On June 6, 2025, the Northern District of California in House v. NCAA approved a landmark settlement deal allowing colleges and universities to pay their students directly for their participation in college athletics. The deal between the National Collegiate Athletic Association, its conferences, and lawyers representing NCAA Division I athletes marks another major shift in the NCAA’s policies around the amateurism of student athletes and in their performance compensation. The settlement deal is already raising legal questions in the world of collegiate athletics.
Part of the impetus behind this settlement deal was to help the NCAA and colleges clarify rules around recent changes to name, image, and likeness (NIL) licensing. As we previously discussed, the NCAA allowed collegiate athletes to pursue and benefit from NIL licensing beginning in 2021, leading to an influx of athlete payments and substantially reshaping the landscape of college athletics.
There were an estimated $917 million worth of licensing deals signed by student athletes in the first year of the NIL rule change alone. In response, states have passed their own laws regulating NIL licensing for college athletes, resulting in an uneven patchwork of rules and regulations.
The settlement agreement establishes the College Sports Commission (CSC) with the intent to help standardize and enforce the approach to athlete payments, including NIL payments. The CSC will enforce the settlement agreement’s revenue-sharing provisions between schools and their athletes. Under this framework, schools may distribute up to 22% of their revenue from ticket sales, sponsorship revenue, and media rights, and these media rights include paying players directly for their own NIL rights.
Schools will be allotted $20.5 million of revenue per school and will be required to relinquish their right to sue the NCAA in the event of the dispute over these revenue-sharing policies through a membership or affiliation agreement with the CSC. Additionally, since athletes will still be permitted to license their NIL rights to third parties, the settlement agreement includes a new enforcement program that requires athletes to report any NIL payment over $600. These outside NIL deals will be required to go through a Deloitte-run clearinghouse, NIL-Go, which will help determine whether the deals are fair market value and represent a valid business purpose.
There are already efforts to challenge some of these new requirements. A group of female former student athletes have appealed the settlement in part because the settlement’s NIL revenue-sharing provision, which also applies to a $2.8 billion payout to collegiate athletes who were not able to earn NIL money before 2021, will allegedly result in female athletes being paid less than their male counterparts. The State of Tennessee has tried to obviate the law, inserting provisions in a bill that schools in the state and their affiliates can break the terms of their agreement with the CSC if they deem its restrictions to interfere with the school’s revenue distribution.
The above, and the changes to the structure of NIL rules via the revenue-sharing provision and creation of NIL-Go, will create new legal challenges for the NCAA, its conferences and universities, and its athletes. Even with those new uncertainties, it appears that now is the time to begin preparing for new restrictions to NIL deals and updating templates accordingly as the settlement agreement reverberates through the NCAA ecosystem.