/>iChange is inevitable. This sentiment resonates across the college sports landscape. Few, if any, would argue that the current model of college athletics is sustainable. While fans continue to tune in and March Madness remains a cornerstone of excitement, the line between amateurism and professionalism in college sports has grown increasingly blurry since July 2021.
As the fallout continues from the potential settlement of an antitrust class-action lawsuit filed against the NCAA — providing for nearly $2.8 billion in backpay to former athletes — new guidance from the Department of Education’s Office for Civil Rights and a Statement of Interest from the Department of Justice may disrupt the approval and impacts of the settlement, as well as the immediate future of college sports. The new DOE guidance warns NCAA schools that name, image, and likeness (NIL) payments must be distributed in a nondiscriminatory manner, pursuant to Title IX regulations. Meanwhile, the DOJ’s statement objects, among other things, to the settlement’s 22% cap on revenue sharing, citing concerns over antitrust violations since the cap was not collectively bargained.
With the potential final approval of the House v. NCAA settlement on the horizon, a hearing is set for April 7, 2025, rampant claims of transfer portal tampering, and headlines about college athletes signing deals rivaling NFL rookie contracts, the call for a solution to this largely unregulated system is louder than ever. Proposals for a “new model” are making headlines, but without fundamental legal and organizational changes, any attempts to fix college sports’ NIL system are as futile as us trying to guard Cooper Flagg at the top of the key — doomed to fail.
Under the proposed settlement in House v. NCAA, which has been preliminarily approved, in addition to the nearly $2.8 billion in backpay to Division I athletes who competed from 2016 to the present, a 10-year revenue-sharing plan would allow NCAA conferences and their member schools to share 22% of annual revenue with student-athletes. The settlement would establish a salary cap framework, in which schools would initially be able to pay their athletes up to $22 million annually.
Title IX
The new fact sheet from the Department of Education, released on January 16, 2024, may impose new guardrails on how the proposed revenue-sharing plan is implemented. The department’s guidance states that the department considers NIL compensation provided by a school as “athletic financial assistance.” Under Title IX, schools must provide equal athletic opportunity, regardless of sex, including “athletic financial assistance” awarded to student-athletes. The department further stated: “The fact that funds are provided by a private source does not relieve a school of its responsibility to treat all of its student-athletes in a nondiscriminatory manner [and it] is possible that NIL agreements between student-athletes and third parties will create similar disparities and therefore trigger a school’s Title IX obligations.”
Whether or not the new guidance from the Department of Education will significantly impact the distribution of the payments under the House v. NCAA settlement, with objections to the settlement due at the end of January, remains an open question. Jeffrey Kessler, an attorney for one of the plaintiffs in the class action, said that the guidance “has no impact on the settlement at all.” Instead, “the injunction does not require the schools to spend the new compensation and benefits that are permitted to any particular group of athletes and leaves Title IX issues up to the schools to determine what the law requires. [The House v. NCAA case] resolved antirust claims — not Title IX claims.”
Additionally, the timing of the new guidance, only days before the beginning of President Donald Trump’s new administration, may also influence how long the fact sheet will be relevant, if at all. Gabe Feldman, a professor of sports law at Tulane, stated that “the timing does call into question the impact this is going to have, because it is likely, as in a number of areas of law, that a new administration will reverse, rescind, amend, or completely change the guidance.” Indeed, the guidance itself states that the fact sheet “does not have the force and effect of law” and is “not meant to be binding” beyond what is required by actual law. Finally, in the wake of the U.S. Supreme Court’s decision in Loper Bright Enterprises v. Raimondo last year, overruling the Chevron doctrine that required courts to defer to agency interpretation of ambiguous statutes, the new guidance will likely have an even less binding effect.
The new guidance, released just days before the beginning of a new presidential administration, implies that schools may face risks under Title IX with the distribution of NIL payments, even if third parties or collectives are providing the funds. However, with a new administration, the position of the DOE could change resulting in even more uncertainty.
Cap on Revenue Sharing
The DOE was not the only government agency to raise concerns over the proposed House settlement. In a Statement of Interest filed on January 17, the DOJ raised objections surrounding the proposed settlement’s 22% cap on revenue sharing. The DOJ argues that the cap “functions as an artificial cap on what free market competition may otherwise yield” and raises “important questions about whether the settlement is fair, reasonable, and adequate.” The DOJ argues that even though the settlement would increase the cap on NIL payments from zero to $22 million, “the new amount is still fixed by agreement among organizations that collectively control the entire labor market.” Additionally, the DOJ objects to arguments that the revenue share cap is similar to caps imposed in professional sports leagues. The DOJ argues that salary caps in professional sports leagues were collectively bargained, which are generally immune from antitrust scrutiny. In this case, however, the 22% cap was not collectively bargained, and the proposed settlement was negotiated without college athletes benefiting from the substantive and procedural rights afforded to workers during collective bargaining.
The DOJ is also concerned that the proposed settlement could be used by the NCAA and power conferences as a defense in future antitrust cases. The DOJ has asked the court to either decline to approve the settlement or make it clear that the approved salary cap does not constitute a judgment on its competitive impact or that it complies with antitrust laws. Effectively, the DOJ has asked the court to either decline to approve the settlement or allow future litigants to file antitrust claims regarding the cap.
In order to approve the settlement, Judge Claudia Wilken, the presiding judge over the House case, must assess whether the settlement is fair, reasonable, and adequate. It remains to be seen whether Wilken will follow the DOJ’s requests. Regarding the settlement being used as a defense, the proposed settlement has certainly not dissuaded litigants from filing antitrust actions against the NCAA. Even after preliminary approval, at least two college athletes brought antitrust claims against the NCAA — a trend that is likely to continue, even if the settlement is granted final approval. The timing of the Statement of Interest is also notable, as it was filed mere days before Trump was sworn into office. The new administration might not align with the previous DOJ’s position, but the timing of confirmation hearings could delay any retraction or opposing opinion prior to the April 7th hearing.
Schools and athletes alike should continue to closely monitor the progress of the House v. NCAA settlement, as well as potential changes or rollbacks from the new administration that would affect distribution of the settlement payments and the proposed new revenue-sharing plan. With so much uncertainty surrounding college sports, schools are navigating uncharted waters, trying to maintain a competitive edge. Without a clear picture of the future, any decisions may feel like walking a tightrope — one wrong move could lead to success or setback.
