NCAA and power conferences agree to settlement paving the way for schools to pay student-athletes

By Jacob Lev and Kyle Feldscher, CNN

(CNN) — The National Collegiate Athletic Association and the Power Five conferences have agreed to a settlement, paving the way to allow schools to pay student-athletes, a profound moment ushering in a new age in college sports.

The NCAA, the governing body for college sports, and the leaders of the Big Ten, Southeastern, Pac-12, Atlantic Coast and Big 12 conferences announced the settlement Thursday night. According to multiple reports citing unnamed sources, the agreement to settle three antitrust cases includes the payment of more than $2.7 billion in damages to past and current student-athletes.

Per ESPN, sources said the parties have agreed to a revenue-sharing plan which will allow each school to share up to “roughly $20 million per year with its athletes.” All Division I athletes who have played since 2016 are eligible to receive a share. In exchange, any athletes who receive a share cannot sue the NCAA for other potential antitrust violations and drop their complaints in the three antitrust cases – House v. NCAA, Hubbard v. NCAA and Carter v. NCAA, according to ESPN.

Reports added Judge Claudia Wilken, who is presiding over the three antitrust cases, must still approve the settlement terms, which could take several months and once approved, schools can begin revenue sharing in the fall of 2025.

The settlement, if accepted by Wilken, represents a turning point in college athletics, which have traditionally competed under the guise of amateurism, allowing a seedy underbelly of hidden payments and compensation to flourish. Numerous college programs have been punished by the NCAA for their players being compensated in some way for their exploits on the field, from thousands of dollars being paid to star players under the table to a coach buying a recruit a hamburger on a visit.

As the business of college sports took off, the veil of amateurism had begun to seem absurd to many observers: Schools and conferences began raking in millions upon millions of dollars, coaches were preaching austerity and amateurism before leaving their players to take a new job with a massive pay raise and TV networks helped reshape the landscape of the sport to maximize their own profits. At the same time, the players on the field were being paid nothing, even though they were the ones playing in the games dring what had become a multibillion-dollar industry.

The House vs. NCAA lawsuit sought to change it.

Filed by Grant House and Sedona Prince, two college athletes, against the NCAA and the Power Five conferences – the Pac-12, Big Ten, Big 12, Southeastern and Atlantic Coast – the lawsuit focused on the eight-year, $8.8 billion extension the NCAA signed to broadcast coverage of the March Madness basketball tournament, as well as seeking backdated damages for payments the suit calls wrongly withheld.

While an NCAA rule change allowed for players to be paid for the use of their name, image and likeness, often through sponsorships and advertisements, the suit argued the NCAA restricts how much student athletes can earn outside employment. For example, the suit says one NCAA bylaw, regulating jobs athletes can hold at their universities, “specifically prohibits athletes from receiving any remuneration for value or utility that the student-athlete may have for the (outside) employer because of the publicity, reputation, fame or personal following that he or she has obtained because of athletics ability.”

Ohio State University Athletics shared a message from NCAA president Charlie Baker on its website Friday providing details on the settlement agreement. The message was sent to all Division I member schools, the NCAA told CNN.

“We have managed to negotiate the total back damages for these cases down to nearly $2.78 billion, to be paid over 10 years, equating to approximately $280 million annually,” Baker’s statement reads.

“To address this obligation, we have developed a plan where the NCAA will contribute $1.2 billion over 10 years, representing 42% of the total back damages. The remaining 58% will be distributed among the Division I conferences based on their distributions over the past nine years,” the statement from Baker continues. “This translates to an annual contribution of $165 million, or a 20% total reduction in distributions.”

In a joint statement, the leaders of the five conferences and the NCAA said they hoped the settlement could be an important moment in the reform of the college sports world.

“This settlement is also a road map for college sports leaders and Congress to ensure this uniquely American institution can continue to provide unmatched opportunity for millions of students. All of Division I made today’s progress possible, and we all have work to do to implement the terms of the agreement as the legal process continues. We look forward to working with our various student-athlete leadership groups to write the next chapter of college sports,” read the statement, which was attributed to Baker, ACC Commissioner Jim Phillips, Big Ten Commissioner Tony Petitti, Big 12 Commissioner Brett Yormark, Pac-12 Commissioner Teresa Gould and SEC Commissioner Greg Sankey.

While it’s unclear what immediate effect the settlement will have on college sports, it’s been clear for some time a reckoning was coming — particularly in the wake of the rule change around NIL compensation in 2021.

The rule change, combined with a softening of the transfer rules, have led to players bouncing from school to school in search of a better NIL deal when in the past they would be forced to stay at their original school for their four years of eligibility or risk sitting out a year following a transfer.

Athletes’ increased use of the transfer portal, the commissioners said, has become problematic in college sports, particularly for student-athletes’ quest to get a degree. They said college boosters have taken advantage of the current patchwork of laws to help their universities recruit the top athletes by promising big paydays — to the detriment of colleges in other states forced to play by a different set of rules.

The lack of regulation around NIL has made for a sort of Wild West atmosphere in college sports the NCAA will now hope to curtail in some way.

The reported revenue-sharing plan could help smaller schools that may not have rich NIL collectives stay on a more level playing field with the big-name schools that do.

This story has been updated with additional reporting.

CNN’s Ben Morse contributed to this report

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