Key Points

A.I. Assisted Summary

• Massive Back Pay Settlement: A $2.8 billion fund will compensate Division I athletes who played between 2016–2024 for lost NIL income. Payments will be distributed mostly to football and men’s basketball players, triggering a Title IX-based appeal from female athletes.
• Direct Pay Begins July 1: Schools can pay athletes directly, allocating up to 22% of athletic department revenue (about $20.5 million).
• Wider Impacts and Oversight: The decision may lead to cuts in non-revenue sports, and will introduce oversight for NIL deals, and establish the College Sports Commission to enforce new rules.

On June 6, a court decision changed the landscape of college athletics forever. A landmark settlement in the case known as House vs. NCAA was issued by a federal judge, and within that settlement came two major decisions about the past and the future of college athletics.

Can you give me a breakdown on the case?

Sure! Legal jargon is so confusing.

For ages, college athletics were organized around the traditions of “amateurism.” This meant that athletes were not compensated beyond scholarships that covered the costs of their tuition. For a long time, this was generally accepted as the standard way for a student-athlete — they’re still students, after all.

But, the money in college sports exploded. As ESPN explained, “top-level athletic departments rake[d] in hundreds of millions of dollars from broadcast deals, ticket sales, donations and licensing agreements.” And the catalysts for all this money were students who weren’t receiving any of it.

But in 2021 the NCAA ruled that student-athletes could capitalize on their name, image, and likeness (NIL). Players began signing deals directly with local and national organizations, acting as representatives. Collectives, school-specific booster groups not directly affiliated with the university, essentially paid athletes directly and resulted in huge transfer portal news (see NiJaree Canady leaving Stanford for Texas Tech and $1 million).

Then, a group of student-athletes who played before the NIL ruling sued the NCAA for back pay.

The House comes from Grant House, a former swimmer at Arizona State University. House vs. NCAA covers three different lawsuits that all address the issue of compensating student athletes. The lawsuit has been in the negotiation stage for a while, but a decision has finally come down.

What does the decision say?

It’s easy to think about the settlement of House vs. NCAA as two-pronged, with a retroactive and a proactive component.

The retroactive component wants to right the wrongs of the past. A nearly $2.8 billion settlement will be paid out to current and former Division I athletes who played anytime between 2016-2024. The payment, per NPR, is “intended to compensate for past lost NIL opportunities.” The plaintiffs in the case will create the back-pay plan for student athletes; universities themselves will not have a say in who gets what amount.

The back-pay will be provided by a combination of the power conferences, the remaining D1 conferences, and the NCAA. It will follow a formula that allocates approximately 75% of the total money to former football players, 15% to former men’s basketball players, 5% to former women’s basketball players, and 5% to other NCAA athletes.

The proactive component wants to chart a new path forward. Beginning on July 1, Division I schools will have the opportunity to allocate up to 22% of athletic departments' revenue, or about $20.5 million this year. That number is expected to increase year over year. Football and men’s basketball can expect 90% of the funds. s. So, colleges and universities will be directly paying their student athletes for the first time. As ESPN reported, NCAA President Charlie Baker called this settlement “a huge step forward for college sports.”

The fact that this decision came down only weeks before the July 1 trigger date is a little chaotic for colleges and universities, whichwho have to scramble a little bit to put their plans together. But they saw this decision coming for a while, so they’re likely ready to pay up.

So, it’s over now?

Ah, no. It’s appeal season! On June 11, days after the settlement was announced, eight female athletes filed an appeal, arguing that the decision violates Title IX. Remember those numbers above? 90% of the back-pay money automatically being allocated to former male athletes didn't’ feel right, or legal, to these folks.

“Title IX is supposed to be a promise to get a full seat at that table and not just get the scraps,” one of the plaintiffs, Lexi Drumm, told The Athletic.

Their appeal will not affect the proactive side of the deal — July 1 payments will go ahead as planned — but it will stall the back-pay aspect of things.

Other things to note

1. Scholarships are out, and roster limits are in.
2. There is concern that non-revenue generating/Olympic/women’s sports will be cut to pay to attract men’s football and basketball players to a school.
3. Collectives will come under additional oversight to try and make sure each payment is actually based on “fair market value.”. Deloitte will approve all deals over $600.
4. The College Sports Commission was created as a new enforcement arm for the Power Four conferences and the NCAA.