The NCAA Settlement is Not the End of the Fight for College Sports

The announcement of a settlement of three class action antitrust cases filed against the NCAA and the major conferences may end the immediate cases, but many issues remain open before the issue of athlete compensation and labor rights is resolved. Professor Mark Conrad explains in the latest ”Sports Business Podcast with Prof. C” episode.

Host: Mark Conrad Producer: Victoria Ilano Additional Production: Jeffrey Haynes Artwork: Pamela V. White Marketing: Michelle Miller Music: ”MarcusWay/Energetic Pop Punk/Tribe of Noise”

Episode Transcript

(00:06):
Hello and
welcome to the Sports Business Podcastwith Prof. C.
The podcast that exploresthe world of professional,
collegiate, amateur and Olympic sports.
I'm Mark Conrad or Prof.
C, from Fordham University's GabelliSchool of Business, where I serve as
Professor of Law and Ethics and a Director

(00:28):
of the Sports Business Initiative.
The brave new world of commercial collegesports has arrived.
After years of litigation and criticism
from the media, athletes, and the public.
A settlement of threeantitrust cases against the NCAA
and the major athletic conferencesmarks a conclusion

(00:51):
to these longrunning and highly publicized cases.
If approved by the court,the $2.7 billion settlement
announced in lateMay will, for the first time, craft
a systemwhere certain college athletes will earn
compensation for their services.
No doubt this is a victory for many pastand present college athletes.

(01:16):
It may well be considereda clever decision by the NCAA
and the power conferences,which could have been
on the hook for billions moreif the case went to trial.
But before we open the champagne,there are significant unresolved questions
that are not addressed,and that is why this settlement will not

(01:36):
mark the end of the battlefor the future of college sports.
Let's break the settlement down,
assuming court approval,and I'll get to that in a bit.
It ends three classaction lawsuits filed against the NCAA
and the
so-called power conferences,which were the then
five of the most powerful collegeathletic groups in the country.

(02:01):
The settlement requires these parties,along with non-party Division
I schools, to pay $2.7 billion in damages
to former Division I college athletes
who played from 2016 to 2021.
That amount would cover damagesfor name, image and likeness rights

(02:24):
they would have earned prior to 2021,
and a negotiated percentageof broadcast revenues.
About 14,500players are expected to be paid.
Varying dollar amounts.
Future college athletes from schoolsin the power conferences will share
$20 million per year for each school,

(02:47):
beginning as early as 2025,
but important questions have not beendetermined and important issues remain.
First, the judge in these casesmust accept the settlement.
While this occurs more often than not in
antitrust cases, it is not a certainty.
The judge may reject all of itor parts of it, and the parties

(03:10):
may have to go back to the negotiationtable or continue the case.
And that process could take months.
But let's assume that JudgeClaudia Wilkin accepts the settlement.
Then the
settlement only applies to the three classaction cases file
known as the House, Carterand Hubbard cases,

(03:30):
all filed by the same lawyers,making similar antitrust claims
against the NCAAand the power conferences.
But there remains a fourth active casetitled Fontenot v.
NCAA, which is not part of the settlementand still active.
Why is this important?
Plaintiffs in the House, Carterand Hubbard cases

(03:54):
do not have to accept settlementand can seek to continue litigation.
It is quite possiblethat some of these plaintiffs
could join the class suing in Fontenot,
where different attorneys are representingthese athletes.
The settlement raises peculiarand troubling questions
because non-parties, meaning the DivisionI schools not in the power conferences

(04:18):
will also have to pay their athletesout of their budgets.
While it is reportedthat the NCAA will shoulder
over 1.2 of the $2.7 billion settlement.
The Power 5 conferenceswill be on the hook
for a considerable percentage,but the so-called “mid-major” schools

(04:39):
would have to pay about 40% of that amountover a 10-year period.
In addition, the parties have to determinethe exact amounts of the payments
to the athletes since the paymentstandards have not been determined.
Making this more complexis that the group will be divided
into three different classes,with different amounts for each class.

(05:03):
I suspect that this would take some timeand possibly more negotiations.
While we don't knowthe exact dollars involved,
it stands to reason that these schoolsdo not have
the athletic department richesthat their more powerful schools do,
and I suspect that more than oneathletic director is not thrilled with

(05:24):
being a part of a settlement of a casewhere their schools are not a party.
And that means these departmentsmay have to cut programs
or find new methods to raise money.
Private equity firmsare beginning to sniff at opportunity.
While the cases settledour antitrust cases,
they do intersectwith labor law questions.

(05:45):
And that leads to the next issue.
The effect of this settlementon the growing calls
for unionization of college athletes.
The short answerit does not limit unionization efforts.
As many of you know, DartmouthCollege's men's basketball team
elected to unionizeas they consider themselves employees

(06:07):
under the labor lawsand a regional representative
of the National Labor RelationsBoard has agreed with this assessment.
The matter is far from resolved dueto an appeal
by Dartmouth to the full National LaborRelations Board.
However, a broad unionization effort
could curb the effector alter the settlement in some cases.

(06:29):
The $20 millionplus paid to athletes in the power
conference schools createsan effective salary cap, averaging around
22% of the revenues from a school'sathletic budget.
That is far less than the caps found
in the NBAand NFL collective bargaining agreements,
which are about 50% of revenuesearned with some exceptions.

(06:54):
If students are deemed employees,will they accept 22% or try to negotiate
a collective bargaining agreementwith better terms?
The NCAA is so concerned about the laborimplications that it has pressed Congress
to pass a uniform law to exempt studentsfrom being considered employees.

(07:15):
It would also include a statutoryexemption
of college athletes from antitrust laws.
Thus far, the NCAA and the conferenceshave not been successful,
despite spending an estimated $15million on lobbying.
But that may changein the wake of the settlement.
And if enacted, the statutewould put to rest the argument

(07:38):
whether these athletes are employeesand whether they could unionize.
And finally, this Title IX,
the landmark 1973 law that prohibitsdiscrimination
based on gender in schoolsthat receive federal funding.
In short, TitleIX is interpreted to require

(07:59):
equal funding of men's and women'sathletic programs.
But does that mean that male and femaleathletes should be compensated equally?
If the settlement calculates that students
from revenueproducing teams (the polite term
for football and men's basketball) receivemore than women's teams,
watch for the potential,even likelihood, of litigation.

(08:23):
The settlement of the
House, Carter and Hubbard cases marksa new beginning for college athletics,
but it does not resolve all of the issues.
Any thoughts?
Send them to me at [e-mail].
Thank you for listening. Until next time.
This is Prof.

(08:43):
C for the GabelliSports Business Initiative.