The National Collegiate Athletic Association and the major athletic conferences agreed upon a historic $2.8 billion settlement of three federal antitrust cases May 23, paving the way for student-athletes to be paid directly.
The NCAA and the Power Five conferences — otherwise known as the Atlantic Coast Conference, Big Ten Conference, Big 12 Conference, Pac-12 Conference and Southeastern Conference — have agreed to settle a class-action lawsuit by former college athletes. The NCAA and its conferences within Division I will pay $2.8 billion in damages over 10 years to both former and current athletes. They also agreed to a revenue-sharing plan, which allows each Power Five school to share up to roughly $20 million per year with its athletes.
This means schools can pay athletes directly for the first time in the NCAA’s 120-year history.
The settlement is another example of the increased commercialization of college athletics and will impact Elon athletics significantly by creating strains on their budget and recruitment opportunities.
Elon Athletic Director Jennifer Strawley said every school, including Elon, will feel the impact of the settlement, known as House v. NCAA.
“Everybody's going to feel the impact of this, and everybody's going to have to be making decisions that best position their institution and their athletic department to be successful,” Strawley said. “That's exactly what we'll continue to do at Elon.”
Strawley also said the funding Elon will have to put toward the damages will be achievable.
“There's no doubt everyone's going to feel an impact, but I don't think it's insurmountable for us,” Strawley said. “I think it just puts us in a position to be strategic.”
The settlement, which was initially filed in 2020 in order to force the NCAA to agree to a revenue-sharing model, gives compensation to about 25,000 athletes who have attended Division I colleges since 2016 that were denied the ability to make money by marketing their names and images. Restrictions on those kinds of deals were lifted by the NCAA in 2021 with the introduction of name, image and likeness deals.
The NCAA would cover 41%, or about $1.2 billion, of the damages through spending reductions and new revenue.
The schools within the Power Five conferences, who are co-defendants in the lawsuit, would pay about 24% — while the remaining five conferences in the Football Subdivision would contribute about 10%.
The Football Championship Subdivision, which includes schools like Elon University and its CAA counterparts, would pay about 13%. Division I conferences that do not play football would pay 12% of the damages.
Some estimates have FCS schools like Elon paying around $280,000 annually.
These schools will help pay the settlement through withdrawals from future NCAA distributions — mostly from the men’s basketball tournament’s media rights.
The settlement isn’t finalized and will be either approved or rejected by federal judge Claudia Wilkin in the coming months.
Strawley said she accepts the allocation of funding as part of the requirements of being part of an organization like the NCAA.
“Ultimately, people made the best decisions we could in order to bring closure to this settlement and I understand that that impact goes across all Division I,” Strawley said. “That's part of being a part of Division I.”
Yet, this settlement has sparked backlash from some schools.
The Power Five conferences will pay about $664 million in contributions to the damages, while the other 27 non-power conferences will pay $990 million. And since 90% of settlement damages are going to former Power Five conferences, the collegiate athletic world has seen some backlash regarding the fairness of the settlement.
The commissioners of the 22 non-FBS conferences, including the CAA, sent the NCAA a letter criticizing the current funding model and offering an alternate way to fund the settlement. But, this proposal was rejected.
These conferences argued that the Power Five should be paying a larger portion of the damage payments since most of those payments will be distributed to former Power Five athletes.
While Strawley said there are no official numbers as of right now — with $280,000 being the closest estimate for FCS schools like Elon —, she believes that there are some benefits to the settlement despite the impact it will have on Elon’s budget.
“The biggest benefit for all of us is it just brings closure to three very significant lawsuits, and it allows us to move on and to move forward,” Strawley said.
The CAA declined Elon News Network’s request for comment on the settlement due to it being an ongoing legal case.
Strawley also said the introduction of revenue sharing through the settlement heightens the need for a clear vision for the future of Elon’s athletic program.
“Now more than ever, we have to figure out who we want to be and then prioritize those pieces within our context,” Strawley said. “Everybody's going to feel the impact of this, and so everybody's going to have to be making decisions that best position their institution and their athletic department to be successful, and that's exactly what we'll continue to do at Elon.”
This revenue-sharing plan would allow schools to set aside $20 to 22 million a year to pay athletes. Each school would decide on their own how to distribute the money and which athletes would receive it. This allows a brand new era of collegiate athletics to flourish — one where student-athletes can be paid directly rather than relying on sponsorship deals with various brands through NIL.
Elon professor of sport management Bill Squadron said this development only encourages the professionalization of collegiate athletics.
“It exacerbates the current arms race situation and the professionalization of big-time college football and men's college basketball, and that has a trickle-down impact on all Division I schools,” Squadron said.
This professionalization of collegiate athletics has already started with the introduction of NIL and the transfer portal, but it will be intensified by this pay-to-play model. According to Squadron, student-athletes will now favor a Power Five school that has a $20 million budget to pay them — rather than a non-Power Five school like Elon that can’t pay their players due to a lack of revenue.
This creates a disadvantage that favors high profile schools with the ability to offer money to recruits, as opposed to schools like Elon with smaller programs and less resources.
“It puts a lot of pressure on schools like Elon and all the schools in that kind of category and it's just going to make it tougher,” Squadron said.
Strawley said a revenue-sharing future could widen a gap between schools' ability to compete with each other, but believes that the student-athlete model will continue to exist.
“Schools like Elon provide a model example of the positive impact that the nexus of higher education and athletics can have for young people,” Strawley said. “That model has benefited countless student athletes and that model is going to continue to exist.”
Strawley also acknowledged that the realm of college athletics is changing, but said Elon just needs to look at the next five years and create a plan to position Elon for success within the CAA and compete for NCAA championships.
“The game is changing, but I still believe there's a path to be strategic in how we think about this and look for those advantages for us,” Strawley said.