The $2.8 billion proposal aimed at settling numerous antitrust claims against the NCAA and major college sports conferences has encountered a significant obstacle. During a recent hearing, U.S. District Judge Claudia Wilken expressed skepticism towards a plan that would allow schools to pay athletes directly, raising concerns about potential restrictions on payments athletes receive from booster-funded organizations.
One of the primary methods for college athletes to monetize their name, image, and likeness (NIL) is through NIL collectives. These collectives accounted for 81% of the $1.17 billion spent on NIL deals with college athletes last year, as reported by Opendorse.
The proposed settlement, part of resolving three antitrust lawsuits, includes provisions to regulate collectives. However, Judge Wilken, known for her involvement in cases challenging NCAA amateurism rules, questioned the feasibility of such regulations during the hearing.
The settlement plan features a revenue-sharing model with a cap on payments to athletes, akin to salary caps in professional sports leagues. Concerns have been raised that collectives could potentially circumvent this cap, giving certain schools an unfair advantage in recruiting talented athletes.
To address these concerns, the settlement proposes new rules limiting boosters' payments for NIL and ensuring that NIL deals serve a valid business purpose related to promoting goods or services to the public.
The settlement also mandates athletes to disclose deals over $600 with collectives or boosters, subject to review through an arbitration process. Enforcement mechanisms will be implemented to oversee compliance with the new rules.
Following Judge Wilken's reservations, both parties have been instructed to revisit the settlement terms and propose solutions within three weeks. While preliminary approval is a crucial step, final approval may take up to 150 days after notices are sent to over 400,000 athletes affected by the settlement.
Despite the challenges, there remains optimism that a settlement will be reached, potentially reshaping the landscape of college sports and financial opportunities for athletes.
