The proposed settlement in House v. NCAA represents a transformative shift in collegiate athletics, introducing sweeping changes to athlete compensation and the operation of athletic programs. Although the settlement aims to bring stability to college athletics in the NIL era, several of its key components raise new questions that are likely to spark additional litigation. If Judge Wilken approves the settlement at the fairness hearing scheduled for April 7, 2025, the following issues will likely be focal points for future legal disputes.
The Legality of a Cap on Revenue-Sharing
The proposed settlement permits Division I schools to allocate up to 22% of the average annual athletic department revenue of a “Power Five” school directly to their respective athletes. In 2025, this figure is projected to be approximately $22 million.
Payments counting toward this cap include Alston awards (up to $2.5 million), scholarship awards exceeding limits previously set by NCAA Division I rules (up to $2.5 million), and any direct payments or personal benefits provided by the school to athletes or their families beyond what NCAA rules historically allowed. However, excluded from the cap are NIL payments from third parties, including those facilitated by the school acting as a marketing agent for the athlete. Still, as detailed below, third-party payments from certain parties (mainly, collectives and boosters) must qualify as “true NIL” to be exempt.
Disputes are almost certain to arise over whether specific payments meet the above criteria (and thus count toward the cap). For instance, questions may emerge about whether an athlete received payments from a legitimate third party—which would not count toward the cap—or from an entity posing as a third party but effectively controlled or operated by the school, in which case the payment would count toward the cap.
In addition to challenges to individual payments, the cap itself will likely face legal scrutiny as an unlawful restraint on compensation, particularly because it was not collectively bargained. Although the NCAA has sought legislative protection from Congress against future antitrust lawsuits, those efforts have largely been unsuccessful. A successful challenge to the cap in future litigation would bring athletes closer to being classified as employees, paving the way for collective bargaining agreements to replace the framework established by the House settlement.
Applicability of Title IX
Title IX requires schools to provide equal opportunities for men and women in their athletic programs. In short, schools subject to Title IX must allocate scholarships and other benefits to male and female athletes in proportion to their participation in athletics.
While subject to future legal challenges, Title IX is unlikely to bar the payment of back-damages to athletes who opt into the settlement, because the parties have released Title IX claims regarding such damages. However, what is less clear is whether Title IX will apply to future payments under the prospective revenue-sharing framework established by the proposed settlement.
Some legal experts argue that revenue-sharing payments made directly from a school to an athlete fall outside the scope of Title IX, particularly when structured as compensation for a license to use the athlete’s NIL. Others maintain that any payments made by an athletic department to its athletes constitute financial assistance and therefore must comply with Title IX.
In light of the uncertainty, schools will continue to take different approaches based on their own risk tolerance. Some will opt to distribute revenue evenly between men’s and women’s sports (or proportionally, based on participation rates), while others may allocate a majority of the funds to revenue-generating sports, which typically include football and men’s basketball. However, as NCAA President Charlie Baker has noted, either approach could prompt litigation—whether from athletes in revenue-generating sports claiming an unfair share of the revenue split, or from female athletes alleging that the school’s unequal revenue distribution violates Title IX.
Without clear guidance from the Department of Education or its Office for Civil Rights, the question of whether and to what extent Title IX applies to revenue sharing will likely be decided by future litigation.
Defining the Scope of “Associated Entities or Individuals”
Under the proposed settlement, all third-party NIL deals exceeding $600 must be reported. However, NIL agreements involving “associated entities or individuals,” regardless of value, are subject to a fair-market-value (FMV) assessment to determine whether the compensation qualifies as “true NIL.” Consequently, determining whether an individual or entity qualifies as an “associated entity or individual” is critical, as it triggers the FMV assessment.
Litigation is likely to play a key role in clarifying the scope of “associated entities or individuals.” While collectives and boosters clearly fall under the definition of “associated entities or individuals,” the term’s full scope is uncertain. For instance, the settlement’s definition includes any individual or entity that “has assisted in the recruitment or retention of prospective or current student-athletes.” But what qualifies as “assist[ing] in the recruitment or retention of prospective or current student-athletes”? Could a supportive tweet about a player bring an individual within this definition?
Although the settlement broadly defines associated entities and individuals, schools—led by their collectives and boosters—are likely to explore creative strategies to funnel money to athletes through sources that fall outside this definition, thereby avoiding the FMV assessment. Efforts to test these boundaries will almost certainly lead to further litigation.
4. Assessing Fair-Market Value
As explained above, the proposed settlement makes third-party NIL agreements involving “associated entities or individuals” subject to a fair-market-value (FMV) assessment. Specifically, the settlement empowers the NCAA to prohibit payments from such individuals or entities unless the payments serve “a valid business purpose related to the promotion or endorsement of goods or services provided to the general public for profit, with compensation at rates and terms commensurate with compensation paid to similarly situated individuals with comparable NIL value who are not current or prospective student-athletes at the [school].” This requirement will apply to any agreement signed after the settlement receives final approval, and to existing qualifying agreements that include payments made on or after July 1, 2025.
Determining the FMV of an athlete is inherently challenging due to the numerous factors—many of them intangible—that influence an athlete’s marketability. The NCAA has indicated that it will hire Deloitte to evaluate the FMV of athletes’ third-party NIL agreements. However, as prominent sports attorney Tom Mars has pointed out on X (@TomMarsLaw), Deloitte itself has acknowledged that calculating “the potential [return on investment] for brands investing in student-athletes through NIL is speculative.”
The NCAA may leverage new technologies to refine its FMV assessments, such as Opendorse’s recently launched platform, which uses a formula considering factors like an athlete’s association, division, conference, school, sport, position, accolades, existing deals, social media following, and more. But even with these technological advancements, accurately assigning a dollar value to individual athletes remains a complex and subjective process. As a result, collectives and/or boosters are likely to challenge any NCAA decision to prohibit a third-party NIL agreement on the grounds that it exceeds a particular athlete’s FMV. Notably, the first step to any such challenge would be appealing the NCAA’s decision to a neutral arbitrator selected by the parties in House prior to final approval of the settlement.
Conclusion
The proposed settlement in House introduces significant changes to athlete compensation in collegiate sports, particularly through its revenue-sharing framework. However, this arrangement will likely lead to legal disputes, especially over the cap on revenue-sharing and the application of Title IX. Defining “associated entities or individuals” for reporting purposes and determining the fair-market value of NIL agreements will also be key points of litigation. Assuming the settlement is approved, these future legal battles resulting from the settlement’s implementation could reshape (yet again) how collegiate athletes are compensated.
Alec McNiff, an attorney licensed in California, is an Associate at a global law firm. He earned his J.D. from University of Michigan Law School and holds a business degree from University of Southern California. Follow him on LinkedIn or on X (@Alec_McNiff).