Green Light For A New Era: Final Approval Of House v. NCAA Settlement Ushers In Historic Change For College Athletics—and A Complex Compliance Roadmap For Schools

On June 6, 2025, Judge Claudia Wilken of the Northern District of California granted final approval of the landmark House v. NCAA settlement, clearing the way for NCAA Division I schools to directly compensate student-athletes for the first time in history. While the headlines trumpet a $2.576 billion payout and the fall of amateurism's last vestiges, what lies beneath for colleges and universities is a regulatory transformation as sweeping as it is uncertain.

The Basics: What the Settlement Does

At its core, the settlement achieves three things:

1. Monetary Relief: The NCAA and the Power Five conferences will pay $2.576 billion over ten years to former and current Division I athletes across a wide range of sports, compensating them for past restrictions which prohibited college athletes from receiving compensation for use of their name, image, and likeness (NIL) and related antitrust claims.
2. Future Compensation Structure: Starting in the 2025–26 academic year, Division I schools that opt into the settlement can share a capped amount of athletic revenue —initially estimated at $20 million per institution—directly with athletes.
3. Rule Reforms: The settlement ushers in a new era of NCAA rules, including eliminating scholarship caps, implementing roster limits, and establishing a more structured system of NIL enforcement by including arbitration rights for student-athletes and narrowly tailored restrictions on payments from "Associated Entities and Individuals," such as major donors or affiliated collectives.

What This Means for Schools

For university counsel and compliance officers, the changes are nothing short of tectonic. Here's what matters now:

1. Compliance Is Now a Competitive Imperative

Under the terms of the settlement, the five Power Conferences—the ACC, Big Ten, Big 12, Pac-12, and SEC—are automatically bound by the new rules. All other Division I conferences and member institutions must choose whether to affirmatively opt in by June 15, 2025, to share in the settlement's benefits and protections and to implement the new revenue sharing model.

For schools electing to join, institutions must design and implement:

1. New revenue sharing policies for athletes, ensuring that all financial benefits provided to athletes fall within the designated cap and comply with NCAA reporting.
2. Eligibility and roster management protocols must be updated in light of the settlement's elimination of scholarship limits and the introduction of new roster limits. While schools now have more flexibility in awarding scholarships and providing athletes with other financial benefits during their tenure as students, they must comply with team-specific roster maximums (with limited exceptions specifically for athletes who were promised roster spots before the settlement was approved).

Cross-functional coordination—between the athletic departments, legal, finance, and enrollment offices—is essential. Failure to prepare now could create recruiting disadvantages, Title IX compliance risks, and administrative chaos come fall.

2. Title IX Uncertainty Looms Large

The settlement does not resolve whether athlete pay must be allocated in a gender-equitable manner under Title IX. This unresolved legal question poses enormous implications. A misstep here could open institutions to costly and high-profile lawsuits.

While Judge Wilken's opinion explicitly carved out future Title IX claims as "unreleased" under the settlement, she did not offer a roadmap for compliance. Female athletes have already voiced concern about disproportionate payouts.

Action step: Institutions may want to consider modeling multiple Title IX-compliant allocation scenarios with legal counsel.

3. Challenge to Employment Status of Athletes Remains Outstanding.

Although Judge Wilken expressly declined to address whether student-athletes are employees under federal or state law, the question is far from settled—and the House settlement does not insulate institutions from that legal frontier.

The leading case to watch is Johnson v. NCAA, currently on remand to the United States District Court for the Eastern District of Pennsylvania. In that case, former Division I athletes allege that they were employees of the NCAA and the universities that they attended, under the Fair Labor Standards Act (FLSA) and related state laws, and are entitled to minimum wage and overtime pay. While the NCAA and university defendants have moved to dismiss the Complaint, if the court denies that motion and ultimately rules in favor of the athletes, it could significantly expand wage-and-hour exposure for Division I schools.

In this post-House landscape, and with Johnson pending, schools should proceed cautiously, and:

1. Review the structure of any revenue provided by the university to its athletes, to ensure that such revenue is not compensation for services under traditional employment tests;
2. Avoid conditioning revenue payments on performance or hours worked; and
3. Coordinate messaging and documentation to distinguish revenue payments from wages—emphasizing educational and participation-based rationales, where appropriate.

The Litigation Shield—and What It Doesn't Cover

The settlement insulates the NCAA and participating schools from future damages claims involving NIL or athlete services compensation through 2024. But this is not a litigation armistice. As Judge Wilken noted, claims under labor law, tax law, and Title IX remain viable.

Rule Reforms: Redefining NIL Enforcement and Institutional Risk

Going forward, the NCAA may only prohibit athletes from receiving direct compensation from "Associated Entities" and "Associated Individuals"—i.e., major donors or affiliates tied to a school's athletics program. Even then, restrictions apply only if the payment lacks a valid business purpose (i.e., is pay for play) and/or is not at fair market value relative to similarly situated endorsement deals with individuals who are not college athletes.

These standards introduce a new compliance burden, requiring schools to evaluate NIL arrangements through a commercial lens. For a deeper breakdown of what "valid business purpose" and "fair market value" mean under the settlement—and how institutions should prepare to document them—see our previous article on the new NIL oversight regime.

Practical Takeaways for Schools

1. Structure Contracts to Avoid Unintentional Triggers of Employment Status. With Johnson v. NCAA pending and the FLSA's "economic realities test" in potentially in play, institutions must ensure that revenue sharing arrangements with athletes do not resemble wages for services. Work with legal counsel to carefully structure revenue sharing agreements, to avoid:
   • Tying revenue sharing to athletic performance or hours logged;
   • Referring to benefits as "salary," "pay," or "compensation";
   • Failing to distinguish the educational or participation-based rationale behind benefit delivery.
2. Budget for Multi-Year Compensation Obligations. The new revenue sharing structure is not optional for Power Five schools, or any other school that opts into House. Schools must model how to generate – and then allocate – potentially significant revenue – initially capped at $20M – to athletes, over the long term. Careful financial planning and revenue generation plans should address both cash flow and long-term competitive parity.
3. Prepare for Rigorous Title IX Scrutiny. Even though the settlement does not require revenue sharing arrangements to be equitably distributed across genders, it explicitly preserves future Title IX claims. Schools must proactively model and assess whether revenue sharing arrangements create disparate impacts across male and female athletes. Legal counsel should be involved early to align revenue sharing structures with existing participation and benefit equity obligations.
4. Implement the Required NIL Compliance Framework. Schools opting into the Injunctive Relief Settlement are required to implement the 12-step compliance process developed by Deloitte.
5. Update Roster Management and Financial Aid Systems. The removal of scholarship caps and addition of roster limits demand realignment of eligibility, roster, and aid tracking systems. Athletes displaced by these changes—"Designated Student-Athletes"—must retain eligibility and roster status for the remainder of their careers.
6. Formalize Internal Oversight and Documentation Protocols. The settlement's enforcement mechanisms—especially neutral arbitration and required reporting—mean schools need robust paper trails. Key components include:
   • Written athlete review sharing and NIL policies;
   • Internal audit checkpoints and compliance signoffs;
   • Arbitration response protocols and case tracking systems.

The final approval of the House settlement is not the end of the amateurism debate—it's the beginning of a new compliance-driven chapter in college sports. The schools that treat this not just as a legal development but as an operational pivot will be best positioned to compete—on the field and in the courtroom.

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