The immediate takeaway from the landmark $2.8 billion settlement accepted Thursday by the NCAA and major sports conferences was that it directly contradicts the very core of the organization's cherished model of amateurism: schools can pay athletes directly.
But another fundamental principle remains intact, and preserving it is likely to be a priority for the NCAA: players who are paid by universities are not employed by the universities and therefore do not have collective bargaining rights.
“Congress must establish that our athletes are not employees, but students pursuing college degrees,” Notre Dame President John I. Jenkins said in a statement announcing the agreement.
It's an attempt by the NCAA to salvage the last vestiges of the amateur model that for decades has barred college athletes from receiving compensation from their schools or anyone else without losing their eligibility. That stance has come under increased legal and political scrutiny in recent years, leading to a settlement that still needs to be approved by a judge.
On the surface, this argument may seem odd. Over the past decade, public pressure, a series of court decisions, and the reality that college sports generate billions of dollars in revenue a year but players receive none of it have forced the NCAA to remove restrictions on player compensation. A California law made it illegal to block name, image, and likeness (NIL) contracts for college athletes, paving the way for players to demand compensation, some of which can earn seven figures a year.
At the same time, college sports has become increasingly a national enterprise. Regional rivalries and traditions have been ignored as schools switch conferences in pursuit of TV rights revenue. Individual conferences now stretch from Palo Alto, Calif., to Chestnut Hill, Mass., and athletes in different sports spend more time traveling to games and less time on campus.
“It's hard not to call them employees at this point,” said Adam Hoffer, director of excise tax policy at the Tax Foundation and a former economics professor at the University of Wisconsin-La Crosse. “The NCAA is going to become more like a professional league than it's ever been.”
But the stance fits with the NCAA's longstanding position that classifying athletes as employees could signal the end of college sports. In February, the association's president, Charlie Baker, argued that “95 percent” of college athletes would be harmed by a ruling that would classify them as employees, and said Congress needed to enact laws to protect them. He said many universities outside the so-called power conferences are already losing money from sports, and that paying players more could lead some to drop teams.
Many details remain unclear about the settlement, which stems from an antitrust lawsuit. If approved by a federal judge in California, the schools will decide how to distribute up to $20 million in revenue set aside for distribution to athletes.
With the settlement, the NCAA hopes to receive an antitrust exemption from Congress that would protect it from further lawsuits over compensation that it says would undermine its ability to make its own rules. In recent years, the organization has spent millions of dollars lobbying the government to create an antitrust exemption similar to the one enjoyed by professional baseball.
The settlement is also an attempt by the NCAA to cap how much leagues should pay players, said William W. Berry III, a University of Mississippi law professor who has studied player-compensation issues in college sports. Under the formula proposed by the plaintiffs in the lawsuit, the settlement would pay players about 22% of their future earnings. That's far less than what professional leagues like the National Football League or National Basketball Association pay players, Berry noted.
“What they've done with the settlement is said, 'We're going to share a portion of the proceeds with you,'” Berry said, adding that a loss in court would have meant even more money would have gone to the players, which could have been financially devastating for the NCAA.
Since being allowed to play NIL, players have been seeking collective bargaining. In February, a federal court in Boston ruled that players on Dartmouth's men's basketball team have the right to unionize and should be considered employees. Dartmouth is appealing the decision. At the University of Southern California, football and basketball players are seeking the right to unionize and be classified as employees. The settlement could bolster those claims.
“One of the hallmarks of employment is that you're paid for services,” said Matthew Mitten, a law professor at Marquette University and executive director of the National Sports Law Institute.
But the settlement alone is unlikely to lead to any major unionization efforts in college sports. Dartmouth is a small, private school in New Hampshire, which has unionization-friendly laws. Many of the football powerhouses, including the University of Alabama and the University of Georgia, are in states with labor rights guarantees, and unionization efforts there face stiff legal and political obstacles.
And for some athletes at the most revenue-generating schools, earning compensation without joining a union may be a preferable way to go.
“I think it's pretty unlikely that players from the Power Four schools would want to unionize,” Mitten said, referring to the Atlantic Coast, Big Ten, Big 12 and Southeastern conferences.
But even if players aren't called employees, the NCAA faces big changes.
“The fact that schools will likely be required to pay these athletes means that their existing business model will have to change,” Hoffer said.