The NCAA is currently negotiating a settlement to the House lawsuit.
Ever heard of it?
In this video I explain what it is, the possible settlement and what might be happening to college sports.
Summary:
College football is undergoing significant transformations, notably the ability for athletes to profit from their name, image, and likeness (NIL) and the ease of transferring schools via the transfer portal.
The NCAA faces a major antitrust lawsuit, House vs. NCAA, involving claims for lost NIL revenue, with the NCAA likely to settle due to the high potential damages. This lawsuit may lead to unprecedented changes in the NCAA, including a new compensation model that allows athletes to share in TV revenue.
The settlement could also increase scholarship opportunities by potentially expanding sports-specific roster sizes. However, the lawsuit and potential settlement do not address issues with NIL and the transfer portal, suggesting the need for further reforms, including possibly treating athletes as employees. This situation is compounded by the immense financial stakes in collegiate sports, driven by TV contracts and legal battles, which continue to shape the future of college athletics.
Full Transcription:
College football has gone through some incredible changes in a very short time. NIL, name, image and likeness has provided a means for college athletes to make money for themselves.
The transfer portal now allows players to transfer as many times as they want without sitting out for a year. Will we get to the point where a player could play for the two teams in the same season? It could happen. I think. Maybe. Maybe not. There are more changes coming to college sports and they will be bigger than anything we’ve seen in over 100 years.
This is a current events video, but there seems to be a lot of confusion about what’s happening with college sports, though I thought I’d give it a shot. Ross Dellinger, a writer for Yahoo Sports, recently published an article discussing how the NCAA is trying to negotiate a settlement in the House vs. NCAA lawsuit. The House case was filed by former Arizona State swimmer Grant House and includes a former Illinois football player, Tymere Oliver and TCU basketball player Sedona Prince.
And they are seeking compensation for lost NIL revenue, including broadcast video game and third party deals that took place prior to June 15, 2016, nearly five years before the current NIL rules. This is an antitrust lawsuit. The student athletes claim the NCAA conspired to constrain their ability to earn money from NIL and in total they are seeking more than 1.4 billion in damages.
The NCAA is trying to negotiate a settlement in this case. They know they’re going to lose the lawsuit and they want to settle because if it goes to court the chances are well they’ll they’ll lose and then they’ll have to pay much higher damages to the tune of it’s been set around 4.2 billion dollars billion again. So if you had to settle for 1.7 billion or 4 billion I think you would always choose the 1.7 billion. But according to Dellinger part of the settlement is going to include changes to the NCAA like we’ve never seen. Part of the settlement is going to include a payout to athletes. It’s a class action lawsuit so lawyers and athletes are going to get paid.
The other part of the settlement is a new compensation model for athletes in which athletes will directly share in TV revenue. And according to Dellinger the 10-year settlement agreement could cost each power school as much as 300 million over the next decade or 30 million a year. I’ll quote the article here. “That figure assumes a school meets what is believed to be a 17 to 22 million dollar revenue distribution cap for athletes and at least 2 million in withheld NCAA distribution for back damages and as much as 10 million in additional scholarship costs related to an expansion of sports specific roster size, a concept previously unpublished.”
According to Dellinger the revenue sharing portion of the new model is permissive, meaning schools are not required to reach the cap or share revenue at all. Schools will also have the discretion to expand scholarships or not across new roster limits expected to be implemented across all sanctioned sports.
So what do we mean by expand scholarships?
I’ll use baseball as an example of that. Baseball for example I believe the limit is they can give up to 11.7 scholarships to a roster of 35 players. So they give partial scholarships across the board typically and part of this settlement what it’s saying is that a school could give 35 scholarships to baseball if they wanted to go ahead and pay for the entire baseball team’s ability to attend school.
Expand that across the entire sports spectrum and you have a lot more scholarships available to athletes.
The NCAA has lost every antitrust lawsuit recently against them. The big one was the Alston case in 2021 which ushered in the era of NIL, name, image and likeness or the ability for college athletes to get paid for basically marketing themselves. The NCAA will continue to lose antitrust lawsuits. The biggest reason for that is that the political tide has turned against the NCAA. In the past they could have depended upon Congress to perhaps give them an antitrust exemption to allow them to do business as usual.
Those days are gone.
The biggest reason those days are gone is because there’s billions of dollars pouring into collegiate sports.
College athletes were making unbelievable money for everybody else but them. Coaches contracts have become massive even when they suck and get fired and the schools have to buy them out. The biggest example of that most recently was Texas A&M paying Jimbo Fisher nearly 80 million dollars to be fired. The athletic did an article on buyouts last November and it showed that Kirby Smart at Georgia has a 92.6 million dollar buyout. Brian Kelly at LSU 70 million. James Franklin 64 million. Matt Rule at Nebraska, my beloved Cornhuskers has a 62 million dollar buyout. Those numbers are insane. They’re ridiculous.
That’s how much money is coming into the sport. The other problem was, is if you look around the country over the past, let’s say 20 years, you’ve seen Taj Mahal level facilities building, millions again being poured into facilities so it impresses recruits. But again, none of that money going to athletes. The bottom line is Congress will not save the NCAA from their antitrust problem anymore. There are basically two groups that are in charge of collective athletics right now. TV networks and lawyers. Both of those groups are determining what the future of college athletics will look like. There’s a tendency to think that the NCAA should do this or do that to control the future of college athletics. But the NCAA has been rendered powerless, neutered by the courts. I cannot emphasize that enough.
It’s also important to understand a negotiated settlement of the House case will not do anything to mitigate two of the biggest problems that college fans have with their sports, those being NIL and the transfer portal. So even if the NCAA negotiate and comes to a new revenue sharing model with student athletes, NIL will still be in place. And the problem we’ve seen with NIL is that it’s the Wild West. There seems to be no limits nor any reason to what players are getting played. There’s no public knowledge of contracts because they’re all private and negotiated with entities outside the schools.
Again, the House lawsuit settlement will do nothing about NIL. The only solution to the NIL problem is that athletes need to become employees. And this is true for the transfer portal as well.
The NCAA has lost all legal proceedings when it’s tried to control the ability for players to transfer. The solution to the transfer issue is ruling athletes to be employees so they can be put under contract. If they’re under contract, we can have collective bargaining like we have in the NFL, where contracts are public instead of all this stuff where there’s just money and numbers being thrown around willy-nilly. And you really don’t know what’s true and what isn’t.
Athletes as employees is a separate issue from the House lawsuit negotiation. It’s further down the road. The NCAA would love to avoid having athletes declared as employees, but it too seems inevitable. There is a lawsuit already in the works about employment.
Johnson versus the NCAA. In that case, former Villanova football player Ralph “Trey” Johnson argues that under the Fair Labor Standards Act, college athletes should be employees of their universities with the ability to collectively bargain. And I’m not going to go into that here, but I can make a separate video on that if I get some interest. You might ask yourself, why doesn’t the NCAA just get out of the way and take the step to have athletes ruled as employees and then work out what that future would look like? And it’s a good question.
One answer I’ll give you comes from my experience of being an IT consultant my entire life. The saying about consultants goes, “If you’re not part of the solution, there’s good money to be made by prolonging the problem.” So NCAA lawyers are billing by the hour to settle these negotiations in cases, as are the plaintiff lawyers.
So the lawyers are making a lot of money.
Collegiate sports, especially football, are making so much money it’s like there’s giant hills of cash around them. And one of you have giant hills of cash around anything. It attracts lawyers, hence the lawsuits. The other reason why this wouldn’t all happen in one fell swoop is because all of it represents a massive huge amount of change in collegiate sports. The NCAA is worried about making massive changes because nobody knows whether this is going to be good for all of collegiate sports or very, very bad.
It could be good and then athletes get paid and you expand scholarship and maybe there’s more opportunities for student athletes. But it could also be very bad because it’s coming at a time at which enrollment is dropping a lot. And there is the possibility that issue will drive many colleges into bankruptcy.
There’s already a giant separation between the haves, basically the Big Ten and the SEC, and the have-nots, which is basically everybody else. Then there’s the problem that most athletic departments do not make a profit and therefore they rely on student fees, taxpayer dollars, or money from the academic side of their universities to pay for sports.
Will larger university use endowments to cover costs? Will they drop non-revenue sports? Will they drop all sports?
No one knows these answers.
There’s one more issue mixed in with all these changes and that is Title IX. If you have to pay the athletes, do you have to pay them all the same? This too will be decided by lawyers. I am not a lawyer, but I follow some actual real lawyers on Twitter. And one of the things that caught my eye is they believe that Title IX is more about having equal participation, not equal amount of dollars. So that’s where that might come into play.
It’s not a matter of if, but when these changes will come to college sports, it may take time for them to wind through the legal system after all lawyers bill by the hour. And keep in mind, historically change has been slow.
For example, it took from around 1880 to 1909 before the football rules had changed to the point that players weren’t being killed by the game. I have an entire playlist on the evolution of early football should you want to know more about that. I’m curious as to what do you think about all these changes.
Does it change your attitude toward college sports? College football the game we love? Let me know.
This is Jon Johnston with Hardcore College Football History. Thank you.
