Objections cloud path to proposed $2.8 billion NCAA antitrust settlement

(CN) — A federal judge questioned on Thursday the National Collegiate Athletics Association and a collection of student athletes over a proposed $2.8 billion antitrust settlement that would revolutionize how student athletes are rewarded for playing sports in college.

The agreement, if approved, would resolve three different antitrust lawsuits that challenged the NCAA’s current rules about student athletes receiving money from third parties, including from endorsement deals and likeness rights for video games.

The deal calls for $2.576 million in damages to be paid to athletes who were denied making money from such deals, going back to 2016. The deal also sets up a new revenue-sharing agreement that would allocate money to student athletes, starting as early as next season, and lasting for the next 10 years.

NCAA Division I schools would also be able to pay their athletes — something that was previously banned — “up to 22% of the Power Five schools’ average athletic revenues each year,” according to the agreement an amount that would start at more than $20 million, and rise to nearly $33 million by the mid-2030s.

Two groups of plaintiffs have objected to the deal, including a number of female athletes who say the agreement is unfairly biased against women.

On Thursday, lawyers for the other plaintiffs and the NCAA tried to defend the proposed settlement, but U.S. District Judge Claudia Wilken had a laundry list of questions, and appeared skeptical over certain aspects of the agreement.

“Do you see a problem with the settlement favoring athletes who played in higher revenue sports?” Wilken asked the plaintiffs’ attorneys.

“We don’t believe [the settlement] favors that,” plaintiffs’ attorney Jeffrey Kessler said. “It traces what would be paid to the athletes.”

Steven Molo, a lawyer for the women objectors, pointed out that the NCAA had been hurting the revenue of women’s sports for years — for example, by failing to market the women’s NCAA basketball tournament in the same way as the mens’. The settlement, he said, failed to take that into account.

“Throughout the history of college athletics, women have been treated as second class citizens,” the two groups of objecting plaintiffs wrote in their objection to the proposed settlement. The settlement, they wrote, “is more of the same,” in that it “vastly favors male athletes (especially football and basketball players).”

“A male football player may receive hundreds of thousands of dollars, while a female swimmer might receive $125 or less,” the objectors wrote.

They also echoed other objections that the deal merely substitutes one “illegal price-fixing cartel” with another one.

Kessler said that the damages were what they were.

“I can’t rejigger the damages to write sex discrimination law,” he said.

Under the terms of the settlement, thousands of former men’s college football and basketball players would receive an average $131,000. Certain players would be eligible for up to $800,000 for “lost opportunity” payments.

The deal, the plaintiffs wrote in the motion to approve the proposed settlement, filed last month, would “have a profoundly positive impact on the tens of thousands of college athletes at the hundreds of colleges and universities that play Division I sports each year.”

The National College Players Association, an athlete advocacy group, has objected to a clause in the proposed settlement that would eliminate so-called NIL collectives — groups set up by alumni and fans to pool donations and distribute that money to certain students, a heavily regulated system that has only existed for a few years.

Wilken said she shared those concerns, saying, “I’ve found that taking things away from people is not too popular.”

NCAA attorney Rakesh Kilaru defended the clause, saying that it was meant to distinguish legitimate compensate for name, image and likeness rights — or NIL — from “pay-to-play” schemes, in which boosters pay athletes to play for their alma mater.

“Our position is that pay-for-play is prohibited,” Kilaru said, adding that the clause, the product of a compromise, set up an arbitration process if an NIL collective is believed to running afoul of the rules — a more fair process than before.

“For us, it’s an essential part of the deal,” Kilaru said.

“We do not expect third-party payments from collectives to be reduced,” Kessler responded. “If anything, we expect them to increase.”

But Wilken said failed to understand the distinctions being made between booster groups and businesses like Nike, seeking to endorse athletes. The definition of booster, she said, was far too murky.

“What if Mr. Fan loves his team and wants to give them all a truck, or a $1million to their favorite player,” Wilken asked. “Is he a booster? I don’t know … How would this ever be interpreted?”

Both sets of lawyers defended the clause as an improvement over the old system. Kilaru pointed out that the payments that athletes currently get via NIL collectives could be stopped by enforcement at any time. But Wilken wasn’t swayed.

“I think we have problems with this,” she said. “I’m going to have to throw it back to you all to come up with something better.”

The parties agreed to work an addendum to the proposed settlement. The plaintiffs said the rewrites wouldn’t be a problem. Kilaru sounded less optimistic.

“Based on the comments, we have to talk about whether or not we have a deal,” he said.

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