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On June 6, 2025, United States District Court Judge Claudia Wilken issued her long-awaited order granting final approval to the multi-billion dollar settlement in the College Athlete NIL Litigation.<a title="" href="#_ftn1" name="_ftnref1">[1]</a> In this pending antitrust case against the NCAA and the “Power Five” conference defendants,<a title="" href="#_ftn2" name="_ftnref2">[2]</a> plaintiffs sought to challenge various NCAA rules that limit compensation and benefits for student athletes. The lawsuit and settlement follow in the wake of the Supreme Court’s unanimous decision in Alston v. NCAA,<a title="" href="#_ftn3" name="_ftnref3">[3]</a> which held certain of the NCAA’s rules limiting benefits to student athletes violated antitrust law. While the settlement seeks to resolve antitrust claims for the next decade, other legal questions remain unanswered, such as whether student athletes are entitled to statutory employment rights and whether Title IX applies to NIL revenue sharing. As such, higher education institutions continue to face significant legal risk in this new era.

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Under the terms of the settlement, approximately 389,700 former and current student athletes will receive $2.576 billion for alleged past damages, with subclasses receiving differing amounts based on the various claims.<a title="" href="#_ftn4" name="_ftnref4">[4]</a> The damages settlement will be paid out over the next ten years, with the vast majority of the settlement funds going to football and men’s basketball scholarship players, with lesser amounts to women’s basketball players and student athletes from other sports. Approximately 60% of the settlement will be funded through reductions to distributions to NCAA member institutions, with the rest coming from the NCAA’s reserves.

Moreover, the settlement will result in ground-breaking changes to college athletics by facilitating direct payment of compensation to student athletes by schools. Beginning as of July 1, 2025, colleges and universities will be allowed to share their athletics revenues by entering into NIL agreements with Division I student athletes. Each school is limited to providing $20.5 million in total NIL revenue share compensation to student athletes per year over a ten-year period. The limit will initially increase 4% annually and will be re-evaluated every three years based on increases in certain sports-related revenues among Power Five conference members. Institutions outside the Power Five conference members may choose to opt into the NIL revenue sharing portion of the settlement at any time during the ten-year settlement period, in which case they will be subject to the same rules and limitations as the Power Five conference members. The final deadline for other schools to opt into the NIL revenue sharing model for the 2025-2026 academic year is June 15, 2025.

Furthermore, new roster limits for each sport will replace prior scholarship limits, typically at levels similar or greater than the prior scholarship limits. However, the schools’ cost of additional scholarships beyond the NCAA’s prior limits will count against the $20.5 million revenue-share limit. In response to Judge Wilken’s stated concerns regarding the impact of roster limits on current student athletes, the parties modified the terms of the settlement to allow current student athletes whose roster spots were, or would have been, lost because of the new roster limits to be exempt from the roster limits for the duration of their college athletic careers. Each school is required to submit a list of those student athletes who will maintain their roster spots as a result of this change within 30 days of the final approval, or by July 6, 2025.

In addition, the settlement includes oversight of third-party NIL agreements. All third-party NIL agreements valued at over $600 must be reported by student athletes to their respective school and a “Designated Reporting  Entity.” In addition, the NCAA and conference defendants are to pass rules requiring that third-party NIL payments by “Associated Entities or Individuals” (i.e. boosters, collectives) be for a “valid business purpose” and at terms similar to those offered to non-student athletes.

Enforcement and Reporting

In accordance with these terms of the settlement, the Power 5 conferences have established a new legal entity—the College Sports Commission (the “Commission”)—to serve as the “Designated Reporting Entity” and provide the governance structure to enforce the settlement. The Commission will have investigative authority to enforce rules related to NIL revenue sharing, roster limits, and third-party NIL agreements. The Commission is separate from the NCAA, and the Commission and the NCAA will have separate compliance oversight responsibilities and jurisdiction. Athletics departments will use a new College Athlete Payment System to report NIL revenue sharing agreements with their student athletes for purposes of compliance with the settlement.

In addition, the Commission and Deloitte have developed NIL Go as the clearinghouse platform for reporting NIL compensation from third-parties to ensure such NIL agreements over $600 satisfy the settlement’s requirements for a valid business purpose and reasonable terms and compensation for such agreements. If the third-party NIL agreements are not approved, student athletes have the option of revising the agreement and resubmitting it to the clearing house, canceling the third-party NIL agreement and refunding compensation received, or appealing the decision to neutral arbitration.

While the settlement resolves multiple challenges to the NCAA’s rules under antitrust law, the court expressly recognized that numerous questions governing the legal and contractual relationships between schools and their student athletes remain unanswered.<a title="" href="#_ftn5" name="_ftnref5">[5]</a> For example, the settlement does not resolve the question of whether student athletes qualify as statutory employees under federal and/or state employment laws. Rather, the settlement recognizes that, if student athletes are determined to have employee status resulting in additional compensation in the future, the defendants have the option to seek to terminate or modify the settlement.<a title="" href="#_ftn6" name="_ftnref6">[6]</a>

The statutory employment question is currently the subject of separate litigation, including Johnson v. NCAA, in which the district court held that student athletes could potentially be considered employees under the Fair Labor Standards Act.<a title="" href="#_ftn7" name="_ftnref7">[7]</a> While the Third Circuit Court of Appeals vacated the Johnson decision based on the district court’s application of the incorrect standard, the Third Circuit remanded the case for review under the proper standard and held “that college athletes cannot be barred as a matter of law from asserting FLSA claims simply by virtue of a ‘revered tradition of amateurism’ in D-I athletics.”<a title="" href="#_ftn8" name="_ftnref8">[8]</a> Following the Third Circuit’s decision, plaintiff filed an amended complaint, and defendants have filed motions to dismiss, which are currently pending before the district court.<a title="" href="#_ftn9" name="_ftnref9">[9]</a>

In addition, the NIL settlement does not resolve whether student athletes have collective bargaining rights as employees under the National Labor Relations Act and/or state labor laws. Rather, the settlement recognizes that, if student athletes gain such rights in the future, the benefits provided by the settlement may be the subject of such collective bargaining. <a title="" href="#_ftn10" name="_ftnref10">[10]</a> While various parties previously brought cases seeking to establish collective bargaining rights for student athletes (e.g., the Dartmouth and University of Southern California cases), those cases were not resolved as of the last presidential election and have now been voluntarily dismissed, likely for strategic reasons in light of changes to the makeup of the National Labor Relations Board under the Trump administration.

Similarly, the settlement does not resolve outstanding issues under Title IX related to the new NIL revenue sharing regime. For example, if compensation to student athletes pursuant to NIL revenue sharing agreements is considered scholarships or grants-in-aid, such compensation could be subject to the Title IX rules requiring proportionate distribution of such financial aid to male and female athletes based on participation rates.<a title="" href="#_ftn11" name="_ftnref11">[11]</a> In the final days of the Biden administration, the Department of Education Office of Civil Rights issued guidance asserting that compensation to student athletes pursuant to NIL agreements is subject to the proportionate participation rule,<a title="" href="#_ftn12" name="_ftnref12">[12]</a> despite the fact that the applicable Title IX rule is expressly limited to “scholarships and grants-in-aid.”<a title="" href="#_ftn13" name="_ftnref13">[13]</a> Shortly thereafter, the Trump administration rescinded this guidance and stated, “Title IX says nothing about how revenue-generating athletics programs should allocate compensation among student athletes.”<a title="" href="#_ftn14" name="_ftnref14">[14]</a>

Absent federal legislation or rule-making, these questions will likely be addressed by courts in response to anticipated litigation by student athletes seeking rights as employees to minimum wage, overtime, and collective bargaining, as well as anticipated Title IX suits by female student athletes seeking a larger piece of the NIL revenue sharing pie.<a title="" href="#_ftn15" name="_ftnref15">[15]</a> As colleges and universities focus on implementing the settlement, they would be well advised to consider strategies to reduce their legal risk related to these questions, such as drafting NIL revenue sharing agreements to reduce employment risks and structuring their revenue sharing distribution to reduce Title IX risk.

Finally, the settlement also fails to address the impact of NIL revenue sharing on international student athletes. Most international student athletes are on F-1 student visas, which have significant limitations on the type of work the student may perform while in the United States.<a title="" href="#_ftn16" name="_ftnref16">[16]</a> The applicable rules do provide limited exceptions allowing some part-time work, although these exceptions relate to on-campus employment that is “an integral part of the student's educational program” or off-campus employment to address “severe economic hardship.” In addition, these exceptions apply to “employment,” a legal relationship that the NCAA and conference defendants assert is not established by NIL revenue sharing agreements. Unfortunately, federal immigration officials have not provided guidance in this area. Accordingly, NIL agreements that include compensation for work in the United States (such as compensation in exchange for promotional activities) raise significant visa compliance concerns for international student athletes, which can be mitigated through the terms and conditions of such NIL agreements.

For further assistance in implementation and compliance with the NIL revenue sharing settlement and related risk mitigation, please reach out to a member of the Michael Best higher education team.

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<cite><a title="" href="#_ftnref1" name="_ftn1">[1]</a> In re: College Athlete NIL Litigation, Case No. 20-cv-093919, U.S. District Court for the Northern District of California, Dkt. 978, Opinion Regarding Order Granting Motion for Final Approval of Settlement (June 6, 2025) (the “Settlement Order”); id., Dkt. 958-1, Fourth Amended Stipulation and Settlement Agreement (May 7, 2025) (the “Settlement Agreement”).</cite>

<cite><a title="" href="#_ftnref2" name="_ftn2">[2]</a> Big Ten Conference, Southeastern Conference, Big 12 Conference, Atlantic Coast Conference, and the Pac-12 Conference.</cite>

<cite><a title="" href="#_ftnref4" name="_ftn4">[4]</a> The proposed settlement of a second antitrust case is also pending before Judge Wilen in Hubbard v. National Collegiate Athletic Association, et al., Case No. 4:23-cv-1593. If the Hubbard settlement is also approved, it will result in payment of an additional $200 million to former and current Division 1 student athletes. Public coverage of these cases has often combined the settlement figures to report a total settlement of approximately $2.8 million.</cite>

<cite><a title="" href="#_ftnref5" name="_ftn5">[5]</a> See Settlement Order at 15; see also Settlement Agreement §A.1(ww) (definition of Unreleased Claims).</cite>

<cite><a title="" href="#_ftnref6" name="_ftn6">[6]</a> See Settlement Agreement, Second Amended Injunctive Relief Settlement §7.2.</cite>

<cite><a title="" href="#_ftnref7" name="_ftn7">[7]</a> Johnson v. NCAA, 556 F.Supp.3d 491 (E.D. Pa. 2021).</cite>

<cite><a title="" href="#_ftnref8" name="_ftn8">[8]</a> Johnson v. NCAA, 108 F.4th 163, 182 (3rd. Cir. 2024).</cite>

<cite><a title="" href="#_ftnref9" name="_ftn9">[9]</a> See Johnson Docket, Case No. 2:19-cv-05230-JP (E.D. Pa.).</cite>

<cite><a title="" href="#_ftnref10" name="_ftn10">[10]</a> See Settlement Agreement, Second Amended Injunctive Relief Settlement, Section 7.2.</cite>

<cite><a title="" href="#_ftnref12" name="_ftn12">[12]</a> Dept. of Educ. Office of Civil Rights, Fact Sheet: Ensuring Equal Opportunity Based on Sex in School Athletic Programs in the Context of Name, Image, and Likeness (NIL) Activities, January 16, 2025 (rescinded). “Compensation provided by a school for the use of a student-athlete’s NIL constitutes athletic financial assistance under Title IX because athletic financial assistance includes any financial assistance and other aid provided by the school to a student-athlete that is connected to a student’s athletic participation; it is not limited to scholarships or grants.” Id. </cite>

<cite><a title="" href="#_ftnref14" name="_ftn14">[14]</a> Dept. of Educ. Office of Civil Rights Press Release, U.S. Department of Education Rescinds Biden 11th Hour Guidance on NIL Compensation, Feb. 12, 2025.</cite>

<cite><a title="" href="#_ftnref15" name="_ftn15">[15]</a> See Settlement Order at 64 (“Thus, to the extent that schools violate Title IX when providing benefits and compensation to student-athletes pursuant to the Injunctive Settlement Agreement, class members will have the right to file lawsuits arising out of those violations.”).</cite>

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