The NCAA Settlement is Not the End of the Fight for College Sports

00;00;00;00 - 00;00;36;08
Mark Conrad
Hello and welcome to the Sports Business Podcast with Prof. C. The podcast that explores the world of professional, collegiate, amateur and Olympic sports. I'm Mark Conrad or Prof. C, from Fordham University's Gabelli School of Business, where I serve as Professor of Law and Ethics and a Director of the Sports Business Initiative. The brave new world of commercial college sports has arrived.

00;00;36;10 - 00;01;11;14
Mark Conrad
After years of litigation and criticism from the media, athletes, and the public. A settlement of three antitrust cases against the NCAA and the major athletic conferences marks a conclusion to these long running and highly publicized cases. If approved by the court, the $2.7 billion settlement announced in late May will, for the first time, craft a system where certain college athletes will earn compensation for their services.

00;01;11;17 - 00;01;41;17
Mark Conrad
No doubt this is a victory for many past and present college athletes. It may well be considered a clever decision by the NCAA and the power conferences, which could have been on the hook for billions more if the case went to trial. But before we open the champagne, there are significant unresolved questions that are not addressed, and that is why this settlement will not mark the end of the battle for the future of college sports.

00;01;41;19 - 00;02;18;28
Mark Conrad
Let's break the settlement down, assuming court approval, and I'll get to that in a bit. It ends three class action lawsuits filed against the NCAA and the so-called power conferences, which were the then five of the most powerful college athletic groups in the country. The settlement requires these parties, along with non-party Division I schools, to pay $2.7 billion in damages to former Division I college athletes who played from 2016 to 2021.

00;02;19;01 - 00;02;56;01
Mark Conrad
That amount would cover damages for name, image and likeness rights they would have earned prior to 2021, and a negotiated percentage of broadcast revenues. About 14,500 players are expected to be paid. Varying dollar amounts. Future college athletes from schools in the power conferences will share $20 million per year for each school, beginning as early as 2025, but important questions have not been determined and important issues remain.

00;02;56;03 - 00;03;21;22
Mark Conrad
First, the judge in these cases must accept the settlement. While this occurs more often than not in antitrust cases, it is not a certainty. The judge may reject all of it or parts of it, and the parties may have to go back to the negotiation table or continue the case. And that process could take months. But let's assume that Judge Claudia Wilkin accepts the settlement.

00;03;21;25 - 00;03;50;13
Mark Conrad
Then the settlement only applies to the three class action cases file known as the House, Carter and Hubbard cases, all filed by the same lawyers, making similar antitrust claims against the NCAA and the power conferences. But there remains a fourth active case titled Fontenot v. NCAA, which is not part of the settlement and still active. Why is this important?

00;03;50;15 - 00;04;22;13
Mark Conrad
Plaintiffs in the House, Carter and Hubbard cases do not have to accept settlement and can seek to continue litigation. It is quite possible that some of these plaintiffs could join the class suing in Fontenot, where different attorneys are representing these athletes. The settlement raises peculiar and troubling questions because non-parties, meaning the Division I schools not in the power conferences will also have to pay their athletes out of their budgets.

00;04;22;16 - 00;05;03;00
Mark Conrad
While it is reported that the NCAA will shoulder over 1.2 of the $2.7 billion settlement. The Power 5 conferences will be on the hook for a considerable percentage, but the so-called “mid-major” schools would have to pay about 40% of that amount over a 10-year period. In addition, the parties have to determine the exact amounts of the payments to the athletes since the payment standards have not been determined. Making this more complex is that the group will be divided into three different classes, with different amounts for each class.

00;05;03;02 - 00;05;35;12
Mark Conrad
I suspect that this would take some time and possibly more negotiations. While we don't know the exact dollars involved, it stands to reason that these schools do not have the athletic department riches that their more powerful schools do, and I suspect that more than one athletic director is not thrilled with being a part of a settlement of a case where their schools are not a party. And that means these departments may have to cut programs or find new methods to raise money.

00;05;35;14 - 00;06;15;09
Mark Conrad
Private equity firms are beginning to sniff at opportunity. While the cases settled our antitrust cases, they do intersect with labor law questions. And that leads to the next issue. The effect of this settlement on the growing calls for unionization of college athletes. The short answer it does not limit unionization efforts. As many of you know, Dartmouth College's men's basketball team elected to unionize as they consider themselves employees under the labor laws and a regional representative of the National Labor Relations Board has agreed with this assessment.

00;06;15;11 - 00;06;42;16
Mark Conrad
The matter is far from resolved due to an appeal by Dartmouth to the full National Labor Relations Board. However, a broad unionization effort could curb the effect or alter the settlement in some cases. The $20 million plus paid to athletes in the power conference schools creates an effective salary cap, averaging around 22% of the revenues from a school's athletic budget.

00;06;42;18 - 00;07;15;17
Mark Conrad
That is far less than the caps found in the NBA and NFL collective bargaining agreements, which are about 50% of revenues earned with some exceptions. If students are deemed employees, will they accept 22% or try to negotiate a collective bargaining agreement with better terms? The NCAA is so concerned about the labor implications that it has pressed Congress to pass a uniform law to exempt students from being considered employees.

00;07;15;19 - 00;07;43;01
Mark Conrad
It would also include a statutory exemption of college athletes from antitrust laws. Thus far, the NCAA and the conferences have not been successful, despite spending an estimated $15 million on lobbying. But that may change in the wake of the settlement. And if enacted, the statute would put to rest the argument whether these athletes are employees and whether they could unionize.

00;07;43;03 - 00;08;18;22
Mark Conrad
And finally, this Title IX, the landmark 1973 law that prohibits discrimination based on gender in schools that receive federal funding. In short, Title IX is interpreted to require equal funding of men's and women's athletic programs. But does that mean that male and female athletes should be compensated equally? If the settlement calculates that students from revenue producing teams (the polite term for football and men's basketball) receive more than women's teams,

00;08;18;25 - 00;08;59;24
Mark Conrad
watch for the potential, even likelihood, of litigation. The settlement of the House, Carter and Hubbard cases marks a new beginning for college athletics, but it does not resolve all of the issues. Any thoughts? Send them to me at [email protected]. Thank you for listening. Until next time. This is Prof. C for the Gabelli Sports Business Initiative.