House v. NCAA Settlement On Hold As Judge Sends Attorneys “Back To The Drawing Board”

The landmark settlement in the NCAA v. House antitrust case has been put on pause after a Federal Judge called into question how the deal would limit third-party name, image and likeness (NIL) payments from boosters.

Judge Claudia Wilken advised the settlement attorneys to “go back to the drawing board” while expressing concern with several parts of the deal during a hearing on Thursday.

In May, the NCAA and the Power Conferences agreed to a 10-year settlement that would pay $2.7 billion in damages to athletes along with terms of a revenue-sharing agreement that would allow schools to share $20-23 million annually in revenue to athletes.

Judge Wilken has put the case on hold, declining to grant preliminary approval.

“I’m concerned about the third-party NIL restrictions,” Wilken said. “I’m concerned (the settlement) will limit those opportunities for people moving forward.”

Among Wilken’s primary concerns was a clause that would require any money boosters provide to athletes to be for a “valid business purpose” and eliminate pay-for-play payments that have become common in NIL collectives.

Wilken asked NCAA attorney Rakesh Kilaru if the settlement would end up with the organization paying athletes to pay, but Kilaru said that pay-for-play will be against the rules.

“For us it’s an essential part of the deal,” Kilaru said.

It’s clear Judge Wilken was under the impression that the settlement *permits* pay-for-play thru 3rd-party NIL to athletes.

NCAA’s prohibition on pay-for-play is “not going to be there anymore right?” she asks, before Kilaru tells her – to her confusion – that it will exist. https://t.co/fc0vFd6zdJ

— Ross Dellenger (@RossDellenger) September 5, 2024

Over the last few years, since the introduction of NIL, booster collectives have provided payments to athletes that are, on paper, for NIL usage, but in reality have essentially served as player salaries. The deal is designed to take this away.

“What are we going to do with this?” Wilken asked. “I found that taking things away from people is usually not too popular.

“The schools don’t have to pay those benefits, and the schools may or may not be able to pay those benefits, but clearly, the collectives or the boosters or the third parties do have those resources and are willing to pay them, apparently.

“I think we’ve got problems with this, and I don’t have an idea of how to fix them. So I think I’m just gonna have to throw this back on you all to see if you can come up with something better.”

Both sides of the settlement agreed to confer, consider Wilken’s concerns and make a supplemental submission on Sept. 26.

Jeffrey Kessler, the lead attorney on the House side, said a trial is possible if Wilken is not satisfied and an agreement cannot be reached.

“If we’re going to solve these issues and go forward, that’s great,” Kessler said. “And if not, then we want a trial date.”

Kilaru added that after hearing what Wilken had to say, he’s not sure a deal can be made.

The NCAA released a statement on Thursday night, acknowledging the manner of questions brought forward by Wilken aren’t out of the ordinary in class action settlements:

“The settlement agreement the NCAA and autonomy conferences submitted to the court was the product of hard-fought negotiations that would bring stability and sustainability to college sports … That continues to be our goal and the NCAA and autonomy conferences will carefully consider the court’s questions, which are not uncommon in the context of class action settlements.”

If Wilken grants preliminary approval later this month, settlement parties can begin notifying class members, namely athletes eligible for damages payments and current student-athletes eligible for optional revenue-sharing. A final approval hearing would then be scheduled for early next year. If it’s approved in that final hearing, settlement terms go into effect immediately with the revenue-sharing agreement beginning in July 2025.