By James Sutherland on SwimSwam
ACC and Big 12 leaders voted to approve proposals for a settlement in the House v. NCAA class-action lawsuit, multiple sources reported Tuesday.
The Big 12 President and chancellors were the first to vote on the terms on Tuesday before ACC leadership followed later in the day, marking a big step toward finalizing a settlement expected to reshape the college sports business model. The remaining Power conferences and the NCAA Board of Governors are expected to vote later this week (the Pac-12 will vote as a full 12-team league, as constructed when the lawsuit was filed).
The Athletic reports that settlement details are expected to include upwards of $2.7 billion in back-pay damages the NCAA will owe former Division I athletes, along with a revenue-sharing model between power-conference schools and student-athletes in the future.
The back-pay damages will be made available to D1 athletes dating back to 2016 for lost name, image and likeness (NIL) earning opportunities, paid out over the course of 10 years.
HOW THE $2.7 BILLION WILL BE DISTRIBUTED
Reports indicate the NCAA will split up $1.6 billion among the member schools and then $1.1 billion will come from NCAA reserves, catastrophic insurance, new revenue and budget cuts.
Nearly 60% of the $1.6 billion is expected to come from leagues outside the Power Five conferences named in the House lawsuit, while the other 40% will come from the power conferences.
Within the $1.6 billion, the NCAA will withhold distribution from six funds across its 32 Division I leagues, including the basketball performance fund (via the NCAA tournament), grants-in-aid, the academic enhancement fund, sports sponsorships, conference grants and the academic performance fund.
The equal conference fund, the student-athlete opportunity fund, and the special assistance fund are not expected to be impacted. The NCAA does not plan to take any money from the D2 or D3 distributions.
The situation remains fluid as several smaller-revenue leagues, particularly the non-FBS Division I conferences, are proposing funding plans that don’t put a disproportionate financial responsibility on them.
The revenue-sharing model would be optional for power-conference schools, possibly as soon as next year, in which 22% of those schools’ average annual revenue (roughly $20 million per year) would be distributed directly to athletes.
“The most important part about the settlement — and let’s face it, there’s still a lot of work to be done there — is it creates some clarity and some visibility on a whole bunch of issues that have sort of been roiling everybody for a while,” NCAA president Charlie Baker said last week at the ACC Spring meetings.
“The other thing it does is create predictability and stability for schools. It creates a tremendous opportunity for student-athletes.”
WHERE IT GOES FROM HERE
Once the NCAA and power conferences finalize terms and come to an agreement, the case will be submitted to Judge Claudia Wilken of the U.S. District Court for the Northern District of California for preliminary approval. If granted, there would be a set period of roughly 90 days in which those in the retroactive damages class have an opportunity to opt out, and those in the future revenue-sharing class can object to the terms of the agreement.
That would be followed by a final approval hearing where, if approved, the settlement would officially go into effect.
This past November, Judge Wilken granted class-action status to the House side, expanding it to any D1 athlete dating back to 2016. This drastically increased the potential cost of the damages in the case, and thus, seemed to expedite talks of a settlement, which really ramped up in late April.
READ MORE
- House v. NCAA Lawsuit Filed (2020)
- House v. NCAA Certified As Class Action Lawsuit
- NCAA Leadership Closing In on Multibillion-Dollar Settlement In House Case
- House Settlement with NCAA Mulling Revenue Sharing Agreement With Athletes
Read the full story on SwimSwam: Big 12, ACC Reportedly Approve Settlement In House v. NCAA Case