A $2.8 billion NCAA settlement reached in May raises new concerns about fairness, recruitment, future of amateurism in college sports
By Teja Tirunelveli and Esha Venkataraman
Athletics have always made up a huge part of American colleges. Each university funds athletic programs to showcase its athletic prowess in different sports. This, in turn, helps universities recognize the effort and tenacity of their student-athletes while raking in money from athletic competitions organized under the aegis of the National Collegiate Athletics Association (NCAA).
Nevertheless, three antitrust lawsuits filed against the NCAA (House v. NCAA, Hubbard v. NCAA and Carter v. NCAA), leading to a $2.8 billion settlement over 10 years on May 3, implicating current and past athletes, bear a heavy shadow for collegiate athletics and aspiring athletes. These rulings threaten to alter the future of American college sports. Even though the settlement only applies to the Power 5 conferences (BIG 10, BIG 12, Pac-12, ACC, SEC), it can still affect national and global athletes who wish to play for American universities.
Historically, the NCAA is the organization that regulates collegiate athletics. The NCAA has worked on the assumption that its athletes are amateurs; hence, it aims to provide student-athletes with a balanced athletic and academic experience. Over time, American college sports morphed into a billion-dollar industry with a huge fan-following, T.V. deals, and much more. The catch was that the athletes represented colleges and did not get paid in return for a quality education. This deal aimed to achieve NCAA’s balance between athletics and academics. Nonetheless, the athletes are profitably marketed by the NCAA and universities alike.
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As more NCAA student-athletes received recognition from social media and professional circuits, the profit the NCAA reaped from their popularity allegedly far outweighed what the athletes received in return. Moreover, NCAA’s amateurism restrictions were perceived to prevent its athletes from reaching their marketability potential. The introduction of the “Name, Image, and Likeness” (NIL) rules in July 2021 was a turning point, but it only exacerbated existing concerns.
The NIL rules, which permitted college athletes to earn money from their name while retaining their amateur status, seemed like a solution that mutually benefited the NCAA and athletes alike. College athletes were finally able to market themselves and earn money from their name, image, and popularity. Nevertheless, NCAA’s amateurism restrictions prevailed, prohibiting athletic compensation (both from marketing and from playing in professional leagues) and raising serious questions. Athletes’ assertions that such NCAA rules have caused them to lose financial and professional opportunities constitute the substance of the anti-trust lawsuits.
Two of the three antitrust lawsuits made prominent headlines, as each contained notable athletes and universities addressing what they assert as the NCAA’s violations of antitrust laws.
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The first, a federal antitrust lawsuit, was filed by the state(s) of Tennessee with, Virginia, Florida, New York, and Washington D.C., (States) questioning the NCAA’s restriction prohibiting players from signing NIL deals before being admitted as student-athletes. The rule prevented universities from incentivizing players to commit to schools with big NIL deals.
The States asserted that the rule directly limited players from earning money. The lawsuit gained momentum with the filing of a second major athlete-driven lawsuit underscoring dissatisfaction with the NIL/NCAA restrictions. Notable athletes who initiated the suit include Duke’s footballer Dewayne Carter, TCU’s basketball player Sedona Prince, and Stanford’s soccer player Nya Harrison. At its core, the States’ lawsuit questioned the basis of NCAA rules, while the athletes’ lawsuit raised a long-ignored question of whether college athletes were being exploited.
Pressure from high-profile lawsuits may have pushed the NCAA toward settlement. Arguably, the NCAA settled to avoid a higher financial judgment burden and further appeals but was also perhaps hoping for congressional intervention to support and protect it from future lawsuits. Congress has yet to intervene to provide directions to the overarching questions.
The settlement resulted in the NCAA Board of Governors and the Power-Five Conferences agreeing to a $2.8 billion settlement to be paid over a 10-year period, owed to current and former athletes from 2016 who lost financial profits and from possible NIL deals since 2021. In addition to this, conferences and schools have also gained the ability to directly pay student-athletes. In exchange, athletes who sign into the revenue-sharing arrangement will waive their right to sue the NCAA, granting the institution protection from future lawsuits.
The NCAA plans to use its reserve fund created from profits to pay approximately 40 percent of the owed monies and 60 percent will be generated from mostly football and basketball conferences, within which Power 5 schools will pay 40 percent while the smaller conferences agreed to pay 20 percent.
This settlement can potentially affect smaller sports conferences and can change how the transfers and recruitment of student-athletes are handled. Wealthier universities, such as Texas A&M and Alabama, gain an edge over private/smaller schools. These schools belong to the power conference that will amass more money from the NCAA while owing less from the 40 percent pay-back due to NCAA.
As such, many questions remain unanswered, including the operational mechanism for fulfilling the settlement distribution. For instance, the settlement does not limit how much universities can directly pay their players. Past players received scholarships covering their academics, but now, universities could potentially pay their current and future athletes a fee on top of their scholarships.
Admittedly, incentivizing the best players with money will build stronger teams, but it will also make money the defining factor instead of talent and skill. This pay-for-talent system risks the NCAA imitating professional leagues, which will compromise its “core value” of maintaining an amateur athletic status to cultivate a balanced collegiate experience. Operationally, such payments can also result in athletes becoming akin to paid employees of the university, which can raise additional issues.
In this background, it is also critical to pay attention to the gender gap and differences in treatment between female and male sports. Female athletes have already highlighted the differences in equipment and sports facilities resulting from unequal funding allocations with their male counterparts. The settlement evokes fear that women’s sports will lose adequate funding and relevance to more “marketable” men’s teams.
Further, the discretion vested in the universities to determine pay for athletes can be (mis)used to further the existing gender gap. Athletes will be unable to verify if they are being paid equally, and even if they do verify, it would only lead to more lawsuits. The hierarchy of sports marketability within the NCAA indicates that most of the money is siphoned toward football and men’s basketball. So, there is a strong likelihood that the disproportionate funding of football and men’s basketball at the expense of other programs will only worsen due to this ruling. The burden lies on the NCAA to sustain its mission of treating all sports fairly and equally. These compounding questions in the current settlement provoke much concern as the foundation of college athletics stands on shaky grounds.
(Teja Tirunelveli is a D1 tennis player for the University of Arizona, Honors College; Esha Venkataraman is a sophomore at Barnard College, Columbia University, New York.)