NCAA settlement: How a $2.7B revenue-sharing deal could work in college athletics, explained

An NCAA settlement with its five power conferences has been agreed upon to allow schools to pay their student-athletes. This historic agreement will mark the start of an enormous transformation in college athletics.

According to ESPN, the NCAA and Power Five conferences, including the Big Ten, SEC, Pac-12, ACC and Big 12, agreed to this antitrust settlement that will award nearly $2.7 billion in damages to current and former student-athletes. All Division I athletes from 2016 are eligible to receive a share of around $20 million that will be awarded to schools each year.

NCAA President Charlie Baker and the commissioners of the five power conferences had this to say in a statement made on Thursday:

"The five autonomy conferences and the NCAA agreeing to settlement terms is an important step in the continuing reform of college sports that will provide benefits to student-athletes and provide clarity in college athletics across all divisions for years to come."

Additionally, according to ESPN, a student-athlete who receives a share of the NCAA settlement money is prohibited from filing a future lawsuit against the regulatory body. They will also be required to drop their current antitrust cases, including House v. NCAA, Hubbard v. NCAA, and Carter v. NCAA.

It may still take several months for Judge Claudia Wilken to accept these terms. This NCAA settlement could usher in a new era of college athletics around the fall of 2025, when the programs could begin their revenue sharing as agreed upon in this settlement.

What did revenue sharing look like in college sports before this NCAA settlement?

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Before this NCAA settlement, players were not allowed any share of the profits made by the NCAA and the programs through sponsorships and TV network deals. Despite the millions of dollars being made, the student-athletes, who were the main factor in these profits, were not allowed any part of that revenue.

The March Madness basketball tournament broadcasting coverage agreement the NCAA signed with CBS-Turner worth $8.8 billion sparked a lawsuit, followed by two student-athletes, Grant House and Sedona Prince. This lawsuit was filed against the NCAA and Power Five conferences and targeted the broadcast coverage extension and old damages for payments considered wrongly withheld.

The lawsuit also centered on an NCAA bylaw, which the plaintiffs claimed allowed the NCAA to limit student-athlete earnings by controlling the types of jobs that athletes could hold at their university.

A recent rule change in college athletics allows players to earn revenue by signing name, image and likeness deals. These NIL agreements allow student-athletes to earn money, most commonly through sponsorships and advertisements with different brands and companies.

The introduction of NIL deals marked the start of a significant change in college athletics that allows athletes to make money off of their names. With fewer NIL-recognized athletes, some smaller programs may find it easier to compete with larger schools that have more prominent athletes in college sports thanks to this NCAA revenue-sharing settlement.

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