Federal Judge Grants Preliminary Approval for $2.8 Billion NCAA Athlete Compensation Settlement

In a significant development for college athletics, a federal judge in California has granted preliminary approval to a revised settlement concerning athlete compensation linked to the NCAA and the Power Five conferences. This decision potentially sets the stage for billions of dollars in financial support for current and former college athletes. The settlement, valued at $2.8 billion, aims to create a damages pool that benefits athletes over the next ten years.

Under the terms of this settlement, Division I schools could begin directly paying athletes for their name, image, and likeness (NIL) rights. This marks a significant shift in college sports, allowing athletes to earn income in ways not previously permitted. Payments are expected to follow a cap per school that will progressively increase over time. However, the process is far from complete, as the official notification and claims procedures for athletes are set to commence on October 18, 2023.

Athletes will have until January 31, 2025, to object or opt out of the settlement, and a final hearing for approval is scheduled for April 7, 2025. There is still a possibility of further legal appeals, reminiscent of past cases that delayed resolutions for years. Some previous objections have been raised regarding elements of the settlement, indicating that this process has not been without its challenges.

Supporters of the settlement, including attorney Steve Berman, regard this development as a major advancement for student-athletes. NCAA President Charlie Baker expressed excitement over the ruling, noting it as a vital move toward offering greater benefits to athletes while sustaining college sports’ future.

The settlement’s structure allows for schools to start paying athletes after final approval is completed and any appeals are resolved. Thus, the first possible payments could begin in the 2025-26 academic year. Lawyers representing the athletes have estimated that close to 400,000 athletes might qualify for compensation, including some substantial claims from athletes outside the top sports.

The settlement also outlines changes in NCAA rules, aiming to eliminate long-standing scholarship restrictions and introduce a roster-size limit, with a potential cap of 105 players in football. While NIL deals with outside entities remain an option, new rules could provide the NCAA with greater oversight and regulatory power regarding those agreements.

This process indicates a shift towards a more equitable financial structure within college sports, reflecting broader changes in how student-athletes can benefit from their participation.