Final Approval of House Settlement Reshapes College Athletics Landscape

After five winding years in court, the most talked about class action lawsuit settlement in college athletics – House v. NCAA – has finally been approved by Judge Wilken in the Northern District of California. This landmark decision marks a seismic shift in the structure of college sports, effectively signaling the end of amateurism.
WHAT WAS THE CASE ABOUT?
At the core of the lawsuit was the NCAA’s long-standing rule that barred schools from compensating athletes for the use of their name, image, and likeness (NIL), including performance-based NIL earnings. The student-athlete plaintiffs argued that these restrictions violated federal antitrust laws. Unsurprisingly, rather than continue to litigate and risk another unfavorable decision from the U.S. Supreme Court, the parties settled, and Judge Wilken granted preliminary approval of the settlement on October 7, 2024. With final approval now in place, the NCAA and the five major athletic conferences have agreed to sweeping structural and financial reforms that are set to transform the landscape of college sports.
THE FOUR PILLARS OF THE SETTLEMENT
The settlement, which takes effect on July 1, 2025, includes four major components:
1. $2.8 billion in back pay
Over the next decade, the NCAA and Division I schools will pay $2.8 billion of NIL “back pay” to former and current athletes who competed from around 2016 through 2024. This compensation is argued to be for the NIL income that could have been earned were it not for the NCAA’s prohibition. About 95% of the money goes to football and men’s and women’s basketball; athletes in other sports split the rest. Individual payouts will vary, but many former Power Five (ACC, Big Ten, SEC, Big 12, Pac-12) football and men’s basketball players are projected to collect roughly $120,000 spread across the decade. Payments will begin once any appeals are resolved. The settlement’s online claims portal opens later this year.
2. Scholarship limits replaced by roster caps
The NCAA’s traditional scholarship limits are being replaced with roster size limits. For example, in baseball, schools were previously limited to 11.7 scholarships, but schools had discretion on how many athletes to put on a roster. Now, teams can offer full scholarships to all baseball players, but the team itself is limited to 34 roster spots. This could, of course, increase scholarship opportunities, but it could also reduce overall participation. In fact, this provision has faced strong opposition from athletes, parents, and coaches in recent months, as some athletes have already lost their hard-earned roster spots due to schools preparing for anticipated roster limits. Many view this change as fundamentally at-odds with the core values of college athletics. In response, the court required the parties to revise and address this issue. Now, schools have the option to “grandfather in” current and incoming athletes – labeled “designated student-athletes” – so they won’t count against the new roster limits.
3. New NIL Payments Moving Forward
Revenue sharing. Yes, revenue sharing. It’s gone from being scoffed at to practical reality in relatively short order. Beginning July 1, 2025, Division I schools that opt in may pay athletes directly. Year-one payouts are capped at $20.5 million per institution—roughly 22% of the average Power Five athletics budget. That “House cap” escalates by at least 4% annually and could approach $32 million by 2034-35. Schools can credit up to $2.5 million of existing Alston academic awards toward the cap, but third-party NIL deals remain outside it. Oversight falls to the new College Sports Commission (CSC), which can sanction programs that overspend. Participation is voluntary, but how many major programs will forgo a revenue-sharing tool that doubles as a recruiting advantage? Only time will tell.
4. NIL Deal Oversight and Enforcement
A new Deloitte-run clearinghouse, “NIL Go,” will vet all third-party endorsement contracts worth $600 or more and flag anything above “fair market value”; the CSC can then impose penalties. But the CSC’s reach is uncertain as reporting is voluntary. In theory, and possibly practice, boosters may simply slice big deals into sub-$600 slices. Add on the fact that NIL Go has no subpoena power, and we’re left hoping that schools cooperate.
LEGAL UNCERTAINTY REMAINS
While the House settlement is a groundbreaking step, it does not resolve all legal issues in college athletics. In fact, it may spark new litigation:
- Title IX Concerns: We have already seen the first appeal to the House settlement. A group of female athletes are challenging the back pay provision arguing that female athletes are being deprived of $1.1 billion. Further, the disproportionate allocation of forward-looking revenue share payments to male athletes and the potential of reduced participation opportunities for women could lead to additional Title IX challenges. In case you missed it, check out our recent publication for an overview of the intersection of Title IX and the House settlement.
- Antitrust Issues: The cap on NIL payments and roster-limit objectors may keep antitrust issues alive, and parallel cases over scholarship caps and eligibility rules are still working through the courts.
- Employment Status: The settlement does not address whether athletes should be classified as employees. However, the nature of the new contracts between athletes and schools could strengthen the argument that athletes are, in fact, employees. Additionally, the NCAA and the member institutions are actively lobbying Congress and the current administration for federal legislation that would protect athletes from being classified as employees and address related antitrust concerns.
The House settlement is a landmark moment in the evolution of college sports. It brings long-overdue compensation to athletes but does not solve every issue facing college athletics. Athletic departments, counsel, and boosters should treat the next few seasons as a live-fire test—budgeting, documenting, and auditing every step—because the rules will keep shifting long after the first checks clear.