The House v. NCAA Settlement is Approved--So What?
What you need to know!
On June 6, 2025, Judge Claudia Wilken in the Northern District of California formally approved the House v. NCAA class action settlement, a historic deal that will transform the legal, financial, and structural underpinnings of college athletics for decades to come—well, maybe.
House v. NCAA background
The lawsuit was brought by current and former Division I student-athletes, including Grant House, who argued that the NCAA’s compensation rules were illegal under federal antitrust law. The class claimed they would have received significantly more compensation if not for NCAA restrictions.
What were they targeting?
Restrictions on name, image, and likeness (NIL) compensation from third parties.
Restrictions on schools and conferences paying athletes directly for their NIL.
Restrictions on schools paying athletes for athletic services (i.e., "pay-for-play").
Caps on the number and value of scholarships that could be offered.
In short, they weren’t just going after backpay—they were going after the entire system.
Show Me the Money! $2.58 Billion in Backpay
The headline figure from the settlement is $2.58 billion, to be paid out over ten years. This is compensation for past harms suffered by athletes who played under NCAA rules that have now been declared illegal.
The settlement breaks the backpay into four main buckets:
Broadcast NIL (BNIL) Fund – $1.815 Billion for the use of athletes’ likenesses in televised games.
Video Game NIL Fund – $71.5 Million for athletes featured in video games like NCAA Football.
Third-Party NIL Loss Fund – $89.5 Million for athletes who could’ve earned more from sponsors but for outdated NCAA rules.
Athletic Services/Pay-for-Play Fund – $600 Million for what student-athletes would’ve earned directly from schools but couldn’t because of NCAA prohibitions.
Each of these funds will be distributed to athletes based on sport, playing years, scholarship status, and market value. Dr. Daniel Rascher, the sports economics expert, crafted the damages model.
A New Legal Order for College Sports
What’s actually sending shockwaves through college sports, however, isn’t the money, but rather the injunctive relief approved in the settlement. This piece of the agreement lays out how the NCAA must change its rules starting immediately. The primary features include the following:
Schools Can Now Pay Athletes Directly
Starting in 2025–26, Division I schools can spend up to 22% of their average annual athletic revenue on direct compensation to athletes.
That’s about $20.5 million per school, ballooning to $32.9 million per school by 2035.
Estimated total over 10 years: $19.4 billion.
This effectively creates a salary cap across schools.
NOTE: that this provision will likely spur additional antitrust litigation if no congressional action or collective bargaining are adopted.
Scholarship Limits Are Gone
NCAA is getting rid of scholarship limits.
This could create over 115,000 new scholarships annually, according to expert estimates.
However, roster limits may still be imposed to prevent schools from simply hoarding talent.
New NIL Rules—and a Guardrail System
The NCAA can still restrict NIL payments from certain groups—like boosters—but those rules are now narrower.
Only “Associated Entities” (like collectives tied to schools) and “Associated Individuals” (think mega-donors) can be regulated—and only if the payment isn’t for a valid business purpose at market value.
NIL payments over $600 will be evaluated by Deloitte’s third-party NIL GO platform.
Disputes will go to neutral arbitration—but see my previous article on some of the associated issues with this setup (NIL Transparency Gap).
An Unusual Judicial Flex: The Court as Rulemaker
It’s extremely rare for a private class action settlement to result in what amounts to an industry-wide regulatory overhaul. Usually, that comes from Congress, or a federal agency. If a body is chosen to monitor an ongoing settlement, it’s typically an existing federal agency (think, the DOJ and policing consent decrees).
But in this case, the court retained jurisdiction to enforce the settlement and even resolve disputes over its interpretation. The creation of the independent College Sports Commission to monitor NIL rules going forward (with the NCAA abdicating) is unchartered water to some degree.
The Political, Legal, and Cultural Fallout
The House settlement comes on the heels of:
NIL chaos sparked by the Supreme Court’s 2021 Alston decision.
A vacuum in federal legislation, with Congress paralyzed on a college sports bill.
Widespread dissatisfaction from coaches, fans, and administrators who hate the current NIL free-for-all but don’t want to give athletes true employment status (which would lead to collective bargaining).
This deal is essentially a plug-your-nose compromise. It avoids declaring student-athletes “employees” (and thus sidesteps FLSA and Title VII claims—for now), but it opens the door to collective bargaining, labor rights, and even unionization down the road. Judge Wilken specifically noted in the opinion that the agreement:
expressly provides that nothing in the agreement ‘shall limit or interfere’ with the ability of student-athletes or Defendants to explore and implement alternative structures for providing benefits to student- athletes, ‘including but not limited to collective bargaining in the event that a change in law or circumstances permits such collective bargaining to take place.’
What Happens Next?
Direct payments to athletes begin in July 2025.
The College Sports Commission will monitor compliance, salary caps, and NIL enforcement (similar to how pro leagues have cap administrators). It named Bryan Seeley (an MLB compliance veteran) as its first CEO.
Class counsel will receive up to $475 million in fees and expenses, with additional fees tied to ongoing enforcement over the next decade.
The door is now open for future antitrust litigation, labor classification challenges, and even new unionization efforts.
Challenges to the agreement will come swiftly—Title IX will be front and center.
Disclaimer:
The content provided in this post is for informational and educational purposes only and should not be construed as legal advice. No attorney-client relationship is created by your receipt or review of this material. You should not act or refrain from acting on the basis of any information included in this newsletter without seeking appropriate legal or professional advice based on the particular facts and circumstances at issue. The views and opinions expressed in this post are solely my own and do not reflect the views of any past, present, or future employer, organization, or client. Any references to legal developments or cases are for illustrative purposes only and may not reflect the most current legal standards or interpretations.