Judge in U.S. grants $2.8 billion agreement, enabling colleges to disburse millions to student-athletes.

College Sports Face Historic Change: A Tale of Winners, Losers, and Cash

In a groundbreaking move, a federal judge gave the green light to a blockbuster change in collegiate sports on Friday. As the curtain is lifted on the controversial amateur model that has defined college sports for over a century, schools can now start shelling out millions to their athletes next month.

Grant House's lawsuit five years ago against the NCAA and its five largest conferences propelled this seismic shakeup. U.S. District Court Judge Claudia Wilken approved the final proposal that had stalled due to roster caps, a minor hurdle among numerous changes expected in the multi-billion-dollar industry.

The headline act of the so-called House settlement includes each school's permission to divvy up to $20.5 million among athletes this year, with $2.7 billion set to be distributed over the next decade to former players who were previously barred from revenue sharing.

The transformation on the horizon for hundreds of institutions hit by the reality that their players generate the billions in TV and other revenue—mostly from football and basketball—that keep this money machine humming is nothing short of monumental.

The fallout from this professionalization of college athletics will be evident in high-stakes and pricey recruitment tactics for NFL and NBA-bound stars, and it will affect athletes at schools trimming their programs. The agreement is poised to resonate in almost every one of the NCAA's 1,100 member schools, brimming with nearly half a million athletes.

The Road to Settlement

Wilken's ruling marks eleven years since she struck the first significant blow to the NCAA's ideal of amateurism by ruling in favor of former UCLA basketball star Ed O'Bannon and others campaigning for the right to capitalize on their name, image, and likeness (NIL). The settlement follows four years since the NCAA gave the go-ahead for NIL income to flow, but it's clear this revolution is even more substantial.

In October 2020, Wilken provisionally backed the settlement, sending schools scrambling to determine how they would manage their new financial obligations and create regulations for an industry that now also permits players to strike deals with third parties, provided they comply with a new auditing group run by Deloitte.

Roster Limits Paused the Progress

Though the deal seemed set since the fall of 2021, Wilken halted proceedings after listening to concerns from players who had lost their spots due to newly introduced roster caps on teams. The limits formed part of a trade-off that enabled schools to provide scholarships to every member of their squad, rather than the fraction that's been customary for decades. Schools started cutting walk-ons in anticipation of approval.

Wilken requested a solution, and, following weeks of deliberation, the parties decided that anyone dumped from a roster (rechristened "Designated Student-Athlete") could reclaim their old spot or join a new team without counting against the new cap.

Wilken Sees Green, Walk-Ons Still Wait

Ultimately, Wilken agreed, addressing objectors' arguments point by point to explain why they held no water.

"The modifications provide Designated Student-Athletes with what they had before the roster limits provisions were implemented - the opportunity to be on a roster at the discretion of a Division I school," Wilken wrote.

Winners and Losers

Deciphering the list of winners and losers is no walk in the park. Predominant winners are expected to be football and basketball stars at prominent schools, who will see a significant share of the budget earmarked for luring and retaining them. Estimates suggest that Michigan quarterback Bryce Underwood's NIL deal amounts to between $10.5 million and $12 million.

In contrast, casualties, albeit less explicit thanks to Wilken's ruling, appear likely to be some walk-ons and partial scholarship athletes whose positions have been usurped. Additionally, the fate of Olympic sports and athletes remains uncertain, as they serve as the primary talent pool for the U.S. team that has dominated the medal tally since the decline of the Soviet Union.

Despite the settlement falling short of resolution on further litigation, its intended purpose remains clear: to place more money in the pockets of athletes who've been generating the profits that drive fans' senses over the course of the football season to March Madness and the College World Series.

In the wake of the historic approval for a significant change in collegiate sports, institutions can now allocate millions to their athletes, starting next month, as part of the so-called House settlement. This settlement, influenced by a landmark lawsuit, aims to distribute over $2.7 billion to former players who were previously barred from revenue sharing, effectively advocating for education-and-self-development and finance opportunities for athletes.

As high-stakes recruitment tactics escalate due to this professionalization of college athletics, anticipated fallout includes high-profile sports stars and athletes at schools trimming their programs. This sweeping change, poised to resonate in almost every one of the NCAA's 1,100 member schools, marks a monumental shift in the US multi-billion-dollar sports industry.

Judge in U.S. grants $2.8 billion agreement, enabling colleges to disburse millions to student-athletes.