NCAA Settles for Survival

Battered by a string of legal losses, bruised by its own incompetence and increasing irrelevance, and faced with the very real prospect of bleeding out, the NCAA last Thursday found a way to stay alive and perhaps ensure its salvation for another decade.

It was aided and abetted by the Power 5 Conferences, who acted in their own self interest and, frankly, made out like bandits.

The six organizations--NCAA and the Big Ten, SEC, ACC, Big 12 and Pac-12 (which endures as a defendant in multiple legal proceedings)--agreed to pay $2.77 billion in NIL (Name, Image and Likeness) back damages to former players and agreed to allow schools to pay athletes more than $20 million per year in revenue shares going forward.

It's a decision that will completely alter the landscape of college athletics and force the NCAA to give up its most cherished principle.

In settling three antitrust lawsuits, most notably the "House vs. NCAA" case, the NCAA and its partners avoided a near-certain loss in the court of law and potential treble damages of up to $20 billion, according to some estimates.

And by agreeing to let "student-athletes" be paid directly by the schools they compete for, the NCAA officially conceded that its 100-year fight to preserve the concept of amateurism is over. Dead and gone.

The "House vs. NCAA" case began in 2020 when Arizona State swimmer Grant House and others sought back pay for athletes who had been barred from earning compensation for the use of their likeness, along with a cut of future broadcast revenues.

It has been looming like a black cloud over the NCAA and its members for the past four years.

Though there are many details to be worked out over the next several months, the main components of the deal are as follows:

* First, the NCAA agreed to pay $2.77 billion in damages for potential NIL compensation dating back to 2016. The money will be paid over a 10-year period. It is not clear how it will be distributed and who the beneficiaries will be, but most of the dollars are expected to go to football and men's basketball players from the Power 5.

* The NCAA will be responsible for paying 41% of this sum, roughly $1.2 billion, from its reserves.

* The power conferences will be liable for about 24 percent, payable in revenue withheld by the NCAA. The remaining 35 percent will be paid (again through reduction in NCAA member disbursements) by Group of 5 conferences (10%), FCS Schools (about 13%) and non-football D1 schools (about 12%). 

* It is unclear how many plaintiffs there will be in the case who receive damages. Estimates range between 10,000 and 15,000. If 15,000 receive equal shares, the average pay per athlete would be about $180,000 over 10 years.

* Second, the NCAA will allow, but not require, schools to pay athletes some of the revenue they generate. The agreement calls for schools to pay athletes 22% of the "average annual athletic department revenue" among schools in the top conferences, which is projected to be more than $20 million per school per year. The cap would grow each year as revenues increase.

*  Schools can opt into the revenue model and decide which athletes in which sports they want to pay. Without question, Title IX considerations will come into play here.

* The revenue sharing paid by the schools is described as being an "addition to scholarships, third-party NIL payments, health care and other benefits college athletes already receive."

* NCAA scholarship caps will be eliminated by the settlement and be replaced by roster limits. No details or specifics have been provided yet.

* The terms will be submitted for preliminary approval to Judge Claudia Wilken of the U.S District Court of Northern California (who seems to get all the NCAA cases). Then all those in the past damages and future revenue-sharing classes will have the opportunity to opt out or object to the agreement, which then goes back to Wilken for final approval.

A couple of observations from this corner:

Rich Get Richer: Power 5 athletes, primarily in football and men's basketball, will receive an estimated 90% of the payments from the House vs. NCAA settlement. But the Power 5 conferences will fund only about one-quarter of the payouts. The other 27 conferences will fund a little over a third of the payouts.

The other conferences are getting the shaft.

Super League? In my mind, this settlement probably scuttles, or at least delays, the creation of a "super league" of the top 30 or 40 football schools. 

Why? The top schools now have about $2 billion reasons to keep the NCAA and other conferences around for the next 10 years. 

Some realignment is still inevitable, but the big conferences need the NCAA and the little guys to remain solvent for another decade, so they can pick up the bulk of the House settlement.

Chasing the Bag: If you were still wondering why USC, UCLA, Oregon and Washington defected to the Big Ten, their fears of potential litigation played a major role. The BIG's new $8 billion TV contracts will make it much easier for its members--both new and old--to cover the House settlement costs.

Employees? Some questions remain. Many athletes are fighting to be recognized as employees. What if they win the right to collective bargaining? What happens then?

Fan Turnoff? Will fans stay engaged? NIL, the transfer portal and conference realignment didn't do it, but could this agreement start turning off college sports fans?

Cost-cutting: Will cash-strapped athletic departments in conferences other than the Big Ten and SEC consider seeking private equity partners or start cutting the layers of administrative bloat we've detailed in previous posts?

The Fallout: As for the future of non-revenue sports, there's no doubt that the axe will fall on many Olympic sports teams throughout the country.

Collateral damage, you might call it, from the increasing professionalization of college football and basketball.

Which, in my book, is a crime.

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Latest Chapter in Sleazy Rashada Saga

It was only a matter of time.

With highly sought-after recruits now being offered seven and eight-figure NIL contracts by newly-formed--and in some cases, short-lived--donor collectives, it was only a matter of time before a player went after a coach, booster or collective when a big deal fell apart.

Last week quarterback Jaden Rashada sued Florida coach Billy Napier, former UF staffer Marcus Castro-Walker and university booster Hugh Hathcock (yes, that's apparently his real name) for making "false and fraudulent promises" to induce Rashada to give up a lucrative offer from another school to sign with the Gators instead.

Rashada, a four-star quarterback from Pittsburg (CA) H.S., initially committed to Miami in June 2022, prior to his senior year in high school, and landed a $9,5 million endorsement deal with a Hurricane booster.

Five months later, he flipped to Florida after signing a four-year $13.85 million contract with the (now defunct) Gator Collective. The deal would be funded by mega-donor Hathcock.

But within a few weeks the collective terminated the deal before a $500,000 signing bonus was due.

Florida wound up releasing Rashada from his letter of intent in January of 2023 and fired Castro-Walker a month later. Napier is still on the job.

Rashada, with the Gators' offer having gone up in smoke and Miami no longer interested after being left at the altar, eventually signed with Arizona State. He started the season-opener as a freshman, but hobbled by injuries, played in only three games.

He recently announced his intention to transfer to Georgia. That means he's been committed at various times to four schools--Miami, Florida, Arizona State and Georgia. And he's only a sophomore.

Rashada's suit, filed in U.S. federal court in Pensacola, alleges six counts of fraud and seeks damages of at least $10 million, roughly the amount he'd have received from Miami.

“Sadly, this type of fraud is becoming more commonplace in the Wild West that is today’s college NIL landscape,” said Rashada's attorney, Rusty Hardin. “Wealthy alumni, consumed by their schools’ athletic programs, are taking advantage of young people by offering them life-changing sums of money, only to renege on their commitments."

Rashada is the first "scholar-athlete" to file a lawsuit over an NIL deal gone bad.

He won't be the last.