The settlement in House v. NCAA ("House Settlement") was formally approved by Judge Claudia Wilken on June 6, 2025. The House Settlement is poised to bring significant changes to the landscape of college athletics, with schools now permitted to make direct payments to student-athletes. This shift introduces a range of legal and operational challenges that increasingly mirror the compensation structures of professional sports. Navigating this new environment will require legal and financial expertise traditionally found in the professional sports world. Issues related to contract structuring and enforceability, salary caps, and endorsement deal oversight will become central to how athletic programs operate and make strategic decisions. These concepts extend beyond compliance and will play an integral role in roster building, financial planning, and long-term program sustainability and success.
Below is a high-level overview of the House Settlement. To explore the House Settlement in greater detail, see our full breakdown here.
Direct Payments; Pool Cap.
Schools are now permitted to directly pay student-athletes, with the total compensation limited by a cap ("Pool Cap"). The Pool Cap is calculated as a percentage of designated athletics-related revenue from the Power 5 conferences, including media rights, ticket sales, and sponsorships. Initially, the Pool Cap is set at 22% of the specified revenue, increasing by 4% in the second and third years, and being recalculated every three years. The initial projected Pool Cap is roughly $20.5 million per school.
The purpose of these direct payments is to compensate student-athletes for providing marketing rights to the school, rather than for their athletic services (i.e., pay-to-play). It is likely that NCAA rules will continue to prohibit compensation for athletic services in the post-House Settlement era.
Roster Limits. NCAA Division I scholarship limits are eliminated and replaced with roster limits adopted by the NCAA.
Third-Party NIL/Marketing Rights
Athletes will continue to be permitted to grant marketing rights to bona fide third parties not affiliated with the school, and these payments will not count toward the Pool Cap.
Boosters and "NIL collectives" affiliated with a school will be subject to heighted scrutiny. To avoid counting toward the Pool Cap, payments by boosters and NIL collectives must be made: (1) for a valid business purpose (i.e., legitimate promotion or endorsement activities); and (2) at fair market value, consistent with rates and terms paid to similarly situated individuals with comparable NIL value who are not student-athletes at the same institution. These restrictions represent a large shift from the current system, where boosters and NIL collectives operate with significant discretion in defining the value of a student-athlete's marketing rights.
The NCAA has partnered with Deloitte to launch "NIL Go", a centralized platform for reviewing NIL deals valued at $600 or more. The system uses a three-stage review process:
- Payor Association Verification: Determination of whether the entity funding the NIL deal involves a booster or NIL collective affiliated with the school that would trigger heightened scrutiny.
- Valid Business Purpose Verification: Determination of whether the NIL deal serves a legitimate commercial purpose, such as endorsing a product, appearing in advertisements, or creating promotional content, and not simply receiving funds for enrolling or participating in athletics.
- Fair Market Value Analysis: A 12-point analysis assessing if compensation aligns with similarly situated individuals in comparable deals.
If a marketing deal is not cleared by the NIL Go process, the student-athlete may (1) revise the deal and resubmit; (2) cancel the deal; (3) appeal through a neutral arbitration process; or (4) proceed with the deal at risk of eligibility consequences. It is expected that no penalties can be imposed on a student-athlete while arbitration is pending, absent the arbitrator's finding of good cause.
Final Note
The core legal concepts now taking center stage in college athletics, including, compensation caps, player contracts, and player marketing rights, are foundational to the compensation models used across professional sports. In professional leagues like the NBA, salary caps and anti-circumvention provisions are tightly defined. For example, the NBA Collective Bargaining Agreement prohibits teams from entering agreements or taking actions designed to circumvent salary cap restrictions, including arrangements where sponsors or business partners pay players compensation that is substantially in excess of the fair market value for services rendered.
For legal and compliance teams, the future of college sports will involve negotiating, structuring, and enforcing athlete compensation frameworks similar to those in professional sports. Expertise in contract structuring and enforcement, compensation analysis, Pool Cap compliance, and endorsement deal evaluation will become increasingly essential. This is sports law at its most complex, making legal and financial advisors with professional sports experience important and valuable.
To explore the House Settlement in greater detail, see our full breakdown here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
