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A Well Done Synopsis of What House vs. NCAA Settlement Means

May 25, 2024
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STILLWATER – We all know that the NCAA Board of Governors and the Power Five Conferences (ACC, Big Ten, Big 12, Pac-12, and Southeastern Conference) all voted to settle the case of House vs. NCAA. This settlement should also go toward a resolution in two other class-action cases that are in the same court. The basic is that the NCAA and Conferences (their members) will pay $2.8 billion in damages to the plaintiffs. The defendents will also 22 percent of the average Power Five revenues to current student-athletes. That figure is estimated in most stories and reporting to $20 million annually, but obviously can go up and go down. 

Also, scholarship caps will be removed allowing athletic departments to spend more there as well. You can expect to see most all sports become full scholarship sports. Sports like baseball and wrestling at Oklahoma State that have been fractional scholarship sports will change.

A story from business information and journalistic leader, Forbes Magazine, has outlined well much of what will happen in the future as a result of this settlement. You can read the entire story here.

Hagens Berman Law Firm
Attorney Steve Berman

Steve Berman, a managing partner and co-founder at the firm Hagens Berman represented the plaintiffs in the suit and he told Forbes, “Our clients are the bedrock of the multibillion-dollar business and finally can be compensated in an equitable and just manner for their extraordinary athletic talents.” 

I would agree with Mr. Berman on that better if his clients were all Power Five college football players and the name plaintiffs in the suit weren’t former Arizona State swimmer Grant House or women’s basketball player Sedona Prince. We’ll get to the best part of this settlement and that is how the new revenue sharing with student-athletes will be determined.

Damages

The plaintiffs, member of the class-action suit of which there are estimated to be 14,500 of them, all athletes in Division I from June 15, 2016 through the date the class was established, Nov. 3, 2023. That money, $2.8 billion will be split among them minus 25-35 percent going to the attorneys. 

Berman told Forbes Magazine that the moeny will be split pursuant to a formula created by a sports economist, some money split equally among all, some split based on the former athlete’s market value.

How will the defendants pay the money?

There are a lot of theories floating around here. The most common have the NCAA paying approximately $1.1 billion with reserves. Then another $1.65 billion will be paid by the Power Five and the other Division I conferences paying $990 million.

Much of that will be money simply witheld by the NCAA of revenue that would have been shared from March Madness and other NCAA championship events.

How much money will current and future athletes receive?

The settlement dictates that going forward student-athletes will be paid a total annually of up to $21-22 million as revenue sharing. That number will increase over the 10-year settlement based pn 22 percent of the average Power Five school’s annual revenues.

The payment to the athletes will be up to the school, but it won’t be uniform or across the board equal. More than likely the money will be paid based on a formula to determine each athlete’s value to the department. 

Where will that money come from?

This is the big question for each school. Does it come from facility upgrades being decreased, salaries decreased or athletic department employees laid off, do schools cut sports? More than likey exppect a combination of all these as athletic departments tighten their belt to add this expense, roughly a fifth of their annual revenues to their expenditures. 

Will NIL collectives go away with this settlement?

In administrators’ ideal world, the House settlement will bring an end to the “wild, wild West” era that sprouted up when the NCAA was forced in 2021 to allow NIL but instituted few if any regulations around it. Fat chance.

The settlement will allow, say, Ohio State, to share up to $20 million with its athletes. Which seems like a lot. But schools won’t be able to give all $20 million of it to the football team, lest they themselves want to be sued by their women’s sports athletes.

From The Athletic website and the story:  Paying college athletes will usher in a new era of uncertainty. But here’s what won’t happen, by Stewart Mandel

The understanding is that NIL collectives are about Name-Image-and-Likeness even those any intelligent person connected with college athletics knows it is 90 percent or more pay-for-play. The schools that cheat such as Miami, Fla; Tennessee; etc. will continue to cheat and keeping the collectives running allows them to do so. Collectives will stay for those that want to find a way to pay their football and maybe basketball players some more.

Does Title iX apply in the payouts? 

I don’t see how it can or would. First, this is not an educational issue. It is a legal issue out of a legal action. We already stated that if you pay all the athletes the same then you risk antitrust issues all over again.

Discussion from...

A Well Done Synopsis of What House vs. NCAA Settlement Means

1,243 Views | 5 Replies | Last: 27 days ago by RodeoPoke
RodeoPoke
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TITLE IX
This is an excerpt from a lengthy story linked at the bottom.

How will schools distribute revenue?


Short answer: It is at the discretion of each school. There are no constraints on the distribution of revenue.
However and this is very important Title IX is not addressed in the settlement terms. It still applies. Title IX is a federal law that requires education institutions to provide equal opportunities for women and men athletes. It's why many schools offer similar or the same amount of women scholarships as men scholarships.
In a revenue-sharing model, how does Title IX apply? Will schools that reach the, let's say, $22 million cap be required to share $11 million of that money with women athletes?

It depends on who you ask. In a previous interview, NCAA president Charlie Baker contended that Title IX only applies to opportunities and not monetary compensation, suggesting that more revenue could be shared with the athletes who generate most of it: football and men's basketball players. But the Department of Education hasn't weighed in on the issue.

Title IX is the single most pressing issue in this entire settlement, most administrators say.
"That's the trump card," said one power school athletic director.

"Campuses must weigh their risk toleration," said another.

On one hand, an unequal split of revenue sharing puts a school at risk of a Title IX lawsuit.

On the other hand, an equal split of revenue sharing puts a school at risk of a lawsuit from football players who believe that they are not receiving enough of the revenue they are generating.

"Don't those generating the money need to get the most in distribution?" asked one university leader.

"The whole reason we are in this scenario is because we've been funneling money from football to pay for country club sports," said an associate athletic administrator at a power conference.

The administrator was referring to a traditional structure of athletic department finances: Revenues often related to football and men's basketball (TV contracts, ticket sales and donations) are used to fund Olympic sports that, at many schools, lose a combined $30 million or more annually.

Even one of the plaintiff attorneys in the settlement case believes that football players should keep the money football players generate.

"(Football players) should not receive anything so that the money can go to the golf and tennis team," Kessler said last month. "Think of the composition of those teams and think of the composition of the teams that are giving up the money. What is that about?"

Kessler expects the Title IX issue to end in a courtroom. That's where, he says, it will eventually be "resolved."

But there are perhaps ways to circumvent or, at the very least, attempt to bend the Title IX rules by skewing more cash to football and men's basketball players.

The first involves the classification of the revenue-sharing deals that schools strike with athletes. Though left up to the schools' discretion, many of the deals are expected to be classified as agreements to purchase the use of their name, image and likeness (NIL). NIL deals are widely based on the value an athlete brings to a team or school. The more valuable, the more money.

This is a potential way for schools to defend a plan to pay male athletes more than female athletes. Some officials are even discussing the use of a "Q-Score," which is a measurement of a person's brand appeal. Others are seeking data on "fair market value."

"What if you are buying NIL rights from players and those rights have different market values for men and women?" asked one power conference administrator.

There is, of course, a second way around Title IX: Have an outside third-party entity share revenues with your athletes.

Such as, a currently existing booster-backed NIL collective.

NCAA settlement Q&A: How will schools distribute revenue, what is the future of NIL collectives and more
[url=https://sports.yahoo.com/author/ross-dellenger/][/url]Ross Dellenger, Senior College Football Reporter

https://sports.yahoo.com/ncaa-settlement-qa-how-will-schools-distribute-revenue-what-is-the-future-of-nil-collectives-and-more-125519681.html
CowboyKip
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Am I understanding that each school essentially has a $20M salary cap to pay athletes?
RodeoPoke
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CowboyKip said:

Am I understanding that each school essentially has a $20M salary cap to pay athletes?
I don't think that it says that.

They can still have NIL (which could help them exceed the cap), for example

It's more like a $20 million dollar penalty that you have to pay, whether you have the money or not.

the example given in the linked article above suggests that $20 million to Ohio States budget is 8%, while that amount to Arkansas' budget is 13% (off the top of my head). (tOSU being the largest and Arkansas being 100th), I believe it said. Something close to that.

That is a much bigger hit to Arkansas' budget than it is to Ohio State's. Major structural and HR issues will need to be addressed to come up with that money, for most schools. A&M restructured their department and laid off a whole bunch of Athletic Department coaches and support staff last month in preparation for this settlement.

NJAggie
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RodeoPoke said:

CowboyKip said:

Am I understanding that each school essentially has a $20M salary cap to pay athletes?
I don't think that it says that.

They can still have NIL (which could help them exceed the cap), for example

It's more like a $20 million dollar penalty that you have to pay, whether you have the money or not.

the example given in the linked article above suggests that $20 million to Ohio States budget is 8%, while that amount to Arkansas' budget is 13% (off the top of my head). (tOSU being the largest and Arkansas being 100th), I believe it said. Something close to that.

That is a much bigger hit to Arkansas' budget than it is to Ohio State's. Major structural and HR issues will need to be addressed to come up with that money, for most schools. A&M restructured their department and laid off a whole bunch of Athletic Department coaches and support staff last month in preparation for this settlement.


I've heard the $20M is the cap. Schools have to spend 22% of their own revenue, but that can be less than the $20M cap. If you exceed the cap you will be assessed a penalty that is paid out to the schools not exceeding the cap.

So lots of different takes out there. We will probably have to wait to see this settle out.
RodeoPoke
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NJAggie said:

RodeoPoke said:

CowboyKip said:

Am I understanding that each school essentially has a $20M salary cap to pay athletes?
I don't think that it says that.

They can still have NIL (which could help them exceed the cap), for example

It's more like a $20 million dollar penalty that you have to pay, whether you have the money or not.

the example given in the linked article above suggests that $20 million to Ohio States budget is 8%, while that amount to Arkansas' budget is 13% (off the top of my head). (tOSU being the largest and Arkansas being 100th), I believe it said. Something close to that.

That is a much bigger hit to Arkansas' budget than it is to Ohio State's. Major structural and HR issues will need to be addressed to come up with that money, for most schools. A&M restructured their department and laid off a whole bunch of Athletic Department coaches and support staff last month in preparation for this settlement.


I've heard the $20M is the cap. Schools have to spend 22% of their own revenue, but that can be less than the $20M cap. If you exceed the cap you will be assessed a penalty that is paid out to the schools not exceeding the cap.

So lots of different takes out there. We will probably have to wait to see this settle out.

You said it yourself, the cap is 22% of athletic department revenue (not donations). 22% can be less than $20 million, and it could be more than $20 million. And it will increase annually.

What are the specifics of NCAA revenue plan with athletes?

At its most basic level, the plan presumably set to being in 2025-26 academic year initially will guided by a cap of 22% of the combined total of certain revenues of Power Five conference schools. Among the revenues being counted for this are those from media rights deals, ticket sales and sponsorships. NCAA representatives said Thursday night the dollar amount for the cap is set to increase annually and would be re-set further, depending on whether the applicable revenues increase substantially (think, new or renegotiated TV contracts).
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