EPISODE 9: THE PROPOSED HOUSE CASE SETTLEMENT
I am going to take a different approach to my review of the proposed settlement in the combined House-Carter-Hubbard i.e., “House” v. NCAA cases. I initially note of the Preamble to the Settlement, “to fully, finally, and forever resolve;” LOL! The “Settlement” is a behemoth set of complicated documents. Whether the court approves is TBD, and some states ’Attorney Generals are already sniffing around (in part due to unfair impact on their NCAA member state institutions).
My analysis will head down two paths to describe expectations and impact if the Settlement is approved. Path 1 – the “Damages” class, which is the past damages scenario to address claims of former D1 athletes deprived of their NIL value; this is the approx.$2.8B amount we keep hearing about. The second and Path 2 is the “Injunctive” class, which includes current and future D1 athletes, which when combined with significant proposed changes to the NCAA playbook of rules/regulations/policies, makes for an interesting and revolutionary potential “future state” of D1 college sports.
PATH 1 – THE “DAMAGES” CLASS (Fix the past)
Basically, if you were a full scholarship D1 athlete in the Power 5 (including ND) from June 15, 2016,to September 15, 2024, in the MBB/Football class, WBB class, or if otherwise deemed in the “Additional Sports Class” in any other D1 sport, you are in the Damages Class and you stand to gain! The agreed upon pot for distribution of back damages is roughly $2.8B, to be paid over a 10-year period (let’s not get in to by whom and how but know that some smaller NCAA Members are not happy).To be sure, however, all such athletes will NOT receive equal distributions.
There is a complex formula proposed in the Distribution Plan filed with the court that considers revenue pools such as Broadcast NIL (BNIL), lost opportunities, and video game, as well as sport played, years, etc. Suffice it to say, most of the funds will be paid out disproportionately in this order (high to low) - Football, MBB, WBB, then all others. Some guestimate 80-90% of the fund will go just to Football and MBB alone. As examples, average recovery for Football is estimated at $135k per, and WBB is $35k per. If you were a football walk-on, you are again SOL! Note: there is an “Opt-Out” option for members of the Damages Class who do not want to participate and to preserve claims.
PATH 2 – THE “INJUNCTIVE RELIEF” CLASS (Protect the Future)
The future! It is called the “injunctive relief” class because this class of plaintiffs seek to prevent the NCAA and member institutions from creating and enforcing any rules that place barriers to NIL, and for a share of the revenue moving forward. It is within this framework that all parties negotiated a comprehensive settlement plan that embodies many new and significant changes. I am going to walk though this, high-level, from the perspective of a rising high school football player(“Billy) looking to play Power 4 (fka 5) D1 football (at fake NEO U.), assuming the settlement is approved.
NEO Head Coach: Hey Billy, we want you! Good news, former scholarship limits at 85 players are gone, and NEO has a new roster limit instead at 105 players. This does not mean we can no longer offer you a scholarship, we can, but it may look different.
Billy: So, no scholarship?
Coach: NEO can still offer you the traditional scholarship benefits of tuition, room, board, books. Medical, health insurance, and Alston payments ($5,980cap), but now we can offer you these cool additional benefits: Revenue Sharing– NEO will have approx. $22M in our coffers annually as an athletic department to spread over all sports (the amount is based on a formula using 22% of average annual P5 revenues). You will share in this stream as a football player for sure, and you likely will get more than athletes in other sports; we just can’t tell you how much yet.
Billy: What about NIL?
Coach: Billy, we (NEO and our boosters/collective) can help you more!
a. License & Endorsement Agreement. NEO can enter into an exclusive or non-exclusive agreement with you for your NIL, institutional brand promotion, or other rights, if it is not for the broadcast of games/events.
b. Agent - we can even act as your marketing agent with respect to third-party NIL contracts.
c. Boosters – our NEO boosters can now pay you as long the license/payment is for a “valid business purpose” (which means someone will review – yikes!) related to the promotion or endorsement of goods or services provided to the general public for profit, with compensation at rates and terms commensurate with compensation paid to similarly situated individuals with comparable NIL value who are not current or prospective student-athletes at NEO;
2. Reporting: You must now report to either (a)NEO and/or (b) the Designated Reporting Entity created by the Settlement any and all third-party NIL contracts or payments you receive with a total value of$600.00 or more.
Coach: Billy, we know this as a lot for you to ponder! Here are a few more tidbits of info for you:
1. Should you choose a non-P4 football program in D1 (FCS or FBS), that program must follow the rules that apply to revenue sharing, etc. if they opt to offer you those benefits per the Settlement, but they don’t have to; otherwise, some changes here may not apply to you.
2. If you are not offered a scholarship you may not have the “walk-on” option as it existed in the past. With new roster limits NEO may only offer scholarships to fill the slots leaving no walk-on opportunities. Time will tell.
3. Title IX is not addressed and thus a grey area.
4. Employment status (Johnson case) is still a huge open item!
Billy: Thank you coach, I “think” I “maybe” want to commit to NEO!
ABOUT THE AUTHORS:
NILegally Speaking™ is written by PowerNIL/Ken Feinberg, attorney, in collaboration with other expert attorneys focused on employment, labor, contract, and intellectual property law.
ken@powernil.com www.powernil.com