Proposed settlement of NCAA lawsuits leaves Power Four schools one choice

Settling the anti-trust lawsuits against the NCAA is the only viable financial option. The Power Four schools have no choice but to choose that option.

The men and women who control college sports have only one financial option. The three anti-trust cases against the NCAA must be settled. According to a Yahoo story and the excellent reporting of Ross Dellenger, the cases can be settled at a cost to the NCAA of $2.77B. If not settled, the NCAA will lose all three court cases. Losing the cases is projected to cost the NCAA "$20B in back damages."

At $20B, the NCAA would be forced into bankruptcy. The next step would be for the plaintiffs to seek payment of the damages from schools through their conference affiliations.

It had been discussed that the NCAA would pay the $2.77B settlement. Technically that is correct, but as Dellenger explains, subsequently the NCAA would lower its payouts to conferences for 10 years. The reduced payouts would result in conferences funding 60% of the $2.77B. It is estimated in the power conferences, schools would receive from the NCAA $1M - $2M less per year.

A memo was distributed to school presidents and administrators explaining a potentially more catastrophic result. Without a settlement, the projected $20B in damages would be due at the conclusion of the court cases. Payment would not be spread out over 10 years.

Any school president or administrator who believes there is a choice to be made about settling the cases is delusional. Not even severing relationships with the NCAA and creating a new entity to oversee college sports could protect schools from back pay obligations.

Fortunately, the settlement discussions also provide a realistic plan for moving forward, while reducing the risks of future anti-trust litigation. Dellenger explained what would come after settling the damage claims, "a new compensation model permitting schools to share as much as $22 million annually with athletes in a capped system; and an overhaul of the NCAA scholarship and roster structure."

The new plan cannot cure all ills. NIL entities, external to universities would continue to facilitate funds for athletes. That would be no problem if NIL was used consistent with its original intent. There is every reason to expect NIL would still be used as 'pay for play' and that the NCAA would have no success in controlling it.

Perhaps the best news in the saga came from Dellenger. He said the plaintiffs are willing to help persuade the federal government to consider an anti-trust exemption for the NCAA. Such an exemption could lead to a much cleaner compensation model that includes collective bargaining.