The NCAA may need to pay hundreds of millions of dollars to athletes in order to keep a lawsuit out of court.
Amidst the NCAA’s biggest revenue generator, the annual men’s basketball championship tournament, the NCAA’s agreement to pay hundreds of millions of dollars of that revenue to athletes in order to keep a lawsuit out of court is going forward.
The lawsuit, alleging that the NCAA violated federal antitrust laws by capping the value of scholarships that member schools could award athletes, was brought on the behalf of over 40,000 football and men’s/women’s basketball players. Many of those players would be eligible for payment if the NCAA settlement is given final approval.
On Tuesday, a federal judge in California gave preliminary approval to the agreement, set at a figure of $208 million. The firm representing the plaintiffs states that eligible athletes who played their sport for four years can expect to receive $6,500 on average.
In order to be eligible, a person must have played either FBS football, Division I men’s basketball or Division I women’s basketball for an NCAA school on a scholarship for at least one academic term from March 5, 2010 through Tuesday. While the financial benefit for athletes of this settlement is significant, as is the cost for the NCAA, there is a clear motivation for the NCAA to settle this dispute out of court.
Had this suit gone to court, the NCAA was running a huge risk. The suit argued that the NCAA was illegally colluding to put artificial limits on the value of the services that the athletes provided. Had that argument been supported by a federal court, it would have established a legal precedent that FBS football players and DI men’s/women’s basketball players are not students participating in extra-curricular activities, but rather employees of the NCAA-member institutions. That’s a legal precedent that the NCAA will pay anything to avoid setting right now.
It’s possible, perhaps even likely, that future litigation along similar lines might change the current status quo. Eventually, the cost of keeping these cumulative cases out of court might prove more of a drain on the NCAA’s resources than establishing a system to monetarily compensate athletes would be. When that threshold is reached, it’s feasible that the NCAA will go about establishing such a program.
Until such a time, however, expect the NCAA to do more of what it’s done in this case. This NCAA settlement is a small win for athletes, but ultimately it maintains the status quo and that’s a bigger win for the NCAA.