American university sports move passions and, with it, billions of dollars. Until now, however, athletes only received a few crumbs of the income pie derived from full stadiums and pavilions and high television audiences. This Thursday, the NCAA, the organization that governs university sports, and the main leagues associated with it have signed a historic agreement that will involve a disbursement of billions to athletes, as announced by the parties involved.
The settlement, which must still be approved by the federal judge overseeing the case, ends a series of class-action lawsuits by athletes who retroactively demanded compensation for their services, alleging an abusive monopolistic position by the NCAA. In addition, it implements income sharing with players, opening the way to a certain professionalization of university sports, especially in American football and basketball competitions, which have the greatest following.
According to the firm representing the plaintiffs, Hagens Berman and Winston & Strawn LLP, the settlement will radically change the economic model of college sports and provide billions of dollars in damages and tens of billions of dollars in future revenue. shared to college athletes.
The out-of-court settlement has been reached between the plaintiffs, the NCAA and the five major college sports conferences (Big Ten, SEC, Pac-12, Big 12 and ACC, known as Power 5, which group together 69 prominent universities). The settlement resolves three pending antitrust lawsuits (House v. NCAA, Hubbard v. NCAA and Carter v. NCAA) that challenged the NCAA’s limits on the compensation and benefits college athletes can receive for their athletic services and names. and image rights.
College sports organizations have agreed to pay more than $2.75 billion in damages to about 14,000 past and current college athletes over a 10-year period. Additionally, the agreement eliminates certain NCAA and conference rules that prohibit direct payments from universities to athletes. The agreement also allows schools to share revenue directly with college athletes.
Although not all details are known, in the first year of the agreement, each university can share 22% of the average revenue of Power 5 universities, which is currently projected to far exceed $20 million annually per year. university. These new payments and benefits are in addition to the scholarships, image payments to third parties, health care and other benefits that university athletes already receive and that have been increasing over time. Universities can choose to make the new payments and benefits to athletes who practice any sport. The agreement also eliminates NCAA scholarship limits to open the door to more opportunities in all sports.
The value of new benefits and payments that can be provided to college athletes under the agreement will grow each year as revenue from college sports increases. Over the 10 years of the deal, attorneys estimate the total value of new payments and benefits that can be shared with college athletes will exceed $20 billion, making it one of the largest class-action antitrust settlements in history. , according to Hagens Berman and Winston & Strawn LLP.
American university sports already attract talent from all over the world with its scholarships and benefits and as a gateway to professional competitions, but this rain of money can increase the attraction for young university athletes from all over the world.
The discussion about the distribution of university income had even reached the United States Supreme Court, which had censured the system in force in a case related to benefits linked to education. “The bottom line is that the NCAA and its member universities are suppressing pay for student-athletes who collectively generate billions of dollars in revenue for the universities each year,” the ruling said.
“This historic agreement will bring college sports into the 21st century and allow college athletes to finally receive a fair share of the billions of dollars in revenue they generate for their universities,” said Steve W. Berman, partner director and co-founder of Hagens Berman. “Our clients are the foundation of the NCAA’s multi-billion dollar business and will finally be able to be compensated equitably and solely for their extraordinary athletic talents,” he added.
Those responsible for the NCAA and the five major leagues They have issued a joint statement. “The agreement between the five autonomous conferences and the NCAA is an important step in the continued reform of college sports that will benefit student-athletes and provide clarity in college athletics in all divisions for years to come,” they indicated. “This agreement is also a roadmap for college sports leaders and Congress to ensure that this unique institution in the United States can continue to offer unmatched opportunities to millions of students,” they added.
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