By Billy Witz
The N.C.A.A. and the richest college athletic conferences joined with plaintiffsâ lawyers on Friday to enter a $2.8 billion settlement agreement of their class-action antitrust lawsuit. The filing outlines in some detail how schools would be allowed for the first time to pay college athletes directly.
The agreement, if approved by a federal judge in California, could deliver the final hammer blow to the amateur model of college athletics, which has begun to crumble in recent years under the weight of lawsuits and legislative action.
The proposed settlement of the antitrust suit, House v. N.C.A.A., and two companion lawsuits would open the door to a new model for college athletics. As soon as a year from now, schools could begin to spend up to slightly over $20 million a year to pay athletes, a ceiling that would rise along with college athletics revenues. The arrangement would last for 10 years.
The settlement also calls for tens of thousands of football and menâs basketball players to be paid retroactively for television and marketing rights. The settlement agreement sidesteps addressing Title IX, which among other things bars colleges from treating menâs and womenâs sports unequally.
The N.C.A.A. plans to use the settlement agreement as leverage with Congress to ask for a shield from further antitrust suits and from claims that athletes be considered employees.
The agreement calls for establishing an outside entity to police what are known as name, image and likeness deals for athletes. Any such agreement that is worth more than $600 would have to be reported to the athleteâs school, and a clearinghouse would be set up to help determine whether the deals have been struck at fair market value.
The athletic conferences that are co-defendants in the suits â like the Big Ten, Southeastern, Atlantic Coast and Big 12 â are granted greater autonomy under the agreement to exercise their financial clout, further separating them from the 27 other Division I conferences.
Leaders of many of the 27 conferences, which include the Ivy League, the Big East and conferences comprised by historically Black schools, are upset that the agreement requires them to pay more than one-third of the cost of damages â close to $1 billion â merely because they are members of the N.C.A.A.
What some conference commissioners find particularly irksome is that none of the revenue from the College Football Playoff is being used to finance the settlement of the lawsuit, which was driven by college footballâs soaring television rights fees and coaching contracts. Instead, the money will come mainly from the N.C.A.A. menâs basketball tournament.
âI know thereâs a number of conferences and institutions that arenât happy,â said Dan Butterly, the commissioner of the Big West and the chair of the Collegiate Commissioners Association, which represents conferences that do not have access to the College Football Playoff. âWe werenât part of the discussion in how their settlement came about. It was sprung upon 27 conferences in many ways.â
Their pleas, though, seem unlikely to receive a receptive audience from Claudia A. Wilken, the judge hearing the case. On Wednesday, the judge dismissed a request for intervention from Houston Christian University, a small private school in the Southland Conference, which argued that it was being forced to divert money from its academic mission to pay athletes and that it had not had any say in drawing up the agreement.
Judge Wilken noted in her ruling that âH.C.U.âs membership in the N.C.A.A. and participation in Division I sports is voluntary.â
Tyler Boyd, the general counsel at Houston Christian, said the school was weighing its options, including an appeal. He declined to comment further.
The judgeâs admonition echoes a question that universities big and small are increasingly pondering: Can the N.C.A.A. serve the needs of two very different classes of member schools? On the one hand are the athletic behemoths like Texas, Texas A&M and Ohio State â schools whose athletics revenue exceeds $250 million a year â and on the other, the majority of the 364 Division I schools, which, like Houston Christian, bring in much less money and use sports to try to boost enrollment at a time when the college-age population is shrinking.
The gap between the richest schools and the rest is expected to grow under the settlement.
In an effort to minimize its antitrust exposure, the N.C.A.A. is seeking to eliminate scholarship limits in the settlement. Instead, there would be limits on team roster sizes, with schools allowed to choose how many players to give scholarships. For example, instead of restricting each football team to 85 scholarships, the roster would be limited to 105 players in all.
Thus, a player who might face a choice of being a walk-on at a football power like Ohio State or getting a scholarship slot at a program like Akron might now be offered scholarships by both schools, which will probably help widen the talent gap between top-tier colleges and the rest.
The same dynamic might also take place within conferences, with, for example, Ohio State more easily able to afford 20 extra football scholarships than Rutgers might be.
There are fears that the proposal would have a devastating impact on Olympic sports, as schools choose to plow more money into the major revenue sports like football and menâs basketball, at the expense of sports like swimming, track and menâs volleyball.
Looming over the settlement, though, is Title IX, which requires equal opportunity for men and women in college sports.
About 90 percent of the settlement payouts would go to football and menâs basketball players in the big-money conferences that are co-defendants in the suits. The average amount due to those athletes will be $135,000, according to Steve Berman, a lawyer for plaintiffs in the litigation. Mr. Berman said that one athlete who he declined to identify would be due $1.85 million. Womenâs basketball players could each receive an average of $35,000 to compensate for lost marketing opportunities.
The agreement has been constructed in a way that the plaintiffs and defendants believe would survive court scrutiny. The back payments would come from the N.C.A.A. and go into a central fund; plaintiffsâ lawyers would then direct the money to athletes based on a formula that includes details of their playing careers, like how many snaps a football player participated in. Because the money does not pass through the schools themselves, the lawyers involved believe, they would not fall under Title IX.
But Arthur Bryant, a lawyer who has successfully won Title IX settlements against Clemson and Florida State, said female athletes were still being treated unfairly. They would have generated more television and name, image and likeness revenue for their schools, he said, and thus be entitled to a bigger payout now, if they had been featured on television as frequently as the men.
The N.C.A.A. is leaving future payments to athletes up to individual schools, saying the payments would have to comply with Title IX, which is administered by the Department of Education.
Another issue that may come before Judge Wilken is a competing antitrust case, Fontenot v. N.C.A.A., that has been filed in Colorado. Plaintiffsâ lawyers in that case have said that the settlement in the House case is insufficient because it earmarks too small a share â just 22 percent â of future revenue to be shared with players.
Lawyers in the House case said in a filing on Friday that no athletes had opted out of the settlement, and that when scholarships, educational payments and various services provided by the schools are factored in, athletes will be receiving close to the 50 percent share of revenue that the playersâ unions in the N.F.L. and N.B.A. have bargained for.
It is not unheard-of for a judge to send a proposed settlement agreement of this kind back to the parties for changes. A decade ago, a judge rejected an agreement that would have capped the damages paid by the N.F.L. to former players who suffered concussions at $765 million.
The parties returned to court with a new agreement that did not cap the damages, which the judge approved. Since it came into effect in 2017, more than $1.33 billion in damage awards have been paid out.