In his capacity as a Columnist for California Sports Lawyer®, Founder and Managing Attorney Jeremy Evans has written a column about the settlement discussion surrounding the House v. NCAA case in California that will alter the college sports landscape.
You can read the full column below.
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The House v. NCAA case in federal district court in California to be heard before Judge Claudia Ann Wilken (Senior Judge of the United States District Court for the Northern District of California) is set to alter the course of college athletics. However, the case may reach a settlement prior to the litigation that will also alter college athletics. According to several sports news outlets, the settlement between the college athletes represented in the class action case against the NCAA would provide a (1) settlement of $2.9 billion dollars to be split among the athletes in the various conferences and (2) create a revenue-sharing system that would open the door to providing up to 22% of athletics revenue per year to participating athletes with a collective salary cap of $25 million that would increase with athletic department revenue.
Judge Wilken is also well-known for her decision in the O’Bannon v. NCAA 802 F. 3d 1049 (9th Cir. 2015) case with former UCLA basketball star Ed O’Bannon, who sued the NCAA and EA Sports for infringing on his and other college athletes rights by utilizing their name, image, and likeness (NIL) in a video game without a license, waiver, or payment. Judge Wilken held that the NCAA’s contract arrangement and restriction of college athletes making money off of the their NIL violated the Sherman Antitrust Act by prohibiting universities from giving student-athletes a share of the revenues earned when their NIL was broadcast over television or through other contracts like video games. Furthermore, Judge Wilken also heard the district court version of the National Collegiate Athletic Association. v. Alston, 594 U.S. _ (2021) case that was eventually decided by the Supreme Court of the United States. The Supreme Court agreed with Judge Wilken and held in a 9-0 decision that the NCAA and member institutions prohibiting enforcement of certain NCAA rules, limiting education-related benefits for student-athletes, such as scholarships for graduate or vocational school and payments for academic tutoring were a violation of antitrust laws.
It was serendipitous for college athletes that state laws regarding NIL had been passed in California, Florida, and other states allowing for college athlete licensing, representation, and profit related to NIL, enacted on July 1, 2021. The NCAA followed suit and changed its bylaws and policies to allow for student-athlete NIL deals prior to July 1, 2021. The NCAA’s decision was coincided by the opening of the transfer portal, NIL collectives and donors, and eventually many universities taking over NIL programs for their athletes. The landscape is further complicated by Title IX restrictions and expansion along with an Eastern District Court decision and a Virginia law that banned nearly all restrictions on NIL compensation to college athletes.
If a settlement is agreed to in the House v. NCAA case, NCAA President Charlie Baker would be wise to seek legal, legislative and/or conference guidance and adoption of legislation, bylaws, and policies that offer solutions to on-going issues in fair competition among the schools, states, and athletes. Specifically, nationwide policies on the status of college athletes as employees versus independent contractors, the use of collectives and donors, school management of NIL, NIL compliance through university and independent persons and entities, general rules on NIL deals, and most importantly the removal of restrictions on college athletes to enter into the NBA and NFL drafts with college or time in another league as a requirement. If the aforementioned problems are not addressed with solutions, the litigation will continue, along with calls for the unionization student-athletes through player associations, increased payments, and distancing of college athletes from collegiate athletics.
The settlement will likely keep the major conferences together under the NCAA umbrella, but with the ability to pay players revenue. The value of a conferences broadcast and streaming deals just became that much more important for the recruitment and retention of college athletes. These changes also mean more tax revenue for the states and federal government as the television/streaming dollars would be taxed when going from the school and now also to the college athletes. Will some college athletic conferences be calling for a salary cap or luxury tax on the wealthier ones?
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About Jeremy M. Evans:
Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.
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