Judge Clears Path for Landmark College Athlete Compensation Deal
On Monday, a U.S. District Judge granted preliminary approval for a $2.78 billion legal settlement that would revolutionize college sports by allowing universities to directly pay athletes. The decision by Judge Claudia Wilken outlines a timeline leading to the potential finalization of the deal in April 2025, just as the highly anticipated March Madness basketball tournament comes to a close.
Under the settlement, college athletes will be able to apply for payments as early as October 18, with millions of dollars being made available to athletes through a revenue-sharing plan.
Historic Shift in College Sports
If approved in its final form, the settlement would mark a significant shift in the collegiate athletics model, moving from scholarships-only compensation to direct payments from schools. Major universities will be required to contribute approximately $21.5 million in the first year to a pool for athlete payments, with future payments recalculated periodically over a 10-year span.
Athletes would continue to secure name, image, and likeness (NIL) deals with outside sponsors, in addition to receiving payments from their schools. The agreement will also provide backdated compensation for athletes going as far back as 2016, helping them recoup potential earnings from NIL deals that were prohibited before 2021.
Concerns and Adjustments Addressed
The settlement follows a 2021 Supreme Court ruling that allowed athletes to profit from NIL deals, but this new agreement directly involves schools sharing their revenue. Legal adjustments to the wording of the agreement were made to address Judge Wilken’s concerns, including clarifying the role of “boosters” in NIL deals.
Despite the large payout, some universities are scrambling to find ways to meet their financial obligations to athletes without hurting their overall sports programs, especially those non-revenue sports that often provide athletes for the U.S. Olympic teams.
NCAA and Athlete Reaction
“We are thrilled by Judge Wilken’s decision to give preliminary approval to the landmark settlement that will help bring stability and sustainability to college athletics while delivering increased benefits to student-athletes for years to come,” said NCAA President Charlie Baker.
However, critics of the settlement have raised concerns over potential Title IX violations. With approximately 90% of the money expected to go to football and men’s basketball players, there are fears that female athletes and athletes in other sports may not receive equitable compensation.
Future Legal Battles
This settlement resolves three major antitrust lawsuits against the NCAA, including one led by former Arizona State swimmer Grant House. The value of payments and benefits to athletes is expected to exceed $20 billion over the next decade. While the $21.5 million annual payout may be a small fraction of what professional athletes earn, it represents significant progress for college athletes.
