TAB Analysis: Why we support the House v. NCAA Settlement

The Settlement Raises Projected College Athlete Compensation to over $2.7 Billion Annually, growing to over $32 Billion Total Over 10 Years ($20B Settlement + $12B In True & Collective NIL).

By: Sam Blake Chase Griffin

The approval, by the NCAA and the five autonomy conferences, of the historic settlement in House v. NCAA and related cases is the latest step in the transformation of college athletics and ushers in a new era where athletes begin to receive their fair share of the value created. While there are still several legal and procedural steps remaining, TAB wanted to offer a primer on the types and amount of compensation colleges athletes can expect to receive from this settlement. 

How We Got Here

Since the O’Bannon v. NCAA ruling in 2015, it was clear this day would come; the only question was when. This new era of athlete compensation is led by powerhouse plaintiffs attorneys (@Stevewberman and Jeffrey Kessler ) on behalf of college athletes. The tide decisively shifted in athletes’ favor after a 9-0 Supreme Court decision in Alston v. NCAA. With the ensuing new state name, image, and likeness (NIL) laws and a changing legal climate, the NCAA adopted its Interim NIL Policy, allowing athletes to legally profit from their NIL. Now, following the House settlement, the income streams available to college athletes are set to include a revenue share and, for a set period of time, back-pay from the years before NIL was legalized, going back to 2016.

How much money will college athletes make in the first decade of this new era? 

Settlement-Related Revenue

First, let’s consider the money unlocked by the anticipated settlement. According to reports, athletes whose careers date as far back as 2016 will be entitled to about $2.8 billion in total back-pay, split evenly across 10 years, with payments beginning by the Fall of 2025. 

As for the revenue share, the reported terms of the settlement will permit schools to pay athletes directly. At TAB we expect, at minimum, all 70 schools in the autonomy conferences (ACC, Big Ten, Big 12, Pac 2, SEC; aka the Power Five) to opt in and begin sharing revenue with their players by the Fall of 2025.

Those that do – presumably to support recruiting and player retention – will create a new expense category for athlete compensation equal to 22% of the autonomy conference schools’ average annual revenue. Sources peg that figure at $20-$22 million per school. Assuming all 70 schools spend $20 million a year on athlete compensation, at least $1.4 billion will be paid directly to athletes (starting Fall, 2025), from their schools, in annual revenue share compensation.

Combining these two sources, and applying an annual revenue growth rate of 5%, the House settlement sends over $20 billion to college athletes over 10 years starting in 2025, when the first tranche of back-pay is set go out and revenue share is expected to kick in.Combining these two sources, and applying an annual revenue growth rate of 5%, the House settlement sends over $20 billion to college athletes over 10 years starting in 2025, when the first tranche of back-pay is set go out and revenue share is expected to kick in.

Existing NIL Market: True NIL + Collective NIL

Remember, this newly available $20 billion is in addition to college athletes’ existing NIL income, which comes in two main varieties – True NIL and Collective NIL. Athletes earn True NIL income when they deal directly with brands/sponsors, while Collective NIL refers to funds from third-party intermediaries who raise money from donors and fans to pay athletes. Given the nature of competition in college athletics, we do not anticipate these collectives going away anytime soon. In fact, we see them growing in importance as sources of competitive advantage in the new era.

Estimates of each NIL market from Opendorse and an independent CPA, along with an assumed annual growth rate of 5%, provide a complete picture of the total universe of potential college athlete compensation over the next 10 years.

In summary: We’re talking about going from a nonentity in 2021 to a $2.7 billion annual market for athlete compensation just four years later. And there’s a reasonable chance this will approach or exceed $4 billion within 10 years from now. Cumulatively, TAB projects college athletes are set to make more than $32 billion (from all sources of income) in the decade after the House settlement takes effect in 2025. 

Like all projections, these figures are estimates. But they do provide an indication of where things are headed, and the magnitude of the House settlement.

Is this a Fair Deal for College Athletes?

There are a handful of critics of the settlement who may try to get athletes to opt out and instead pursue a nebulous and unproven form of collective bargaining with conferences and schools. The burden of proof is on them to show they have a viable alternative path to generate more than the $20 billion in athlete compensation that the House settlement provides. Notably, this settlement does not preclude those with interest and capability from pursuing additional action, but rather provides a new, higher baseline from which to negotiate.

There is also some scuttlebutt around what the settlement does not address, such as employment status, Title IX, and other litigation. These are important topics, but they are fights being pursued in others forums and are not mutually exclusive with this settlement. 

One thing athletes uniquely understand is the value of each win. The TAB mission, from its inception in November 2023, has been to advocate for college athletes to earn a fair share of the revenue we create. The House settlement provides that and creates a framework to build upon.

TAB POV: We Anticipate formally Endorsing this Settlement as Long as the Final Terms Filed with the Court Reflect What Is Being Reported

Even if we assume the detractors are acting in good faith, it is an open question as to whether alternative approaches could get college athletes a better deal. At TAB, we always considered a court-administered settlement superior to the BATNA (Best Alternative to a Negotiated Agreement).

The athlete plaintiffs and classes are represented by legendary attorneys Jeffrey Kessler and Steve Berman. Kessler, in particular, has negotiated every major NFL and NBA CBA over the last 30 years, and if collective bargaining becomes a viable option, he is the person athletes will want negotiating for them.  

TAB supports the structure of the settlement and believes that the back-pay should come from the NCAA and schools, while the revenue share should come directly from the athletic departments. 

TAB Polling of College Athletes Underscores Our Support

When our Publisher, Chase Griffin, testified in Congress this past January, he submitted the results of the TAB College Athlete Poll conducted in conjunction with the leading college student polling firm, The Generation Lab. The poll found that about two-thirds of college athletes think their revenue share compensation should be paid directly by athletic departments rather than conferences or third parties. Additional findings included that around 80% of college athletes would consider a fair revenue share to be at least 20-30%, on top of the scholarships and stipends they currently receive. The House settlement falls within that zone of what the overwhelming majority of athletes would consider to be fair.