What the recent antitrust settlement means for the NCAA

Karen Weaver of Penn’s Graduate School of Education, an expert on college sports and higher education, discusses the NCAA settlement agreement and the effect it will have on student-athletes and college sports overall.

Indianapolis - Circa March 2018: National Collegiate Athletic Association Headquarters. The NCAA regulates athletic programs of many colleges and universities II
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If approved, the recent NCAA settlement to resolve antitrust litigation will change college sports as we know it. The $2.75 billion settlement agreement covers three class-action lawsuits filed against the NCAA, claiming that the NCAA’s long-standing prohibition against student-athletes monetizing their athletic abilities violated the Sherman Act and antitrust law.

Karen Weaver, an adjunct assistant professor in the Graduate School of Education (GSE), academic director of GSE’s Collegiate Athletics Certificate Program, and an expert on college sports and higher education, spoke with Penn Today about how the implications of the settlement.

A headshot of Karen Weaver
Karen Weaver, an adjunct assistant professor at the Graduate School of Education and a distinguished authority on college sports and higher education. (Image: Graduate School of Education)

Are you surprised that the NCAA settled?

The NCAA has shown a history of stubbornly taking cases to the Supreme Court, and with the most recent one, they lost 9-0, so perhaps they were reading the tea leaves. There are fears that much of the court system has turned against the original definition of a student-athlete being an amateur athlete first.

I do believe that the NCAA was planning on going forward with the trial, but what stood in their way was the fact that if they lost—and, obviously, there would be an appeal and all those type of things—because it is an antitrust case, the damages are tripled. So conceivably, I’ve seen ranges between $14 billion to $20 billion in damages. And what’s different about settlement versus the judge trial is that the settlement allowed the NCAA to pay this over 10 years. If they had lost in court in January, the $20 billion would have been required immediately.

The student-athletes covered in the settlement date back to 2016. Why is that the start date and not 2000 or 1990?

With antitrust law, that’s as far back as you can go.

NCAA agreed to pay $2.75 billion in damages over 10 years. Where will the money come from?

This is where it gets into the weeds a little bit. It’s not just the NCAA that will be paying—although the NCAA will be paying a portion of it with their insurance. What they’re planning on doing is taking a portion of the annual March Madness payouts that they give to the conferences as their conferences’ earnings to this payout over the next 10 years.

For some conferences, this is a bigger deal than others. You might be surprised to know that the bigger concern is with the 22 conferences that earn less money so these NCAA revenues mean more to them. They also don’t have access to the $1.2 billion in new media revenues from the College Football Playoff that the Power 5 or the Power 4 conferences do. So that’s where the tension is developing.

Is it correct to say that the NCAA will be paying athletes now?

Going forward, each of the Power 5—soon to be Power 4—conferences have agreed to set aside about 22%, or $20 million, per year for at least the next decade to provide for ‘revenue sharing’ with some or all of the athletes in those specific conferences. The NCAA continues to argue vigorously that these payments are not salaries or employment-focused rewards; rather, they view them as ‘revenue-sharing’ arrangements. When the various conference and national media agreements are eventually renegotiated, that $20 million will very likely go up.

Will the revenue be shared with all student-athletes across all sports, or just the big money sports like football and basketball?

We don’t have a final answer on that for a couple of reasons. One, because we have to actually figure out what the annual payments are from each school going forward to that class. But two, you have Title IX, and Title IX may require this to be split equally between male and female athletes. There’s no clarity from the government or the Office of Civil Rights, any of those folks yet. So, it’s very much up in the air as to how that will be broken out.

Do you think the settlement agreement will hold up?

The judge has to review parameters. She can choose to move it forward or she can send it back and say, ‘I need you to provide clarification on this or that,’ so we’re still very much in a somewhat uncertain phase. But it seems pretty clear that these schools have signed off on this and they should prepare to do it.

If this agreement goes forward, what will the NCAA do? What will be their role?

They’re very good at running championships—and that’s an important characteristic. Everyone wants to see who the top teams are. But the challenge has been that the NCAA has gotten used to setting standards so that they can create what they call a ‘level playing field.’ That’s been a mantra in college athletics for 60 years. The problem is that appears to be in direct violation with U.S. antitrust law.