New documents were filed on Thursday regarding the House v. NCAA settlement, responding to questions Judge Claudia Wilken raised during a preliminary approval hearing on Sept. 5.
Lawyers in the proposed House settlement — which would also resolve the Hubbard and Carter antitrust lawsuits against the NCAA — filed a revised version of the agreement, as well as a brief explaining how Wilken’s previous concerns have been addressed. Most of the revisions aim to clarify language in the original proposal regarding restrictions on third-party name, image and likeness (NIL) payments to college athletes, and to better define the term “booster” and what constitutes the pay-for-play inducements the NCAA is aiming to eliminate.
No decisions or next steps regarding preliminary approval are expected from Judge Wilken this week.
The settlement, which would be a historically impactful one for the financial structure of college sports, hit a snag in the approval process during the preliminary hearing earlier this month. Wilken, presiding over the case in the Northern District of California, sent the parties “back to the drawing board,” with the stipulations involving third-party NIL receiving the bulk of that attention.
“The parties have made changes … to clarify these provisions so that it is explicit that the Agreement is only allowing the continuation of existing NCAA rules which already prohibit so-called ‘faux’ NIL payments in narrow and more objectively defined circumstances,” the brief stated.
Agreed to in principle in May, the settlement would have massive ramifications on college sports if approved, including the ability for current and future athletes to receive pay directly from schools, breaking with the NCAA’s century-old system of amateurism. This revenue-sharing model would include an annual pool capped at north of $20 million per school to be distributed to athletes starting next season. However, one aspect of the settlement that is critical from the NCAA’s perspective is renewed enforcement of rules limiting NIL payments to “a valid business purpose” and eliminating the imbalanced pay-for-play payments that have become commonplace among booster-led NIL collectives.
Under the revised settlement proposal, “enforcement authority over third-party NIL deals would no longer extend to all third parties … or the broadly defined term ‘boosters’” and instead focus on “a narrower group of entities and individuals closely affiliated with the schools.” The briefing specifies these individuals as people affiliated with an NIL collective or involved in a players recruitment, or individuals/families/affiliated entities that have contributed more than $50,000 to a university’s athletics department over the course of their lifetime.
Wilken signaled general support for the settlement efforts during the preliminary approval hearing but expressed specific issues and confusion once discussion turned to the proposed restrictions on third-party NIL payments. She questioned whether the restrictions would curtail earning potential for certain athletes, and challenged the distinction between boosters and other “legitimate” businesses or entities that might want to broker NIL deals with athletes.
“I’ve found that taking things away from people is usually not too popular,” Wilken said during the hearing.
The NCAA currently has rules meant to guard against pay for play and other recruiting inducements in relation to NIL, but those rules have largely gone unenforced, especially since a federal ruling in Tennessee earlier this year. Wilken alluded to this reality during the hearing.
The House settlement is intended to reform that. Under the proposed terms, the NCAA and power conferences could form a “designated enforcement agency” that would determine whether third-party NIL deals qualify as “true NIL” and provide fair market value. All college athletes would be required to report third-party NIL contracts worth $600 or more through a newly created clearinghouse database. Deals that are deemed to be pay-for-play inducements would be denied or forced to be amended under the settlement, with penalties levied if an athlete ignores those directives.
During the Sept. 5 hearing, NCAA lawyer Rakesh Kilaru stressed that this is “an essential part of the deal” for the NCAA and something both sides attempted to clarify and expound on in the latest revisions.
“For the first time in the NCAA’s long enforcement history, neutral arbitration will be available to challenge the NCAA’s enforcement of such rules against athletes or their schools,” the brief stated. “The NCAA will no longer be the prosecutor, judge, and jury for these restrictions.”
Whether Thursday’s revisions will be enough to satisfy Wilken’s concerns remains to be seen. The filings also addressed other questions raised in the preliminary approval hearing, including if the plaintiff lawyers negotiating for both the injunctive revenue sharing and retroactive damages portions of the settlement presents a conflict of interest. Wilken previously expressed few (if any) issues with the proposed formula for distributing the $2.8 billion in back-pay damages or the future revenue-sharing pool.
Wilken will likely take a week or two and review the revised filings, after which she could schedule another hearing for preliminary approval or simply make a ruling based on the revisions. It’s more likely the judge will schedule another hearing, which may include a briefing period for any additional responses and/or objections to be filed.
If preliminary approval is ultimately granted, the settlement parties can begin notifying class members, which include the former athletes eligible for damages payments and current athletes eligible for the optional revenue sharing. A final approval hearing would likely be scheduled for early next year; if that approval is granted, the settlement would immediately go into effect, with the revenue sharing implemented next July.
If approval can’t be reached at any point in the process, the original antitrust cases would likely go to trial.
An approved settlement will not resolve all of the NCAA’s legal battles, which is why the organization will continue to pursue Congressional antitrust exemptions and federal NIL legislation. A House settlement would not necessarily supersede the federal ruling in Tennessee and would need member institutions to adhere to the settlement terms to be most effective. It also wouldn’t protect against possible Title IX complaints, employment status and collective bargaining efforts or other antitrust litigation.
The NCAA does believe that the House settlement would help prevent situations like the one involving UNLV quarterback Matthew Sluka, who announced this week he will sit out and redshirt the rest of this season before entering the transfer portal over an NIL dispute. Sluka and his agent claim the quarterback was “verbally promised” at least a $100,000 NIL contract by an assistant coach but that Sluka has received only a $3,000 relocation stipend. UNLV and its affiliated NIL collective maintain a formal NIL was never made.
“The NCAA fully supports college athletes profiting from their NIL, but unfortunately there is little oversight or accountability in the NIL space and far too often promises made to student-athletes are broken,” NCAA senior vice president for external affairs Tim Buckley said this week in a statement. “Positive changes are underway at the NCAA to deliver more benefits to student-athletes but without clear legal authority granted by the courts or by Congress, the NCAA, conferences and schools have limited authority to regulate third parties involved in NIL transactions.”
(Photo: Ken Ruinard / USA Network via Imagn Images)
