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On June 6, 2025, the Honorable Judge Claudia Wilken approved the $2.576 billion settlement in House v. NCAA, reshaping the economics of college athletics and clearing the way for current and former Division I student-athletes to receive compensation for past restrictions on Name, Image, and Likeness (NIL) rights. More importantly, the settlement solidifies direct revenue sharing. This article dissects Judge Wilken’s opinion granting the Settlement Agreement and the terms of the Settlement Agreement itself.
Why This Settlement Is Different
Unlike NIL reform in 2021, which focused on third-party endorsements, House targeted the NCAA’s restrictions on compensation flowing directly from member schools. At the heart of this case is the NCAA’s enduring prohibition against member schools compensating athletes for their NIL or athletic services—even as television contracts have soared into the billions
What Student-Athletes Get
- Back Pay for Denied NIL Rights: The $2.576 billion settlement fund will be distributed over ten years to class members—current and former Division I athletes denied NIL and athletic compensation opportunities between 2016 and 2024. Nearly 390,000 class members are eligible.
- Direct Payments from Schools: Potentially as early as the 2025–2026 academic year, schools may share up to 22% of the average Power Five school’s average athletic revenue directly with student-athletes, subject to specified yearly increases. This number is colloquially referred to as the “Pool.”
- The “Pool”: In practice, the Pool will operate like a salary cap for Division I athletic departments. However, the Settlement Agreement merely permits the NCAA to modify current rules to achieve that end. The NCAA must determine how the yearly Pool will be calculated, which types of benefits and compensation count against the Pool and in what amounts.
- Expanded Scholarships: The NCAA will lift its caps on the number of athletic scholarships allowed per sport. Experts predict that Division I schools will award more than 115,000 additional scholarships annually.
What Compliance Officers Must Watch
- “Associated Entity” Restrictions Remain: NIL payments from boosters, collectives, and other school-affiliated organizations that are merely incentives to commit, or stay are still prohibited unless they meet a “valid business purpose” test. Therefore, payments from school-affiliated organizations or individuals must be tied to the promotion or endorsement of a for-profit good or service. There are also protections for commensurate compensation, but all in all, this carve-out codifies the “NIL Collective” business model developed since the reform in 2021. Simply put, payments for a student-athlete’s athletic services must go through the athletic department.
- Third-Party Deals: The NCAA cannot restrict NIL payments from unaffiliated third parties. This portion of the agreement is likely to be controversial because of potential partnerships the NCAA or its members may find unfit for their student-athletes, such as sports gambling applications, alcohol, or other controversial sponsors.
- Mandatory Arbitration & Reinstatement: House further protects third-party payments and partnerships by instituting mandatory arbitration upon payment disputes between student athletes and the NCAA and/or their member school. Furthermore, the NCAA and its member schools cannot impose penalties while arbitration is pending, unless the arbitrator finds good cause. The Settlement Agreement also allows for contract rescission and repayment as a path to reinstatement.
- New Roster Limits Instead of Scholarship Caps: While schools can offer more scholarships, they must now comply with sport-specific roster limits. Compliance teams will need to develop new systems for tracking roster eligibility.
- Title IX Compliance: Although the settlement does not directly violate Title IX, the shift toward athlete compensation introduces new risks. Schools must continue to ensure equity in participation, benefits, and financial aid for male and female athletes.
What Happens Next?
Every school participating in the settlement must decide whether to engage in the new revenue-sharing model. Those that do will need to account for budget realignments, Title IX compliance, and enhanced reporting standards. Many of the Settlement Agreement’s provisions require clarification. The mandatory arbitration process, which includes a requirement that the arbitrator issue a written opinion, will gradually rectify ambiguities.
Bottom Line
House v. NCAA is monumental—a structural shift. It signals the arrival of professionalized college sports under the veneer of amateurism. The term “student-athlete” may stay, but its meaning—legally, financially, and operationally—is fundamentally changed.
