More Money, More Problems for Collegiate Athletics?

3 min

The ball keeps rolling on potentially big compensation for college athletes. In a landmark proposed settlement (Settlement), the National College Athletics Association (NCAA) and the Atlantic Coast Conference, Big Ten Conference, Big 12 Conference, Pac-12 Conference, and Southeastern Conference (collectively, the Power Five Conferences) have agreed to pay a class of former NCAA student-athletes $2.8 billion to settle the consolidated antitrust case, House v. NCAA. The Settlement payment compensates certain former collegiate athletes for income they allege they should have received between 2016 and 2020 and will be paid out over 10 years by the NCAA and the athletic conferences (including smaller conferences that are not part of the Power Five Conferences). While the Settlement’s $2.8 billion payout is a massive number, it is not even the biggest news from the Settlement. Under the Settlement, Division I schools will be allowed to establish a revenue-sharing framework beginning in fall 2025, for up to $20 million of sports revenue per year to be paid directly to athletes.

The revenue-sharing framework is where this seismic shift in collegiate athletics will get tricky for colleges and universities. The Settlement will allow schools to decide for themselves how to allocate revenue-sharing payments to athletes, which raises a multitude of questions as to how schools will develop their revenue-sharing programs. Will schools choose to allocate more pay to high-profile athletes to further recruitment goals? How will individual athletes’ right to profit off their name, image, and likeness under the Supreme Court’s decision, NCAA v. Alston, 141 S. Ct. 2141 (2021), impact schools’ decision making when it comes to revenue sharing? These are but two of many interesting questions raised by the Settlement.

Schools engaging in revenue sharing will be entering uncharted legal waters. In implementing revenue sharing, schools must grapple with Title IX’s requirement to provide equal athletic opportunities based on sex. Moreover, it is clear that the National Labor Relations Board (NLRB) regards certain student athletes at private colleges and universities as “employees” entitled to compensation for services rendered to the schools, as defined under the National Labor Relations Act (NLRA), which we previously reported on here and here. This raises the possibility that the NLRB would require schools to collectively bargain over revenue-sharing programs that impact unionized teams. As student-athletes continue to trend toward professionalization, other employment laws may come into play, including laws that prohibit pay discrimination for men and women working jobs that require substantially the same skill, effort, and responsibility under similar working conditions.

All of these legal issues raised by student-athlete revenue sharing require careful legal consideration in the brave new world of the nation’s professionalized student athletics. The Settlement still has to be judicially approved and then implemented, but schools must begin working through these thorny issues now, as they begin to craft their revenue-sharing strategies. We will continue to monitor the state of collegiate athletics and the law. Should you have any questions about the changing landscape of collegiate athletics, Title IX, employee classification, or collective action, please contact the authors of this article or any member of Venable's Labor and Employment Group.