‘How did court work out for them?’ — With NCAA settlement talks heating up, college leaders brace for multibillion-dollar price tag

In the fall, as college leaders were mired in negotiations to settle a handful of antitrust lawsuits, one of the attorneys across the table from them delivered a message: “I kept telling them that our price will go up if you keep letting us win in court,” said Steve Berman, the managing partner at Hagens Berman law firm.

Six months later, college administrators have grown “serious” about avoiding the courtroom, said attorney Jeffrey Kessler, of the firm Winston & Strawn. “We were always serious,” he said. “The question was, when were they going to get serious?”

As the NCAA and power conferences work to adopt a historic settlement agreement by the month’s end — a deadline placed upon them — the two leading plaintiff attorneys spoke publicly two weeks after college executives began socializing to their stakeholders potential settlement terms of the House, Hubbard and Carter cases.

As previously reported, the groundbreaking proposed agreement is expected to feature nearly $2.9 billion in back damages for former players; a future revenue sharing model with athletes starting at as much as $22 million annually per school; and an overhaul of the NCAA scholarship and roster structure.

While Berman and Kessler mostly declined to discuss specifics of a potential agreement, they detailed to Yahoo Sports the nature of discussions, a possible post-settlement timeline and hot-button topics such as a settlement’s impact on future legal challenges, Title IX and booster- collective LEDs. At least one of them, Berman, also acknowledged that he worked against college executives in their years-long pursuit of gaining legal protection through congressional legislation.

“As we had (settlement) discussions, they were playing both sides,” Berman said in an interview Friday. “(NCAA president) Charlie Baker would run to Capitol Hill to say, ‘Let’s pass a bill!’ for complete immunity. Every time Charlie would go talk to someone on the Hill, I’d go talk to someone on the Hill. I was trying to explain why they (NCAA) are not entitled to immunity.”

In a presidential election year and with little action to show for years of lobbying, the NCAA and power conferences have accepted the realization that a congressional bill is “not going to happen,” said Berman.

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Congressional inaction, coupled with approaching court dates, accelerated negotiations over the last month. Agreed-upon terms are being disseminated as power conference commissioners work to gain consensus from their league administrators and presidents to authorize the deal. As new settlement information is becoming available, those within college athletics briefed on the matter have been granted anonymity to share sensitive details of the terms.

Industry leaders describe the next two weeks as, perhaps, the most consequential in college athletics history, laying out a timeline for potential ratification of a deal as soon as the week of May 20. Annual conference meetings this month provide a road map to a decision timetable. The NCAA’s governing boards and the boards of university presidents and chancellors in each of the power conferences need, at the very least, a simple majority vote.

While ACC athletic directors meet this week in Amelia Island, Florida, ACC presidents meet in Charlotte next week. Big Ten presidents gather next week as well from their league meetings near Los Angeles. SEC and Big 12 athletic directors and presidents meet the week of May 27, though presidential meetings in those leagues are expected to be called sooner.

“This is very simple,” Kessler said in an interview Sunday. “What’s worse for them? A deal that is negotiated together that everyone, their commissioners and president of the NCAA, thinks will be a meaningful system? Or would they like to lose in court?”

Even if the NCAA and power leagues authorized a settlement this month, this could be a long way from over. A lengthy process would unfold that could stretch well into the fall and, possibly, next year, attorneys say: (1) Judge Claudia Wilken, of the Northern District of California, must approve the settlement terms, which “should easily be satisfied,” said Berman; (2) Athletes who are part of the class receive a notice about the terms with a choice to object to any terms or completely opt out of the settlement; and (3) a final approval hearing, or hearings, is scheduled in court.

“Say we got a thumbs up on May 23,” Berman said. “It would take us a month to get papers together, a couple weeks for the (judge’s) approval and then a 90-day period for us to have any objections.”

Berman highlights what many in college athletics describe as a key date to a settlement agreement: May 23. On that date, a hearing is scheduled in a separate antitrust case playing out in Colorado, Fontenot v. NCAA. The case seeks billions of dollars for college athletes in compensation from televised broadcasts.

While the House settlement is expected to consolidate two other antitrust cases — Hubbard and Carter — the Fontenot case is an outlier. House, Hubbard and Carter share the same legal team. The law firms Korein Tillery and Olson Grimsley Kawanabe Hinchcliff & Murray are leading the Fontenot case.

The hearing is expected to center around the potential consolidation of the case. Berman said he expects the case to be consolidated with Carter. A consolidation of all four cases is ideal as to prevent future legal challenges against the NCAA and power leagues.

Either way, even if a settlement in the cases were to happen this week, “it would not be completed before the start of the academic year,” Kessler said.

The back damages, owed to athletes for the use of their name, image and likeness (NIL) before the NCAA lifted NIL prohibitions in 2021, would likely start immediately after the court’s final approval, the attorneys said. Any future revenue-sharing model and the expansion of scholarship limits would likely start the next academic year in the fall of 2025, Kessler confirmed.

For those in college athletics, so many questions continue to linger and remain unanswered, most notably about how a settlement provides future legal protections, the future of NIL booster-led collectives and the application of Title IX in any revenue-sharing model.

Attorneys provide only some answers.

Berman said future legal protections will be built into the settlement agreement by way in which each new class of athletes can opt into the revenue-sharing structure. Will this offer enough guaranteed protection? Athlete advocacy groups and player association leaders believe collective bargaining is the only answer, as explored in this Yahoo Sports story last week.

There are several open lawsuits against the NCAA ongoing, but none may have a bigger impact on the college sports industry than House v. NCAA. (Michael Allio/Getty Images)

Title IX is one of the most vexing — and, for some, problematic — issues with any revenue-sharing model. The federal law requires universities to provide equal opportunity for women as men. Does this mean 50% of revenue in a compensation model is required for female athletes? Such a setup may spark administrators to use third parties, such as NIL collectives, to circumvent the cap in an effort to pay their football and men’s basketball players more in a competitive recruiting environment.

While Berman says the settlement “enables” schools to satisfy Title IX, Kessler believes the issue will be resolved in the courtroom.

“The courts will decide,” he said. “It doesn’t impact us. If we have a settlement, we’ll negotiate a system in which athletes will be compensated. The degree in which Title IX applies will be determined (by the courts).”

Third-party NIL cash is not factored into the settlement agreement, the attorneys confirmed to Yahoo Sports – a move that one high-ranking administrator believes will “do nothing for the Wild West” landscape playing out in college athletics recruiting.

Said Kessler: “I fully expect devoted alumni will continue to support their institutions.”

Any third-party funds to athletes will be in addition to payments directly from the school and additional financial aid in a model that is expected to incorporate the expansion of scholarships. Though scholarship expansion and the revenue-sharing concept is permissive — it is not a requirement — schools are likely to opt into the concepts as they jockey for talent in a competitive recruiting space.

At the end of it all is a steep price tag — as much as $300 million annually per school over the 10-year settlement agreement. That figure assumes a school meets what is believed to be (1) a revenue-distribution cap starting at as much as $22 million; (2) at least $2 million in withheld NCAA distribution for back damages; and (3) as much as $10 million in additional scholarship costs related to an expansion of sport-specific roster sizes.

That cost could rise significantly.

As reported earlier this month, the cap will fluctuate over the course of the settlement with increase in athletic department revenues. The cap is roughly 22% of an average of power conference school revenue streams, as detailed in this story from Yahoo Sports.

The settlement-related revenue-share concept is expected to feature some exemptions, such as counting toward the Alston-related payments to athletes. Schools providing the full Alston payment to each athlete (roughly $6,000) normally spend $1.5-$3 million annually.

As part of the new model, officials plan to lift scholarship limitations and implement roster limits, permitting schools to offer scholarships to an entire roster — a concept to prevent future litigation and one explored in detail in a story last week at Yahoo Sports. A portion of any additional scholarship is expected to also count in the cap calculations.

For many school administrators, sticker shock exists. The $30 million price tag, a starting figure for an industry that has only provided athletes with mostly non-cash resources, is about 20% of the average athletic department budget of public schools in the ACC, Big Ten, SEC and Big 12.

However, without a settlement, college leaders risk another loss in court that could triple the damages tab and leave them open to other active antitrust cases.

“How did court work out for them?” Kessler asked. “I don’t believe Congress is going to bail them out. They thought that was an alternative. They have to choose. Choose to engage in your own destiny and be proud of a system that will be very hard but fair. Or not. Change is hard, but it’s time for change.”

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