Sports Law: House v. NCAA

Writers: Shriya Alli, Alex Bowles, Raphael Caballes, Abia Siddiqui, Jakob Tawney

Editor: Savannah Miller

What is House v. NCAA?

House v. NCAA (2024) is a lawsuit begun by Arizona State swimmer Grant House who challenged the NCAA over their revenue policies and restrictions on athletic compensation as anticompetitive behavior. This case is a federal class-action antitrust lawsuit meaning that the legal action was filed in federal court (in this case the U.S. District Court for the Northern District of California). The progression to a lawsuit typically begins with the filing of a formal complaint, where the plaintiff, or person who filed a complaint, alleges specific violations of the law. In this case, House and fellow collegiate athletes claimed that the NCAA's regulations constituted a restraint of trade in violation of antitrust statutes. The court subsequently recognized the matter as a class action allowing a group of similarly impacted individuals known as a class to collectively sue the NCAA. This case criticizes how the revenue from collegiate sports and NIL (name, image, and likeness) or the legal right of student-athletes to profit from the commercial uses of their identity without losing eligibility within the NCAA should be allocated. The NCAA currently stipulates that colleges cannot compensate student-athletes like professional players, leading to House suing the NCAA.

This suit covered five major areas: back pay, revenue sharing, scholarship changes, roster caps, and NIL regulations. Back pay entails retroactive compensation for service, i.e. that student-athletes might request compensation for time when they were restricted from NIL deals. Revenue sharing refers to the direct payment of student-athletes from part of their school's athletic revenue. Moreover, the ability to pay student-athletes directly could create more comprehensive scholarship packages extending beyond the traditional tuition, room, and board. House v. NCAA also has the potential to increase rosters as colleges might find themselves with more financial resources to assist student-athletes. Finally, the suit would make major changes to NIL regulations through further financial compensation for student-athletes.

Moreover, as this case nears a final decision, schools are preparing new systems to compensate their athletes. While presiding judge Claudia Wilken has yet to approve the settlement, if accepted, the $2.8 billion settlement proposal would allow schools to directly pay athletes. For instance, each university could pay up to $20 million annually to its athletes, marking a major shift away from NCAA's long-standing ban on direct pay. This would have numerous implications for student-athletes from increased competition among schools for top talent to unprecedented collegiate financial compensation.

Background

NIL refers to college athletes' right to control uses of their image both personally, such as through private social media accounts, and commercially. This restricted athletes from endorsement deals, sponsorships, and social media marketing, for the NCAA claimed these athletes should be students first, not professionals. In 2022, a combination of NCAA rules and state law changes restored the right for college athletes to make sponsorship deals. While school policies and state laws still dictate the deals athletes can make, the NCAA's biggest stars, such as Texas quarterback Arch Manning, have signed deals with the numerous brands including Panini America, EA Sports, Red Bull, Uber, and Vuori. Manning also has the biggest NIL valuation of any American college athlete at $6.5 million. This dramatic shift towards sponsorship deals resulted from years of legal pressure, athlete advocacy, and changing public opinion in college sports. In 2014, a group of Division 1 athletes (historically D1 athletes have produced millions of dollars in revenue without compensation beyond scholarships) filed complaints against the NCAA's antitrust laws, leading to two major court cases that would influence athlete compensation in the future: O'Bannon v NCAA (2015) and Alston v. NCAA (2021), both of which centered around the Sherman Antitrust Act which restricts businesses from working in ways that limit competition or form monopolies.

In O'Bannon v. NCAA, former UCLA basketball player Edward O'Bannon sued the NCAA after the organization used him as a model for a video game character without his consent or financial compensation. O'Bannon argued that the NCAA's rules prohibiting athletes from using their NIL violated the Sherman Antitrust Act by restraining trade and unfairly exploiting student-athletes. The court ruled in favor of O'Bannon, declaring that the NCAA's amateurism model is insufficient to justify bans on NIL compensation. Similarly, in Alston v. NCAA, West Virginia University football player Shawne Alston challenged the NCAA's preservation of its amateur status, limiting the education-related benefits schools could offer student-athletes. In a unanimous 2021 ruling, the United States Supreme Court upheld a lower court ruling that the NCAA could not cap non-cash education-related benefits, such as graduate school scholarships, laptops, or paid internships, as doing so is anticompetitive.

Although only Alston's case reached the Supreme Court, both cases impacted NIL legislation as the Supreme Court ruled that student-athletes' lack of NIL compensation violated the Sherman Antitrust Act. Both cases weakened the NCAA's legal defence of amateurism, ensuring that the NCAA cannot restrict education-related benefits while also putting pressure on lawmakers. The conversation shifted around NIL deals from should athletes be paid to how much and how soon. Moreover, these court cases led to the NCAA's ability to provide full-cost scholarships to athletes and future NIL legislation starting in California in 2019 and the NCAA in 2020 which allowed athletes to sign endorsement deals, get paid for appearances, and hire legal contractors. While neither O'Bannon nor Alston are involved in House v. NCAA, Judge Wilkens presides over House v. NCAA. Judge Wilken, also the presiding judge for O'Bannon v. NCAA and Alston v. NCAA, has consistently scrutinized the NCAA's compensation policies and continuously advocates for increased rights and benefits for student-athletes.

What's Next for the Settlement?

In a major shift for college athletics, the NCAA and the four power conferences (the Atlantic Coast Conference, Big Ten Conference, Big 12 Conference, and the Southeastern Conference) have agreed to a proposed $2.8 billion settlement in House v. NCAA, a class-action antitrust lawsuit brought by former and current college athletes seeking compensation for the use of their name, image, and likeness (NIL). Although the parties reached a proposed settlement out of court, it still requires approval from U.S. District Judge Wilken, who has presided over multiple landmark cases challenging NCAA amateurism rules. Her role now is to review whether the settlement terms are fair, adequate, and reasonable for the affected class before granting final approval. If Judge Wilken approves the settlement, it would allow NCAA DI universities to share up to roughly $20 million annually in revenue with athletes, a significant departure from the long-standing amateurism model that prohibited direct pay from universities.

While this agreement opens the door to more direct financial support for student-athletes, it leaves unresolved a central legal and policy question: whether universities can classify and compensate athletes as employees, receiving salaries beyond third-party NIL deals or collective arrangements. Because the settlement permits individual universities and conferences to determine how payments are distributed, it creates ambiguity around whether payroll-like systems would be permissible or legally defensible. Furthermore, the proposal also replaces traditional scholarship caps with new "roster limits," which could shrink team sizes, particularly in non-revenue and Olympic sports. This is important because it could drastically reduce participation opportunities for athletes in less visible programs, undermining the breadth of collegiate athletic offerings. This change has also sparked concerns about access for walk-on athletes or students who join athletic teams without receiving athletic scholarships. For example, smaller programs like collegiate rowing or gymnastics, which often rely on walk-ons to fill rosters, could be cut or diminished, threatening the diversity of college sports.

Additionally, the settlement raises significant Title IX implications. Title IX, a federal civil rights law enacted in 1972, prohibits sex-based discrimination in any education program or activity receiving federal funding, including athletics. As universities shift funding toward revenue-generating men's sports such as football and basketball, critics warn that women's sports programs could be disproportionately underfunded or eliminated, violating Title IX's mandate for gender equity in athletic opportunities. Judge Wilken has requested further clarification on how the settlement will ensure compliance with Title IX before issuing final approval. Until then, the settlement remains under judicial review.

Conclusion

The proposed House v. NCAA settlement would allow schools to pay athletes directly and share a portion of their athletic revenue, marking a major shift away from the old model while allowing student-athletes more financial recognition for their contributions. This verdict would also pave the way for better support systems like mental healthcare, post-injury support, and life skills training. This case also sets a strong precedent that could impact compensation practices across other industries, not just sports. For example, these debates over name, image, and likeness could extend to the fashion industry where models often have little control over their image or academia where professors might further monetize their lectures and other intellectual property. Additionally, this potential settlement has already begun impacting student-athletes and universities. Schools are restructuring rosters, and some non-revenue athletes are losing spots because of the shift from scholarship limits to roster caps. Moreover, athlete transfers are rising as players seek better pay opportunities with schools establishing systems to handle NIL deal disclosures and compliance under the new rules. Ultimately, NIL's reshaping of college sports has created both new opportunities and pitfalls for student-athletes as they seek to navigate a new web of NCAA NIL regulations.