAA compensation restrictions are subject to ordinary antitrust scrutiny.¹¹ In College Athlete NIL Litigation, a federal judge approved a $2.8 billion agreement allowing Division I schools to compensate athletes directly for the commercial use of their name, image, and likeness.¹² The settlement created a revenue-sharing framework that permits schools to distribute tens of millions of dollars annually to athletes for the first time. Together, the outcomes of these antitrust lawsuits have brought college athletics closer to becoming a commercial enterprise subject to ordinary competition-law principles.

The proposed settlement in Brantmeier is the latest example in a series of antitrust lawsuits that have caused a remarkably rapid shift in NCAA student athlete compensation since the issue was first litigated in 2015 in O’Bannon v. NCAA. Just over a decade ago, the Ninth Circuit deemed even a $5,000 cash compensation to be injurious to amateurism of college athletics;¹³ today, the legal landscape allows some student-athletes to have the potential to earn millions of dollars while competing in the NCAA.

Footnotes

1. Plaintiffs’ Brief in Support of Motion for Preliminary Approval of Class Action Settlement, Brantmeier et al. v. NCAA, No. 1:24-CV-00238-CCE (M.D.N.C. April 28, 2026), ECF No. 113 [hereinafter Proposed Settlement].

2. Id. 

3. Complaint ¶ 169, Brantmeier et al. v. NCAA, No. 1:24-CV-00238-CCE (M.D.N.C. Nov. 8, 2024).

4. Id. ¶¶ 145-46.

5. Id. ¶ 174.

6. Proposed Settlement at 5.

7. 594 U.S. 69 (2021).

8. Case No. 4:20-cv-03919 (N.D. Cal.).

9. Case No. 4:23-cv-01593 (N.D. Cal.).

10. Case No. 4:23-cv-06325 (N.D. Cal.).

11. See generally, NCAA v. Alston, 594 U.S. 69 (2021).

12. See Opinion Regarding Order Granting Motion for Final Approval of Settlement Agreement, In re College Athlete NIL Litigation, No. 20-cv-03919 (N.D. Cal. Jun. 6, 2025), ECF No. 978.

13. O’Bannon v. NCAA, 802 F.3d 1049, 1053 (9th Cir. 2015).