On Thursday evening, a preliminary approval hearing to settle House v. NCAA — the antitrust case that could bring revenue sharing to college athletics — ended without anything resembling preliminary approval. Instead, Judge Claudia Wilken told the sides to “go back to the drawing board,” particularly over language regarding third-party name, image and likeness (NIL) payments from booster-funded groups known as collectives.
That could be a significant sticking point for the NCAA, one of six defendants in the case along with the SEC, Big Ten, Big 12, ACC and Pac-12 conferences. The first settlement draft calls for the NCAA and its members to pay $2.78 billion in damages to past and current athletes, who are suing over various restrictions on compensation. It also creates a landscape-altering model in which schools could directly share up to a certain amount of revenue with athletes starting in the fall of 2025. The cap would be somewhere between $20 million and $23 million that first year, then continue to rise.
But a major reason the NCAA is settling is that the plaintiffs’ lawyers agreed to try to limit — or even eliminate — the outsize influence of NIL collectives. When Wilken expressed doubt about that section of the draft Thursday, NCAA general counsel Rakesh Kilaru curtly responded: “Without it, I’m not sure there will be a settlement to submit.”
Kilaru also said that “based on [Wilken’s] comments today, we have to discuss whether we have a deal.”
The lawyers agreed to resubmit a draft within the next three weeks. Jeffrey Kessler, one of the lead plaintiffs’ attorneys, told Wilken during the hearing he was open to settling without the NIL rules as written. Kilaru, to no surprise, did not express the same. Wilken even floated a trial if they couldn’t agree. The settlement is aiming to consolidate multiple antitrust cases: House v. NCAA, Hubbard v. NCAA and Carter v. NCAA. Kilaru said the NCAA is not open to a settlement that doesn’t include all three.
“I think we’ve got problems with this,” Wilken said. “I don’t have an idea of how to fix this. I will throw it back on you all to come up with something better and consistent. Keep in mind that taking things away from people doesn’t work well.”
Wilken’s underlying message: A sweeping antitrust settlement shouldn’t cut off athletes’ existing access to money.
There’s a lot going on here, and the hearing didn’t just focus on NIL and collectives. Wilken heard from two attorneys representing groups of athletes who oppose the settlement. Because the settlement would cover 10 years, she pushed the plaintiffs’ attorneys on who would be the class representatives for athletes who are not yet enrolled in college, at one point referencing “the 6-year-old playing kickball.” Wilken also wanted clearer language about how damages will be paid out and who will receive them.
But NIL, collectives and boosters are what really muddied the waters Thursday. Experts were always dubious about the NCAA being able to limit collective spending without inviting more antitrust scrutiny (and in turn, more lawsuits). Kilaru described the enforcement process agreed to in the settlement to Wilken, laying out how any collective deal over $600 would have to go through a clearinghouse, which could eventually lead to it being reviewed by a neutral arbiter.
Both Kilaru and Kessler stressed they are not trying to regulate an athlete’s standard endorsement deal with Nike. The NCAA’s vision, which the plaintiffs’ attorneys initially agreed to, is to establish what it’s calling “fair market value” with collective NIL deals. In recent years, collectives have paid de facto salaries to athletes — mainly football and men’s basketball players — and spent big in the transfer portal and high school recruiting to entice athletes to attend their schools. Often, six-figure payments are made for appearances, autographs or charity work.
The NCAA hopes to eliminate a situation in which a linebacker is making $400,000 annually to attend a few booster dinners (again, because it says it doesn’t view that as in line with fair market value). For now, though, Wilken isn’t buying the argument or enforcement plan.
She has presided over major college sports antitrust cases in the past, including O’Bannon v. NCAA and Alston v. NCAA. On Thursday, she said she was under the impression the settlement draft permitted “pay for play” payments from third-party groups. Kilaru pushed back, saying that is currently against NCAA rules and would remain that way.
“The no pay for play thing is kind of not going to be there, is it?” Wilken asked. Kilaru informed her the NCAA would still bar that under new rules. Wilken just shook her head.
The crux of Kilaru’s and Kessler’s argument was that, in regard to NIL and collectives, the settlement wouldn’t restrict anything that isn’t already against the rules. Under the NCAA’s current regulations, NIL money isn’t technically supposed to be used to compensate athletes for their performance or to influence recruiting decisions. Of course, in reality, this happens all the time. But to convince Wilken the proposed solutions are in line with the current system, Kilaru said that “at any moment that rule could be enforced by the NCAA.”
Uh, not so fast.
Back in February, a federal judge in Tennessee granted a preliminary injunction that barred the NCAA from punishing boosters or athletes for discussing NIL deals during the recruiting process. A week later, the NCAA announced it would pause all investigations — and not start any new ones — of whether boosters or NIL collectives had broken recruiting rules. So if the NCAA did want to get back in the enforcement game, as Kilaru suggested, there are at least two state attorneys general who would like a word.
Wilken is not opposed to a settlement, even if she did say the word “trial” while discussing the possible next steps. All of this, as it stands, is complicated, and there is no clear end in sight. But what’s clear, given Kilaru’s transparent comments about settling (or not) without specific ways to neuter collectives, is that the ball is squarely in the NCAA’s court. The rest of the college sports world can only wait to see what it does with it.
