NCAA v. House, Part 1: How would UMass athletics be affected by landmark settlement proposal?

MAC commissioner Dr. Jon Steinbrecher, right, speaks along with Director of Athletics Ryan Bamford and Chancellor Javier Reyes during a press conference at the Martin Jacobson Football Performance Center earlier this year regarding the University of Massachusetts joining the Mid-American Conference.

MAC commissioner Dr. Jon Steinbrecher, right, speaks along with Director of Athletics Ryan Bamford and Chancellor Javier Reyes during a press conference at the Martin Jacobson Football Performance Center earlier this year regarding the University of Massachusetts joining the Mid-American Conference. STAFF PHOTO


Staff Writer

Published: 06-07-2024 2:50 PM

Modified: 06-07-2024 3:12 PM

(This is part one of a two-part series. Part two can be found here.)

Late last month, the NCAA’s Board of Governors and the Power 5 conferences reached a $2.8 billion proposed settlement in NCAA v. House, a consolidated antitrust litigation of three class action lawsuits brought by former student-athletes seeking lost compensation. The settlement has yet to be approved by U.S. District Judge Claudia Wilken, who could still reject the settlement or ask for fundamental changes as she reviews it over the next few months.

Prior to 2021, student-athletes were not allowed to earn money from their name, image and likeness (NIL). This case will cover damages as far back as 2016 and until 2034 while also providing the NCAA a release of antitrust compensation claims brought by athletes for the next 10 years. If the case ultimately went to trial, the NCAA risked $20 billion in back damages and its own bankruptcy. The $2.8 billion in damages is almost entirely earmarked for football and men’s basketball student athletes from Power 5 schools.

The settlement also includes the elimination of scholarship limits and the first step toward direct revenue-sharing with players. FBS schools will have a cap of about $20-22 million to directly pay athletes, and schools can opt in or out of the model. That number is based on an average of power conference schools’ media rights, ticket sales and sponsorships and offers athletes a 22% share of revenue, rather than the 45-50% athletes receive in the major professional leagues.

“The way that we do business is, without a doubt, going to change probably significantly in the next five years,” UMass athletic director Ryan Bamford said.

Of the $2.8 billion to be paid to players in the settlement, the NCAA will pay $1.1 billion (40%) and Division I schools will pay the remaining $1.65 billion (60%). This lawsuit only pertains to Division I, and payments will begin in the 2025-26 academic year.

The damages will be paid to student-athletes via withheld revenue from both the NCAA and its 32 Division I conferences. UMass announced in February it would be leaving the Atlantic 10 for the Mid-American Conference in the 2025-26 academic year, so their payments would come from the NCAA and the MAC, not the A-10.

But even though about 90% of the damages will be paid to former, current and future student-athletes at Power 5 schools, the Power 5 schools themselves will only be on the hook for 40% of the $1.65 billion schools are shouldering. The Group of 5 schools (which will include UMass upon its entrance into the MAC) and the non-FBS schools (like ones in the A-10) will pay the other 60%, about $990 million. 

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Though Power 5 schools will pay more money per school into the settlement than non-Power 5 schools, they’ve also recently signed media rights deals that far surpass what non-Power 5 schools earn. Simply put: their fast-growing revenues mean they can withstand an expense hit in a way that non-Power 5 schools with much slower-growing revenues can’t.

UMass expects to pay $400,000-500,000 per year into the settlement for the next 10 years.

UMass and the nearly 300 other schools outside the Power 5 had no input on the terms of the settlement agreement or in the way the payments will be distributed. Their approval was rolled into the NCAA Board of Governors’ approval.

“I feel like there’s a pretty strong contingent of Division I schools who felt like we were on the outside looking in, both on the settlement and the way that it’s ultimately going to be paid over the next 10 years,” Bamford said. “And that’s frustrating to many people in Division I, that we didn’t have the opportunity to weigh in on that.”

The distribution in the NCAA v. House settlement is similar to the distribution in the new College Football Playoff media rights contract signed with ESPN in March. Schools in the Big Ten and the SEC – as well as the Big 12 and ACC to a slightly lesser extent – will take home much more revenue and receive more berths than the Group of 5 in the new 12-team playoff. 

“We didn’t have a real opportunity to be part of that,” Bamford said. “I don’t think the Group of 5 conferences felt like they were. They were told what it was going to be, and if they wanted to be in it, they had to vote for it. That’s not a negotiation, that’s basically, ‘hey, here’s what it is, and here’s what we’re going to do, and if you want to be a part of this great thing,’ where, really, it’s built where the Big Ten and the SEC take a lion’s share of the revenue and a lion’s share of the access. I think that’s been not just hard for the Group of 5 but hard for a pretty solid contingent of the FBS institutions to swallow.”

Division I schools everywhere, especially outside the Power 5, will have to dramatically change their expense models to fit a new reality where a significant portion of the revenue they receive from their conference will go toward the settlement. Olympic sports that are not traditionally revenue-positive are in danger, and many schools may cut some of them to free up money to spend on football and men’s basketball, especially if they’re trying to reach the $20-22 million revenue-sharing cap.

It’s still to be seen whether Congress will step in and enact legislation to codify regulations for NIL, employment and other issues in college athletics. The NCAA has been lobbying Congress for years to receive an antitrust exemption and classify its athletes as students, not employees. Additionally, the settlement does not address how Title IX would be applied in such a compensation model.

Despite the whirlwind of potential changes, it’s important to remember that this settlement has not been approved by Wilken. She could decide that the settlement doesn’t warrant such an extensive restructuring of college athletics. 

Additionally, she could contend that attorneys negotiating what is basically a labor agreement is problematic from a labor law perspective. College athletes – aside from the Dartmouth men’s basketball team's recent efforts – are not recognized as employees and thus cannot unionize and collectively bargain. With college athletes’ employment status still in flux, Judge Wilken could decide that this settlement is too encompassing.