It all started with a good idea.
And then the lawyers got involved.
The state of California ruled that NCAA student-athletes should be financially compensated for use of their name, image and likeness. The NCAA said they should not. And back and forth it went. And then others states — Texas, Louisiana, New York — sided with California. At one point more than 15 states approved NIL laws.
And the NCAA cried, “Uncle.”
But then former student-athletes said, “Whoa, whoa, whoa, where’s the money we should have been paid?” And one legal action became two, and then three, and eventually a class-action suit against five power conferences and the NCAA charging illegal limitation of earning power for players.
The House vs. NCAA settlement was negotiated. And last week, Judge Claudia Wilken approved the deal, which will pay nearly $2.8 billion in back damages over the next 10 years to student-athletes who competed from 2016 through today. The deal goes into effect July 1.
Here are some of the key points:
What the heck happened?
While the then-five power conferences (now four because of the dilution of the Pac-12) and the NCAA were the plaintiffs, they decided to split the $2.8 billion bill with the group of five (G5) conferences over the next 10 years. The power conferences would pay 40% and the G5 and NCAA would contribute 30% apiece. While the four power conferences have lucrative TV deals and licensing arrangements to cover their share, the G5 schools, such as the University of Hawaii, can take a smaller annual payout from the NCAA to go toward the bill.
The settlement now allows Division I schools to pay current players directly, with an annual “salary” cap of $20.5 million, a figure derived from 22% of what power-4 schools receive in revenue from ticket sales, TV deals, corporate sponsorships, and licensing. The Mountain West, of which UH is a football-only affiliate this year and a 16-sport member beginning on July 1, 2026, does not pull in nearly the same amount in revenue. As of now, UH receives only a small share of the Mountain West’s TV revenue, although it keeps the money from its pay-per-view deal with Spectrum Sports.
UH student-athletes currently have NIL deals mainly through three collectives. But a new “clearinghouse” — the College Sports Commission — now will evaluate whether players are receiving “fair-market” compensation for their NIL deals. It probably will be ruled a player with a modest social-media presence, for instance, should not receive a six-figure NIL deal for making, say, one appearance at a sponsoring restaurant. But a nationally aired TV commercial probably would justify the pay. A study showed about 70% of NIL deals overpaid a players’ market value. The intent is to deter collectives — or boosters — from buying players for above their fair-market value. The loophole is the collectives can donate money to a school, which could then pay players directly without needing approval whether they are worth the money. Whatever avenue, UH and other mid-majors will have a smaller bankroll than power-4 schools.
A glitch in the plans
Power conference players are expected to receive the bulk of the $2.8 billion in back pay; G5 players, not so much.
Power-4 schools indicated they would employ this distribution: 75% to football, 15% to men’s basketball, 5% to women’s basketball and 5% to other sports. Separate lawsuits are sure to be filed: 1) the male-dominant payouts appear to violate Title IX; and 2) if the disbursements are adjusted, antitrust advocates would argue the players are not being paid fair-market value. Unlike money paid from a school, NIL payments from collectives are not subject to Title IX.
The settlement notes that a player paid directly by the school is not considered an employee or contractor. At UH, players paid directly will have to sign contracts and receive 1099 forms, but it is not clear which tax category they are considered. And while collective bargaining would be useful in deciding payouts, the players are not eligible for that because they are not employees or contractors.
Times have changed
Back in the day, a UH football player received tuition, room and board, and books. A successful suit led to schools being able to offer cost of attendance — money to cover expenses such as cell-phone bills, laundry and Uber rides. In addition, the so-called Alston lawsuit resulted in schools being permitted — but not required — to pay up to $5,980 annually to student-athletes for miscellaneous educational expenses. UH pays cost of living to its players, and some of the teams also offer Alston money.
Everybody can get paid
On July 1, new roster limits will implemented. What’s more, Division I teams can give every player some form of scholarship. In men’s volleyball, teams can go from splitting the financial equivalent of 4.5 scholarships to offering scholarships to all 18 players. FBS football teams were limited to 85 scholarships on a roster of about 120 players. Now rosters will be capped at 105, with each player being eligible for a full or partial scholarship. UH is not likely to add that many more scholarships in football or baseball.
Bill, please?
In a report on UH athletics to the Board of Regents Committee on Student Success, it was noted the “House Settlement Realities” could cost an additional $16 million if it makes maximum payments to student-athletes. The breakdown:
Back pay — $463,427; required payments to players for NIL from 2016 to 2025
Revenue sharing — $3,968,606; percentage of department revenues to current players
Scholarships — $7,872,264; increase in scholarships from 246 to 444
Cost of attendance — $1,786,770; maximum value of scholarship above tuition, fees, room and board
Alston — $2,650,300; expenses related to education up to $5,980 per player.
Solution
UH needs more money, preferably from the Legislature, to be able to pay what it can pay.
