Name, Image and Likeness has already forever altered the chemistry of college sports with collegiate athletes now able to earn unlimited financial indemnity for their NIL, but an upcoming settlement ruling could reimburse former Division I athletes $2.75 billion for years of missed NIL opportunities and financial gain.
The U.S. District Court for the Northern District of California’s potential approval of this settlement would also establish a framework of revenue-sharing to combat future concerns of player compensation.
Judge Claudia Wilkin approved the preliminary hearing in October, but the court hosted a final hearing for the settlement on Monday. Wilkin didn’t rule either way but reportedly asked both sides to address some of her concerns in the upcoming days regarding corners over roster limits and the review process for NIL deals.
“See what you can do about all these issues,” Wilkin told the parties via USA Today. “Basically, I think it’s a good settlement ‒ don’t quote me on that ‒ but it is worth pursuing (how) to fix them.”
What is Name, Image and Likeness?
NIL was introduced to college sports after the Supreme Court’s unanimous decision in the 2021 National Collegiate Athletic Association v. Alston case that the NCAA’s policy of prohibiting player compensation was a violation of federal antitrust law. The landscape is still governed by state laws without any strong federal regulation.
NIL is projected to reach a $1.67 billion market evaluation by the end of this year, according to Opendorse, but the industry has remained widely unregulated with legislation varying across states and institutions.
The settlement: former athlete compensation
The nearly $3 billion of funds would be distributed over the next decade among 400-plus eligible athletes, and three components are guiding the distribution: broadcast NIL, video game NIL and lost NIL Opportunities.
High-revenue sports in a Power Five conference – the Atlantic Coast Conference, Big Ten, Big 12, Pac-12 and Southeastern Conference – would take a majority of the back pay with non-Power Five athletes or players of smaller sports receiving various smaller amounts.
Sports Illustrated provides a detailed breakdown of how back pay would be distributed.
Revenue sharing
In addition to reversing back damages, the settlement would create a structured model of revenue-sharing. All Power Five schools are automatically included in the settlement’s annual 10-year revenue-sharing model, while non-Power Five universities would have the option to opt into the terms and agreements.
The initial salary cap is projected around $20.5 million, according to Forbes, meaning each school will have the same $20.5 million allowance to take from its yearly revenue and distribute to its athletes. There isn’t a minimum requirement and each school would have full autonomy in deciding how the revenue, if any, would be shared between teams and individual players.
Perhaps the biggest concern for USC and other schools that opted in to the settlement is deciding how to distribute the money among its teams and players.
“I’m guessing [the revenue-sharing] will be heavily allocated towards the major sports, the revenue-producing sports – football, men’s and women’s basketball – although I don’t know if it’s necessarily profitable at all the schools,” said Annenberg professor Jeff Fellenzer, who teaches a course on business of sports.
Football is the powerhouse of USC Athletics, with men’s and women’s basketball as supporting revenue streams. The three sports are projected to report $181 million in revenue for 2024, according to USCFootball.com. That income would account for a substantial 85% of USC’s total athletic revenue, which CNBC reports at $212 million.
Heisman Trophy winner and former Trojan quarterback Caleb Williams is one example of NIL’s influence in this era of college sports. The Athletic reports that Williams earned $10 million during his final two years at USC from partnerships with major brands like Dr. Pepper, United Airlines and Neutrogena. While Williams left USC as the No. 1 pick in the 2024 NFL Draft, he’s not the only player making six- to seven-figure salaries.
USC football’s incoming recruiting class of 2025 is ranked No. 15 in the nation, according to On3, with an average NIL valuation of $101,000. The Trojans’ five-star quarterback commit Husan Longstreet has a valuation of $897,000, according to Sports Illustrated.
It isn’t always about an athlete’s abilities on the court or field that make them millions.
Former USC men’s basketball guard Bronny James, son of NBA legend LeBron James, held a $5.9 million NIL valuation during his only season (2023-24) with the Trojans, according to Sports Illustrated, despite averaging a mere 4.8 points per game.
Football and basketball teams see the most NIL opportunity due to sports’ popularity and blurred athlete-celebrity personalities.
Front Office Sports reports these sports earn 93.4% of total collectives, leaving a very small margin for all women’s sports and smaller men’s sports, such as tennis.
The Intercollegiate Tennis Association (ITA) sent Wilkin a letter last month concerning possible “irreparable damage” to these smaller sports programs should the settlement receive approval.
“We fear the possible ramifications of student-athletes becoming employees, including the ramifications of the maze of differing state labor and employment laws,” ITA’s website stated.
Given that most universities’ largest sources of income are football and men’s basketball, there is concern regarding potential Title IX violations. Most schools don’t generate the millions of dollars of revenue that USC women’s basketball does throughout the season, along with additional funds from tournament appearances and donations.
Title IX legally requires equal educational opportunities for female and male athletes, including athletic opportunities and equitable distribution of financial aid (i.e. access to travel, locker rooms, per diem, etc.). If schools decide to distribute based on sports revenue, female athletes could suffer a severe lack of opportunity simply because their sport isn’t generating enough revenue.
On the other side of the argument, if revenue was split 50/50 between men’s and women’s sports, programs such as football wouldn’t have enough funds for recruiting, transfer acquisitions or roster retention, and its salary wouldn’t fairly account for the 10s of millions it generates.
USCFootball.com owner and publisher Ryan Abraham agrees that football would take priority in a revenue-sharing model.
“My guess is that USC will give around 75% of the revenue to football and divide the rest between the remaining sports,” Abraham said. “Football drives the bus and needs to be fed. Basketball will get a good chunk and everyone else splits what’s left. Title IX dictates men and women must be paid and the number of athletes from each group will match, but the amount each is paid doesn’t have to be equal and it certainly will not be.”
Collective bargaining agreement
As NIL continues to professionalize college sports, there’s a lot of discussion surrounding whether student-athletes should become direct employees of the university. This relationship could allow for a potential collective bargaining agreement between the two entities that could provide stability by defining employer-employee terms.
With NIL currently unregulated, Abraham believes it’s feasible for USC football.
“In my opinion, collective bargaining is going to be a part of college football in the very near future,” Abraham said. “With player ‘salaries’ climbing and athletic departments paying players directly, college football needs contracts to bring more stability to roster building and management.”
Boosters and collectives– organizations that collect money from individual or organizational donors – will be included in the revenue-sharing budget, but universities are awaiting the settlement’s final hearing to find out whether third-party NIL deals will also have to fit in the salary cap.
House of Victory is USC’s third-party Official NIL Sponsor of USC Athletics and helps set up branding opportunities, trademark rights and advertising for athletes.
Scholarships and roster limits
House v. NCAA’s potential impact extends to scholarship distribution and roster sizes. Schools currently have strict limits on scholarship distribution, but the settlement would allow all teams to give every athlete a scholarship.
Increasing the number of scholarships sounds great, right? While it’s true that every team player would be eligible for a scholarship, the “too good to be true” drawback is new roster limits.
Take baseball for example. It currently has a 41-man roster limit with only 11.7 available scholarships. Following settlement approval, the new limit would be 34. Thirty four players, 34 scholarships, according to Yahoo! Sports.
As for football, the average roster size among Division I teams is 121 with only 85 scholarships, according to ESPN. Following approval, the roster would shrink to 105 spots while increasing available scholarships by 20.
“I hope other sports that have been underfunded for scholarships will be better funded for scholarships,” Fellenzer said. “At least they can get to be further than they are, especially with those that have been very, very underfunded for a long time.”
The settlement ultimately provides more financial opportunity for athletes by granting scholarship eligibility, but a scholarship means nothing for the individuals who are cut from the team.
Wilkin is expected to reach a final decision in the upcoming weeks, according to AP News. Approval would enforce the settlement’s revenue-sharing model beginning the 2025-26 school year.