A $2.8 billion settlement that will change US college sports forever: What you need to know

In a historic turn for the future of athletics, a case which can fundamentally reshape the landscape of college sports in the United States was settled in May 2024. The case, initially brought by Arizona State swimmer Grant House and other athletes, later turned into a landmark $2.8 billion federal class-action antitrust lawsuit against the NCAA and the nation’s largest athletic conferences—ACC, Big Ten, Big 12, Pac-12, and SEC.

On Monday, a final hearing on the case was held by US Judge Claudia Wilken. While she had given primary approval to the settlement, the final decision was expected soon.

If all goes as planned and approved, the terms of this groundbreaking deal could go into effect by July 1.

But what does this settlement mean, and why is it so significant for college athletes? Here's a breakdown of this historic deal.

At the heart of this legal battle is the issue of compensation for college athletes. For decades, athletes have been prohibited from directly receiving payments for their name, image, and likeness (NIL)—even though their performances generated billions in revenue for their schools, coaches, and the NCAA.

The settlement will end the decades-old prohibition on schools cutting checks directly to athletes and will enable them to receive payments from their schools—not just from third-party sponsors or donor-based collectives, as was allowed since 2021.

This is one of the most significant points of the deal as it marks the end of the NCAA’s long-standing amateurism model.

How much will the athletes be paid?

In the first year, each school can share up to about $20.5 million with their athletes, a number that represents 22% of their revenue from things like media rights, ticket sales and sponsorships, AP reported.

Alabama athletic director Greg Byrne famously told Congress, "Those are resources and revenues that don’t exist.” Some of it will be raised through ever-growing TV rights packages, especially for the newly expanded College Football Playoff. But some schools are increasing costs to fans through “talent fees,” concession price hikes and “athletic fees” added to tuition costs.

Is there a “Pay for Play” model?

Many people might wonder, “Aren’t athletes already being compensated through scholarships and cost-of-attendance payments?” The answer is yes—Division I athletes have long received these benefits.

But the athletes have long argued that it was hardly enough to compensate them for the millions in revenue they helped produce for the schools, which went to a lot of places, including multimillion-dollar coaches' salaries.

In short, scholarships were never intended to be a direct form of payment for athletes’ performances on the field or court. This settlement, however, is a more equitable way to compensate athletes, as it allows them to receive a portion of the revenue they help create.

Who will get most of the money?

Since football and men's basketball are the primary revenue drivers at most schools, and that money helps fund all the other sports, it stands to reason that the football and basketball players will get most of the money. But that is one of the most difficult calculations for the schools to make.

What about athletes who played before the NIL was allowed?

A crucial component of the settlement is the $2.78 billion in backpay going to athletes who competed between 2016-24 and were either fully or partially shut out from those payments. It will come from the NCAA and conferences.