House v. NCAA Settlement Approved, Changing the Landscape of College Sports

The House v. NCAA class action settlement is set to redefine collegiate sports by creating a mechanism for past and future players to be compensated for the use of their Name, Image and Likeness (NIL). On June 6, Judge Claudia Wilken did just that, issuing final approval for the settlement agreement in House. Assuming no appeals, the settlement is now final and effective.

The settlement amount to be paid by the defendants—the NCAA and its major conferences—totaled $2.576 billion, which is to be paid out in annual installments over 10 years. The award is broken up in the following ways:

The NIL Claims Settlement is intended to compensate players directly for prior use of their NIL. The Additional Compensation Claims Fund is intended to address “pay-for-play” claims—distinct from NIL claims—by athletes who performed athletic services above the value of a scholarship.

In addition to the settlement damages award, the Court also ordered the defendants to take five actions:

• Create revenue-sharing pool for direct athlete compensation
  • Opt-in Schools provide direct compensation to Division I athletes up to 22% of the average annual athletic revenue of Power Five schools.
  • The pool is estimated to start at over $20 million per school in 2025-26 and rise to $32.9 million by 2034-35, totaling at least $19.4 billion in new athlete benefits over 10 years across all major conferences.
  • Applies to all Division I sports, not just football and basketball.
• Eliminate Scholarship Limits
  • NCAA must eliminate the scholarship caps challenged in the lawsuit.
  • Schools may now offer as many scholarships as they wish, subject to new roster limits (see below).
  • Over 115,000 additional scholarships could be available annually for Division I athletes.
• Modify NIL Restrictions
  • NCAA may continue to restrict NIL payments from certain school-associated boosters, but those restrictions are narrower than before. Includes affiliates who contribute $50,000+ to a school or athletic program.
  • NIL payments from all other third parties are allowed and cannot be prohibited by the NCAA.
  • All associated and unassociated entities/Individuals can make NIL payments if for a valid business purpose at market rates for non-athletes.
• Keep roster limits with grandfathering for affected athletes
  • NCAA may adopt roster limits for Division I sports.
  • Athletes whose roster spots were or would have been eliminated due to the new limits are exempt from roster caps for the remainder of their eligibility. They do not count toward any school’s roster limit, and they are labeled Designated Student-Athletes (DSAs).
  • DSAs can transfer back to their original school without restriction if they left because of the new roster rules.
• Use neutral arbitration to resolve NIL disputes
  • Disputes about enforcement of the new NIL restrictions must be resolved by neutral arbitration, not the NCAA alone.
  • No penalties may be imposed while arbitration is pending (unless good cause is found), and arbitrators must issue written decisions.

Who Gets the Settlement Award?
A total of 101,935 athletes are set to receive their settlement award. This number represents those who timely opted into the class by submitting a claim form, which represents approximately 26.2% of the estimated 389,700 possible class members.

The Court found that the relief provided by the settlement was fair and reasonable considering the exceptionally positive reaction of the settlement class members, the over 26% participation of the estimated 389,700 potential class size, and only 73 valid objections and 357 opt outs.

Roster Limit Implementation
In April 2025, Judge Wilken refused to approve the parties’ settlement agreement. Judge Wilken’s sole concern with the settlement language pertained to the immediate implementation of roster limits, set to take effect July 1. Her concern was that the immediate implementation would eliminate (and now has eliminated) thousands of roster spots of current NCAA athletes.

To address this final sticking point, the parties came back on May 7, with a tweak to the roster limit language in the settlement agreement. With the newly proposed language, student athletes cut from rosters in anticipation of the roster limits would not count towards the limits. High school students who had scholarships retracted because of the proposed roster limits would also be exempt.

However, it would remain at each school’s discretion to reinstate student athletes who have been cut from their teams due to the impending roster limits. In Judge Wilken’s ideal world, the parties would have instead included settlement language mandating that schools bring back all student athletes cut due to the roster limits. But the judge ultimately determined that this tweak would suffice, memorialized by her issuance of the settlement’s final approval.

What Happens Now?
Now most of the decisions are back in the schools’ hands on how they are going to effectuate and change following the House settlement. The pertinent questions are how roster limits paired with unlimited scholarships change the landscape going forward and how schools will distribute the $20.5 million in revenue sharing created by the settlement.

According to news reports, roster limits are expected to cut nearly 5,000 athletes from teams across the NCAA. A limited number of sports may see increased roster sizes, but most will be trimmed despite the ability to offer unlimited scholarships. Football rosters will shrink to 105 players (some schools had 180 players), though most schools are expected to exceed those limits for at least the coming years due to grandfathered-in current athletes.

Nothing in the House settlement controls how schools are to divide the $20.5 million revenue pool. Most schools are expected to mirror the back-payment formula outlined in the settlement: 75% future revenue to football, 15% to men's basketball, 5% to women’s basketball, and 5% to all remaining sports.

Some schools have opted to simply mirror the gross revenue each sport averages, which could lead to an even more outsized share going to football. Other schools have even opted to keep the allocation amounts confidential to increase competitive advantages in the recruiting process.

Expect more litigation to come over exactly how schools will divide the revenue pool to athletes. The possible variations are prompting many to call for federal regulation to preempt or add uniformity across the post-House NIL scene. An immediate unifying factor is a new College Sports Commission, headed by former MLB executive Bryan Seeley.

Following the House settlement, the NCAA will no longer enforce most of its rules, and so the College Sports Commission will step in as a neutral arbitrator to enforce and punish for violations of NIL rules. Seeley and the commission will play a key role in regulating school associated collectives and boosters, who no longer can give athletes NIL deals without a “valid business purpose” or above the “fair market value.”

Takeaways
The House v. NCAA settlement represents a seismic shift in the collegiate sports landscape, marking the formal end of the NCAA’s amateurism model, and ushering in a new era of direct athlete compensation. With final approval by Judge Wilken, nearly $2.6 billion will be distributed to past and present athletes over the next decade, compensating them for missed NIL opportunities and pay-for-play claims.

The settlement also establishes a forward-looking framework allowing schools to share up to $20.5 million annually (and rising) in revenue with athletes. The settlement eliminates scholarship caps, introduces roster limits, and narrows NCAA control over NIL payments.

But it leaves key implementation decisions in the hands of individual schools. The lack of a mandated distribution model for schools leaves room for significant variability—and likely future disputes—over how these funds are allocated.

The House settlement sets the stage for ongoing legal, regulatory, and competitive changes that will define the next chapter of college athletics.

Please contact Steven Blank, Candace Gregory, Patrick Judd, Rhett Parker, Michael B. Victorian or any member of Phelps’ litigation or media, sports and entertainment teams if you have questions or need advice and guidance.