Settlement designed to pay college athletes gets preliminary approval

College athletes on Monday moved a significant step closer to a future in which their schools could pay directly.

Judge Claudia Wilken granted preliminary approval of the terms of an industry-changing antitrust settlement Monday morning, adopting a series of changes made by attorneys representing all Division I athletes, the NCAA and its Power Five conferences.

Wilken initially raised concerns that some elements of the settlement would limit future payments to players and fail to make legal submissions, but he wrote in his ruling this week that the court “will likely be able to approve the settlement as fair, reasonable and adequate.”

Wilken’s order also laid out a timetable for the remaining steps to finalize the deal. Any athletes affected by the settlement have until Jan. 31 to object or opt out. A final hearing to approve the deal is scheduled for April 7, 2025 — coincidentally the same day as the men’s basketball championship game.

In May, attorneys for all sides agreed to settle a trio of lawsuits (House v. NCAA, Hubbard v. NCAA and Carter v. NCAA) that claimed the association’s rules were illegally limiting the earning potential of college athletes. The NCAA has agreed to pay nearly $2.8 billion in damages to former and current college athletes.

The agreement also eliminates restrictions on schools directly paying their players that have long been a cornerstone of the NCAA’s unprofessionalism rules. If the settlement is finalized, schools will be able to pay their players up to a certain limit starting next year. The cap will start at a little more than $20 million per school and is expected to increase on an annual basis.

“We are thrilled that we are one step closer to a revolutionary change in college sports that will allow NCAA athletes to share in billions in revenue,” said Steve Berman, co-lead counsel for the plaintiff class.

Berman and fellow plaintiff attorney Jeffrey Kessler will begin sharing more information about the details of the settlement with athletes at all Division I schools later this month. By December, all athletes participating in Division I sports since 2016 will be able to get an estimate of how much they can get from the loss pool.

NCAA President Charlie Baker previously said the settlement is a key step toward changing the economic model of college sports to one where athletes can be paid without being considered employees. Baker said this summer that the NCAA will still need help from Congress to fend off several pending legal challenges that claim college athletes should be considered employees of their schools.

“We are thrilled with Judge Wilken’s decision to grant preliminary approval of the landmark settlement that will help bring stability and sustainability to college athletics and provide enhanced benefits for student-athletes for years to come,” Baker said in a statement Monday.

“Today’s progress is a significant step in writing the next chapter for the future of college sports. We look forward to working with all Division I, and student-athlete leadership groups in particular, to move historic change forward.”

Wilken gave preliminary approval to the terms of the deal, despite objections raised over whether the settlement fairly allocated damages. The plaintiffs estimate that about 90% of the $2.8 billion will go to football and men’s basketball players because broadcast rights to those games generate the bulk of revenue in college sports.

Multiple teams told the judge they believed such allocations would be unfair to female athletes and could violate federal Title IX laws. As part of the settlement, the athletes must agree to waive their right to file a Title IX lawsuit over damages.

Other objectors also raised concerns about a part of the agreement that would allow the NCAA to place restrictions on a defined group of third-party boosters and the name, image and likeness agreements they can strike with college athletes. The bans are designed to stop the current system of NIL-based conglomerates that use endorsement deals to attract and retain players to a particular team.

Moving the sums would place a stricter cap on what each team is able to spend to build its roster.

Wilken said during a preliminary approval hearing in early September that he thought the ban on aggregation could be considered an illegal restraint. He also indicated that it would be difficult to determine which third-party groups the NCAA could restrict. Attorneys for the plaintiffs submitted new language in late September defining the disputed term more narrowly.

The settlement is likely to face continued scrutiny from those who have already objected to some of the restrictions, including at least one group of athletes who filed a separate antitrust lawsuit last November.