For anyone who thought an unprecedented $2.8 billion settlement agreement actually resolved one of the many murky issues of student-athlete compensation in college athletics —not so fast. On June 6, federal Judge Claudia Wilken officially approved the class action antitrust lawsuit House v. NCAA. The landmark settlement turned the amateurism model of athletics in higher education on its head and is set to provide back pay to Division I student-athletes for name, image, and likeness (NIL) earnings. While it took five years of litigation to get approval of the settlement, it took just five days for a group of plaintiffs to appeal it.
NCAA NIL Settlement in House v. NCAA Faces Immediate Title IX Challenge
On June 11, a group of female student-athlete plaintiffs in House noticed an appeal to the Ninth Circuit Court of Appeals registering their objection to the back-pay provision of the final settlement. Although no appellate briefs have been filed yet, these female student-athletes are expected to assert that the settlement’s terms for paying out back-pay damages violates the prohibition on sex discrimination under Title IX because the settlement is set to overwhelmingly pay out most of the back-pay damages to male athletes.
Allegations of Unequal NIL Compensation Based on Gender
More specifically, the settlement’s formula for paying out back-pay damages has allocated 75% of the fund to men’s football players and 15% to men’s basketball players in the five premiere athletic conferences in NCAA Division I, with only 5% of the damages fund allocated to women’s basketball players and the remaining 5% to all other student-athletes.
Proponents of this formula argue that it tracks the gross revenue averages of college sports, and accordingly football players should get the biggest piece of the pie. Opponents, including the appealing female student-athletes, argue that the back-pay damages formula in the agreement will pay male athletes 90% more than female athletes, which they assert is an unlawful disparity based on gender.
The anticipated argument is, essentially, that if the schools and/or the NCAA on behalf of schools had allocated 90% of their revenue to the male athletes during the plaintiffs’ college athletic careers, then they clearly would have violated Title IX’s requirement to provide “substantially proportionate” financial assistance to male and female student-athletes. In short, the schools would not have met their obligation to ensure equitable opportunities for both men’s and women’s sports programs.
Judge Wilken’s view in approving the settlement was that the litigation was an antitrust case, not a Title IX case, and the Title IX compliance, unionization, and collective bargaining issues are outside the scope of the House litigation. She nonetheless left the door open to a Title IX challenge on appeal, indicating that future lawsuits can be filed if the way that schools compensate athletes violates Title IX. Despite the appeal putting the brakes on the payout of back-pay damages under the settlement, the other terms of the agreement were left uninterrupted and went into effect on July 1. This includes roster limits, scholarship limits, and the rules regarding direct pay and revenue-sharing with student-athletes.
What’s Next: Ninth Circuit to Weigh Title IX and NIL Backpay
The Ninth Circuit now has an opportunity to weigh in on whether Title IX does have a bearing on these back-pay damages. It may simply decide that Judge Wilken did or did not abuse her discretion in approving the settlement. Or it could take on the larger controversial and contested issue: How does Title IX apply to NIL payments and revenue sharing with student-athletes, and does the revenue-sharing model set forth under the settlement agreement terms for future compensation for student-athletes run afoul of Title IX?
Regardless of how far-reaching the Ninth Circuit’s opinion ultimately goes in the House appeal this is not the last Title IX challenge we will see to the allocation of direct payments and revenue sharing funds to student-athletes in the near future.
The federal government’s current position on the issue of direct pay and revenue sharing with regard to Title IX does not currently provide decisive direction to courts that may grapple with this issue in the future. The U.S. Department of Education guidance under the Biden administration indicated payments to student-athletes would have been considered “athletic financial assistance,” which requires proportional allocation among male and female athletes at a given institution. The Trump administration rescinded that guidance in February, and in the current landscape, it is unclear whether compensating student-athletes will be viewed by the Office of Civil Rights—the agency division tasked with Title IX enforcement—as subject to Title IX.
Division I schools have been mulling over their options since the proposed settlement agreement was under review. However, the thorny issues of direct pay to student-athletes, equitable sports programming, and NIL deals are not reserved exclusively for D-1 schools and their athletic departments—any college or university with an athletic program should closely track the developments in federal and state law in this space.
Venable will continue to monitor developments in Title IX compliance, student-athlete pay equity, and NIL legal challenges and remains available to provide guidance to colleges and universities. Should any college or university have questions or concerns regarding Title IX, labor issues and employment of student athletes, or NIL rights and contracts, please contact the authors or any attorney in Venable’s Sports Law Group.