With $2.8B settlement looming, NCAA's smaller conferences feeling squeezed: 'What other options are there?'
On Tuesday morning before his drive to the office, Big Sky Conference commissioner Tom Wistrcill scrolled through news on his phone.
He stopped at a headline announcing that college football’s two goliaths, the SEC and Big Ten, earned a cumulative $1.7 billion in revenue last year.
“It’s both ironic and a gut punch,” Wistrcill told Yahoo Sports in an interview Tuesday. “The SEC and the Big Ten are announcing record revenues and distributions to their members while I’m looking at a 10% operating budget cut so that money can go to their former student-athletes.”
It is a strange time in college athletics.
The industry, on the brink of authorizing a landmark settlement of three consolidated antitrust cases, is fighting amongst itself over how to fund the deal’s $2.8 billion in damages owed to former athletes for use of their name, image and likeness (NIL). In a framework approved Tuesday by the Division I Board of Directors, the NCAA will fund 41% of the damages ($1.1 billion) while the schools will fund 60% ($1.65 billion) over a 10-year payback period.
At issue is the schools’ portion. The power conferences will pay about $664 million in contributions to the damages. The other 27 non-power conferences will pay $990 million.
Such a split in damage payments sparked a coalescence of the leaders of the 22 non-FBS conferences. They sent to the NCAA a two-page letter skewering the current funding model and offering an alternate proposal that, while seriously explored, was not ultimately approved.
They are now speaking out publicly.
“This has not been a healthy process,” said Julie Roe Lach, commissioner of the Horizon League and a former NCAA executive who holds a law degree. “This appears to be a rushed process to decide a billion-dollar settlement without collaboration with stakeholders who are responsible for $990 million of it.”
Their argument is simple: The power leagues should be paying a larger portion of the damage payments since a wide majority of those payments will be distributed to former power conference athletes.
According to legal experts and the court’s class certification itself, that is true. An economic report used in the case’s legal filing attributes about 90% of NIL backpay to the first of three certified classes in the case: Power Five football and men’s basketball players, specifically for use of their NIL in broadcasts and video games as well as third-party NIL payments.
If that report is accurate, $2.5 billion of the $2.8 billion settlement is intended for that classification.
But, in many ways, these are assumptions, experts say. Many questions around the back damages process remain unanswered. In an interview Monday with Yahoo Sports, Jeffrey Kessler, one of the leading attorneys in the case, provided only some of those answers.
If a settlement is reached, the damages will be distributed, unevenly, to thousands of athletes who participated in Division I athletics in the four years before the NCAA lifted restrictions on NIL compensation in 2021. Plaintiff attorneys will use “allocation formulas” to determine how much each former player receives, Kessler said.
Some athletes will get an equal share from damages for their use in video games. Others, the more notable major conference college football and basketball players, will receive variable amounts based around the formula.
Some believe that to be a difficult endeavor. How does one determine how much former Clemson quarterback Trevor Lawrence would have earned in booster collective pay and television money compared to, say, former Iowa State running back Breece Hall?
Kessler declined to reveal details of the allocation formula, but he was clear on one thing: How the NCAA determines how damages are paid is its problem.
“We represent the student-athletes. We only care that they get paid,” Kessler told Yahoo Sports. “The internal infighting among the NCAA and its members of how to pay for it has no impact on our settlement.”
Plenty remains unclear, including how many total plaintiffs are part of the case. The case provides injunctive relief to 25,000 Division I athletes, Kessler said, but actual settlement damages would only cover three “subsets” of that group: (1) power conference football and men’s basketball players for damages of their broadcast NIL, third-party NIL and video game use; (2) power conference women’s basketball players for their broadcast NIL and third-party NIL; and (3) additional DI athletes for their use in video games and third-party NIL.
That only covers the NIL-related House case. The settlement also includes the Hubbard case (for back-Alston payments) and Carter (revenue-sharing and pay-for-play).
Three sources with direct knowledge of the settlement believe the total number of plaintiffs in the case to be between 10,000-15,000. If 15,000 plaintiffs received equal shares, the average payment per athlete is about $180,000 over 10 years, when not excluding attorney fees.
Kessler declined to reveal attorney fees associated with such a mega settlement. In normal cases, fees are often about 25% of damages. However, in settlements such as this, with billions in damages spread over a mass of plaintiffs, the court often seeks a more reasonable fee while considering the monetary value of the settlement to members of the class.
This happened last year in California’s Ninth Circuit, where the House case is playing out. The court rejected a $1.7 million attorney fee awarded in a separate case, Lowery v. Rhapsody Inc., as it was “30 times larger than the amount paid to class members,” the court released.
Two sources with direct knowledge of the settlement told Yahoo Sports that the fee in this consolidated settlement is expected to at least eclipse $100 million.
“I don’t know what the lawyers are going to take in this one, but typically it is a large one,” said Gabe Feldman, a sports law professor at Tulane and one of the most knowledgeable about the inner-workings of college athletics litigation. “One of the criticisms of class action in general, not this one but in general, is each plaintiff gets a small amount because it’s spread out to so many plaintiffs and the lawyer fees.”
Meanwhile, NCAA and conference leaders march forward with finalizing settlement terms to meet a deadline from plaintiff attorneys, as well as rectify the situation before a hearing in a separate antitrust case, Fontenot v. NCAA, on Thursday.
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The Big 12 became the first of the five major conferences to authorize settlement terms in a meeting Tuesday. The Big Ten, ACC, SEC and Pac-12 are scheduled for votes this week as well. Expectations are that the proposals will pass.
The NCAA Board of Governors has allotted meeting time both Wednesday and Thursday for the final approval process in the organization adopting settlement terms.
However, those in the non-FBS conferences plan to continue to fight toward changing the funding formula.
“Who is suing, for what are they suing, and where will the damages be paid? Those are the questions we ask,” Lach said. “For the most part, it’s Power Five athletes. But we’ve been told because it’s a Division I rule, we need to share in the damages. I understand that, but sharing should be an equal hit across the board.”
According to figures from the NCAA and the 22 non-FBS leagues, based on the approved funding formula, those outside the power conferences will sustain a hit of between 1% and 1.68% of their budgets. Those in power conferences will endure an average reduction of 0.61% of their current budget — budgets that will soon see a significant increase from College Football Playoff and television contracts.
Power conference leaders contend that the formula is fair, pointing to the forward-looking portion of the settlement, which calls for a permissive revenue-sharing concept that could cost major conference schools a combined $1 billion annually. The low-revenue leagues will almost assuredly decide against participating in the revenue-sharing model that may as well feature a new governance structure, enforcement arm and scholarship concept controlled by the power leagues.
“I’m definitely not opting in,” said one non-FBS conference commissioner.
“Not only can we not share revenue with athletes, but we may be cutting athlete benefits, such as Alston payments, because of the funding formula,” said another.
In the meantime, Wistrcill arrived at his office on Tuesday morning, learned that the NCAA Board of Directors voted on the original funding plan and wondered about the next steps.
“What other options are there?” he asked aloud. “There are smarter people than me who, legally, can tell me what our options are. This is clearly unfair.”
