Even though the NIL era began in 2021 with the Alston v. NCAA decision and the NCAA’s interim NIL policy, college athletes secured an even bigger win on Friday when Judge Claudia Wilken officially approved the legal settlement of a trio of lawsuits started by former Arizona State swimmer Grant House against the NCAA and the five biggest athletic conferences.
Schools can now directly pay athletes directly starting July 1. A $20.5 million cap, roughly 22% of average FBS school annual revenue from things like ticket sales and media rights deals, will be allowed for schools to share with athletes in the first year.
As a part of the House settlement, the dependent conferences (ACC, Big Ten, Big 12, SEC and Pac-12) have come together to create the College Sports Commission, an organization that will seek to enforce the rules that the NCAA committees of years past would have for scholarship, tampering, recruiting and other financial violations. The CSC will analyze all third-party payments of $600 or more in order to ensure that they are fair and properly reflect the value of the deal. Deloitte, a multinational accounting firm hired by the CSC, has already said that about 70% of third-party deals with players since the NIL era began would be denied under the new evaluation system.
The bottom-line is student-athletes can now be paid directly by schools, opening the door completely for a new era for college athletics and system of compensation for athletes. Yet, there seems to be no real system at this point, even though NIL has been allowed since 2021.
Laws are different in every state, and appeals by the NCAA and the major conferences to the federal government for help with unifying the regulating process have fallen short. States like Tennessee, whose law essentially limits all restrictions from the House settlement or the NCAA on NIL payment, will make it difficult for the CSC to hold schools accountable consistently and in a fair manner.
There is nothing wrong with paying college athletes. This debate has raged on for over a couple decades now, and anyone trying to push back against the reality of the NIL era is really fighting a losing battle. Currently, Arch Manning has the highest NIL valuation at $6.8 million according to On3 and top basketball recruit AJ Dybantsa, who is headed to BYU this fall, is set to earn up to $7 million. Those numbers will only keep going up, as well as the caps implemented by the House settlement.
Student-athletes are being paid like professionals, and they should be. The reasoning behind the initial push for NIL compensation was legitimate: schools are generating hundreds of millions every year in revenue, yet athletes get no share and can’t even earn money off of a YouTube promotion or selling an autographed jersey. There were legitimate concerns with the system, and players got they wanted. What has happened in the following years and now with the settlement is what draws the most concern.
The CSC, in theory, is a great idea. A new entity, not run directly by the NCAA, enforcing NIL regulations and ensuring third-party collectives do not give additional salaries to athletes on top of the cap set by the settlement.
“The defendant conferences now own several facets of rulemaking and enforcement related to specific settlement areas, the NCAA will be able to move away from certain enforcement activity that, despite the best efforts of many, wasn’t working well,” NCAA President Charlie Baker said in an open letter Friday. “Rather, we will focus on further enhancing what is working: elevating the student-athlete experience and maintaining fair playing rules and eligibility and academic standards.”
Are the defendant conferences really going to do better than the NCAA though?
Atlantic Coast Conference commissioner Jim Phillips seems to believe so.
“We’ve been in an unregulated environment with no rules and no enforcement,” said Phillips. “It has paralyzed the NCAA in Indianapolis, and we’re responsible for certainly some of that. We’re now going to have a foundation and structure laying out those rules. The new structure provides our student-athletes with more opportunities and benefits than ever before.”
The CSC is requesting that the four biggest conferences sign a document pledging not to use state laws to work around the commission’s regulations. Yet, what is stopping individual schools from those conferences from taking advantage of more athlete-friendly state laws and spending more money on athletes than their rivals when they seek to stay ahead of the competition? Not really anything as of now.
Without regulation, college athletics run the risk of a landscape that looks more like NFL free agency on steroids than a fair and equal system of compensation. As NIL valuations continue to rise, student-athletes continue to trend closer being exactly like their professional counterparts. The number is less of an issue though when compared to the ethics of compensation.
Schools now engage in bidding wars over players, even going as far to tamper for top-tier athletes, a major reason why some schools have canceled their spring games and shifted to different ways of showcasing spring practices. Bidding wars are commonplace and acceptable at the professional level, but can’t be replicated in a fair manner at the collegiate level if schools are not guaranteed equal spending power and resources. Power 4 conferences are the ones to gain from this settlement, while Group of 5 schools may have a hard time keeping up.
One potential solution that has been floated around, primarily by athletes, is collective bargaining. Players had already begun the process of forming unions but have hit roadblocks as Dartmouth men’s basketball, unionizing pioneers, ended its bid to unionize among concerns with the new Trump administration and the National College Player’s Association withdrew its unfair labor charges against the NCAA, USC and the Pac-12 with the pending arrival of the House settlement.
Unionization and making players employees only brings further complexities to the table though. While amateurism had its flaws, ensuring the integrity of the game and athletes as students first did set college athletics apart and helped to maintain expectations for student-athletes. Now, if athletes are full-time employees of universities, entire budgets and systems of payment change. Schools may prioritize athletics over academics and student support in a way never seen before. And for state-funded universities, how does increased budgeting for student-athlete-employees affect state funding for university operations and work-study student employees or graduate students? Also, student-athlete-employee is just too hard to say.
Then comes the issue of Title IX violations. While the Trump administration has had a complicated relationship with Title IX to this point and has rescinded guidance that NIL payments could fall under Title IX rules and obligations, ethical concerns still remain. The biggest NIL earners are male as just two women crack On3’s top 100 NIL valuations currently and men have earned $92 million to just $19 million for women among the 12 schools publicly disclosing NIL records last year.
Most schools already commit most of their athletic budgets to football and men’s basketball, leaving athletes from non-revenue sports to suffer as well. While the settlement calls for roster limits while making all players available for full scholarships, there is still little guiding or regulating where school’s spend their NIL and scholarship budgets.
The House settlement simply brings too many issues and unknowns to the table. Athletes can be paid directly by schools now, yes, but where are the limits and what are the consequences for the fairness of athletics. Will female athletes and smaller schools continue to suffer? Are players unions really the best solution for negotiation and regulation? What happened to the education side of college and college athletics being a path for growth to the pros, not imitating the pros to a tee?
Judge Wilken said the settlement will create “ground-breaking changes in NCAA rules that govern student-athlete compensation”, but there is guarantee those changes will lead to fair and positive results.
Paying athletes was a great idea, but boy has the execution been chaotic, confusing and even destructive.
