SAN ANTONIO -- The irony isn’t lost on NCAA President Charlie Baker.
Kicking back in a board room on the second floor of the Grand Hyatt a stone’s throw from the Alamodome, Baker was just a few hours shy of attending Monday night’s men’s basketball national title game between Houston and Florida.
But as the Cougars and Gators prepared for the evening’s contest, Baker’s mind was admittedly elsewhere -- Oakland, specifically, where Judge Claudia Wilken presided over the final approval hearing for the proposed settlement in the House Hubbard and Carter antitrust cases without making a final decision.
“I certainly think if the judge approves the settlement -- and I think most of us are anticipating that she will at some point -- it is probably the biggest change in the formal way college sports works in 40 years or so,” Baker told Sports Business Journal. “It creates a structure, it would operate under an injunction and, for the first time since NIL began, we’ll actually have a process to collect and manage information about what’s going on out there.”
Monday’s proceedings in the Northern District of California came and went without a ruling -- an outcome most largely expected -- while Wilken gave attorneys one week to “fix” a handful of the issues she raised during the hearing.
And though the timeline for a possible rubber stamping of the settlement is likely days away, college sports are on the verge of adopting one of the most consequential legal matters in the enterprise’s history.
“I think it’s worth pursuing,” she said of the settlement. “I think some of these things can be fixed.”
What is the House settlement?
The House settlement -- which centers on the House, Carter and Hubbard antitrust cases -- largely focuses on three key pillars:
- Roughly $2.8B in back pay to athletes dating to 2016 over lost NIL revenues name, image and likeness revenues to be paid over 10 years ($280M annually)
- A revenue-sharing formula that allows schools to pay athletes directly
- Eliminating restrictions on scholarship numbers in favor of roster limits
The revenue sharing piece is the most striking shift in thinking from college athletics leaders, opening the door for schools to pay athletes directly following decades of penalizing such action.
The system laid out in the settlement creates a $20.5M cap in Year 1 that would see schools distribute that to athletes and sports as they deem fit and increase year-over-year.
It also calls for the creation of a clearinghouse, which would be operated by Deloitte, to judge NIL deals worth more than $600 for “fair market value” rather than pay-for-play payments being passed off as brand deals.
“You can look at the House settlement from at least three perspectives,” Gabe Feldman, Director of the Sports Law Program at Tulane, told SBJ recently. “1) The benefit the NCAA gets from eliminating the risk of past damages; 2) it tries to create a new system going forward, not completely protected from antitrust attack, more protected; and 3) it creates a plan to bring to Congress.”
If approved, the settlement would fundamentally shift the way in which college sports operate -- and create one of the larger classes in legal history.
Wilken noted there are roughly 390,000 applicable class members of which there were 343 opt-outs and 73 objectors. Plaintiffs attorney Jeffrey Kessler added there had been 118,879 claims made related to back-pay associated with the settlement.
That size and scope wasn’t lost on the judge.
Said Wilken: “That’s quite a surprising and large number of responses.”
What happened in Monday’s House settlement hearing?
Monday’s hearing inside a packed courtroom offered Wilken and those objecting to the settlement to explain their potential concerns with the involved attorneys ahead of any possible approval.
The primary points Wilken took issue with included the institution of roster limits and their immediate cutting of slots and how the settlement might be applied to future athletes.
“I represent thousands of student athletes struggling to find our place,” said Gracelyn Loudermilch, a runner who lost her roster spot at a Division I program related to potential roster limits. “For many adults involved in this case, that number is just a number. But when I hear it, I can see the faces of my friends and competitors. … No one can explain to us why roster limits are good for anyone.”
Wilkin seemingly agreed with Loudermilch’s plea, suggesting to attorneys they include a process grandfathering in athletes who might see their spots cut in order to maintain new standards laid out by the settlement.
The more pressing piece Wilken offered skepticism around was whether the settlement can bar future college athletes from bringing injunctive relief claims.
The settlement as constructed is a 10-year agreement would create ground rules related to a cap, NIL vetting and more that would theoretically be applied to people that, as Wilken quipped, might be a “10-year-old playing kickball” right now and wouldn’t be aware of what is being agreed to in these cases.
The NCAA, Power Four Conferences and Pac-12 -- the named defendants in the case -- meanwhile, has widely pushed for the way in which the settlement is currently written in hopes of protecting against future litigation.
“We need the 10 years [of future athletes being included in the settlement],” said NCAA attorney Rakesh Kilaru, “or there will not be stability and there will not be a deal.”
What comes next for House settlement?
Wilken will ultimately approve or dismiss the settlement in the coming days based on conversations held Monday and whatever changes might be made by attorneys over the next week.
Schools nationwide, however, have largely prepared for a world in which she will, in fact, grant approval, while the wheels are in motion for the mechanisms contained in the settlement to be operational by July.
“A lot of the center of gravity here, I think, will move to the schools, who will have an opportunity to regain some of the lost connectivity that they have with student athletes, which I think is good,” Baker said. “I think it will be a much more of a process, accountable system, than we’ve had previously.”
While the settlement would mark a landmark moment for college athletics, it’s no silver bullet.
Title IX has been a perpetual conversation around the House settlement and whether schools would have to divvy up their $20.5 million, should they opt into the settlement, 50-50 across gender lines. Most schools are operating under the assumption it will not need to split equally.
Employment, too, remains a significant discussion that will likely necessitate congressional action. Collegiate sports leaders are expected on Capitol Hill on Wednesday to broach a narrow antitrust exemption that could allow athletes to collectively bargain without becoming employees (Non-employees cannot collectively bargain under federal law).
“There’s no sustainable future for college athletics without collective bargaining,” said Jim Cavale, co-founder of Athletes.org. “You cannot set these rules, you cannot create these structures without the athletes being involved in the process and agreeing to it.”
Seated atop a stage at SBJ’s Intercollegiate Athletics Conference in November 2023, Baker proposed a system in which institutions become more directly involved in compensating athletes.
The House settlement has since evolved into the spiritual manifestation of that plan. Two years later, Baker may well get his wish.
“Basically, I think it is a good settlement,” Wilken said as Monday’s hearing neared its conclusion. “Don’t quote me on that.”
“We won’t” Kessler said through a smirk, “but someone else might.”
