Home Sports Power conferences, NCAA to vote on landmark $2.7 billion settlement

Power conferences, NCAA to vote on landmark $2.7 billion settlement

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University presidents across the country are set to meet this week to vote on a proposed settlement of an antitrust lawsuit that would cost the NCAA nearly $3 billion and establish a landmark revenue-sharing system with college athletes.

The settlement terms have encountered resistance from Division I conferences that do not compete in major college football. Leaders of these leagues argue they are being unfairly burdened with the financial costs of the settlement.

Attorneys for the defendants in House vs. NCAA have given college sports leaders until Thursday to agree to the terms. The defendants include the NCAA and the Power Five conferences: the Atlantic Coast, Big Ten, Big 12, Pac-12, and Southeastern conferences.

The presidential boards of the NCAA and the Power Five conferences must individually vote to accept the settlement. This includes the current full membership of the Pac-12 before it shrinks to two schools later this summer.

The NCAA is expected to pay approximately $2.7 billion in damages over ten years to current and former college athletes, dating back to 2016, who were denied the ability to earn money from sponsorship and endorsement deals due to NCAA rules.

Around $1.6 billion of the settlement will come from withheld distributions to member schools—money typically sent to schools by the NCAA, according to sources familiar with the proposal. These sources spoke with The Associated Press on the condition of anonymity because the settlement details are not public.

The Power Five conferences, currently comprising 69 schools, are slated to cover 40% of the $1.6 billion. The other 27 Division I conferences, currently comprising 283 schools, will cover the remaining 60%.

Although the Power Five receive the largest total distributions from the NCAA, schools in non-football-centric conferences rely more heavily on these distributions to support smaller budgets.

“Basketball-centric leagues are really getting hit,” said an administrator from a non-FBS conference.

The NCAA annually distributes about $700 million to its members, with last year’s revenues nearing $1.3 billion, primarily from the television rights contract for the men’s Division I basketball tournament with CBS and Warner Bros. Discovery.

Under the proposed settlement, each conference’s financial obligation will be proportional to its share of the total NCAA distribution to its members from 2016 to 2024, according to sources with knowledge of the agreement. The NCAA has about 1,100 member schools with over 500,000 athletes across three divisions; Division I, the most lucrative, includes around 352 schools and 190,000 athletes.

An administrator told the AP that in smaller Division I conferences, NCAA distributions can account for over 50% of a school’s athletic revenue, compared to less than 10% at most Power Five schools.

Leaders of smaller conferences have sent multiple memos to the NCAA expressing concerns. In a letter obtained by the AP on Monday, non-FBS conferences supported the need for a settlement but opposed the current allocation model proposed by the NCAA.

“As commissioners of non-defendant Division I conferences, we do not support the current model proposed by the NCAA for allocating back damages, which unreasonably impacts our conferences,” the commissioners wrote. “We have not been involved in the settlement negotiations or damage allocation modeling, and learned of the settlement status two weeks ago.”

The memo proposed that the Power Five conferences cover close to 60% of the $1.6 billion, effectively reversing the current 60-40 split.

“It hits us harder. We’re dependent on NCAA distributions,” said another administrator from a non-FBS conference.

Going forward, the Big Ten, Big 12, ACC, and SEC will bear most of the financial burden in a revenue-sharing system, requiring each school to commit upwards of $20 million per year for ten years, to be paid directly to athletes. The overall commitment is expected to total about $300 million per year.