Ibrahim Gardner
The National Collegiate Athletic Association (NCAA) has long resisted compensating its college athletes, citing amateurism as a defense for its failure to pay revenue-drivers. However, in 2024, the NCAA reached a historic settlement to pay college athletes, marking a significant shift in college athletics. This settlement, which resolves a series of lawsuits challenging the NCAA, includes a $2.8 billion payout to athletes and creates a system for schools to directly pay athletes. While this agreement is a step towards fair compensation for athletes, it also raises complex questions about regulation and gender equity in payments. The NCAA continues to face criticism and legal challenges regarding its compensation model, with ongoing debates about the classification of athletes as employees and the potential for future antitrust lawsuits.
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What You'll Learn
NCAA's amateurism model
The NCAA's amateurism model has been a point of contention for many years, with critics arguing that it is unfair for athletes to generate billions of dollars for their universities while not receiving compensation themselves. In 2019, California Governor Gavin Newsom signed the Fair Pay to Play Act, allowing college athletes in California to sign endorsement deals with brands and accept compensation for the use of their name, image, and likeness (NIL). This marked a significant shift in the landscape of college sports and the NCAA's amateurism model.
Despite this, the NCAA has continued to classify student-athlete compensation as a violation of the Commerce and Contracts Clauses of the U.S. Constitution and has resisted efforts to compensate college athletes beyond scholarships and stipends. In 2021, the NCAA started allowing athletes to be paid for their NIL, which led to the formation of "collectives" that raise money to lure key players to their chosen schools. However, this still meant that athletes were not receiving direct compensation from their colleges or universities.
The NCAA's amateurism model came under further scrutiny in 2024 with the House v. NCAA class-action lawsuit, which sought to force the NCAA and affiliated athletic conferences to lift restrictions on revenue sharing from broadcast rights and allow athletes to be paid directly. The lawsuit argued that the NCAA's century-old tradition of amateurism in college sports was unfair to athletes who generated significant revenue for their schools. The NCAA agreed to a proposed settlement of $2.8 billion, which, if approved by a judge, would allow schools to pay athletes directly for the first time.
While the settlement is a landmark moment in the history of college sports, it is important to note that it only applies to the five biggest collegiate conferences and athletes in football and basketball, leaving many college athletes in other sports and conferences without access to direct payment. Additionally, questions remain about how the law will apply to revenue payments to athletes, including whether men and women will be paid equally. Despite these uncertainties, the settlement is expected to bring college sports into the 21st century and provide college athletes with a fair share of the revenue they generate.
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Student-athletes' classification as employees
The classification of student-athletes as employees has been a subject of debate for some time. On one side of the debate, proponents argue that student-athletes dedicate a significant amount of time and effort to their sports, which is often at the expense of their academic pursuits and personal lives. They generate substantial revenue for their institutions but do not receive a salary or traditional employment benefits. Some argue that this is a form of exploitation, and recognizing student-athletes as employees would provide them with fair compensation and labour protections.
Opponents of this classification argue that student-athletes are primarily students, not employees, and that the primary purpose of attending college is to receive an education, not to play sports. They also point out that student-athletes already receive benefits such as scholarships, academic support, and access to high-quality training facilities. Some worry that classifying student-athletes as employees could lead to unintended consequences, such as specialized contracts and increased payroll costs.
In 2021, the NCAA started allowing athletes to be paid for the use of their name, image, and likeness in endorsement deals. This NIL policy paved the way for the formation of "collectives," groups of supporters who raise money to attract or retain key players at their chosen schools. Despite this, there is still a debate over whether college athletes, who can generate millions of dollars for their universities, should be paid.
In 2024, the NCAA agreed to a proposed settlement in a class-action lawsuit, commonly referred to as House vs. NCAA, which would allow schools to share broadcast revenue with players. This settlement, which applies to the five biggest collegiate conferences, introduces direct payments to players in football and basketball. However, it is important to note that direct pay will only be available to players on teams that generate broadcast revenue, leaving many college athletes out of the new payment program.
The debate over the classification of student-athletes as employees has also reached the legal sphere. In 2023, Senator Ted Cruz announced draft legislation stating that a student-athlete would not be considered an employee of an institution, conference, or athletic association based on their participation in varsity sports. On the other hand, the National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo found that the NCAA violates federal law by not recognizing student-athletes as employees, a stance that opens the door for student-athletes to potentially unionize.
The outcome of these legal battles and proposed legislation will have significant ramifications for the future of college sports and the rights of student-athletes.
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State laws and compensation
The NCAA's stance on student-athlete compensation has been a topic of debate for over a century. The NCAA has historically resisted efforts to compensate athletes beyond scholarships and stipends, citing amateurism as a defence. However, in 2021, the NCAA started allowing athletes to profit from their name, image, and likeness (NIL) in endorsement deals.
The Supreme Court's decision in NCAA v. Alston (2021) allowed for non-scholarship earned income across every division, rejecting the NCAA's "amateurism" argument. This decision paved the way for the formation of “collectives," groups of supporters who raise money to attract or retain key players.
The NCAA and its Power 5 conferences also agreed to a $2.8 billion settlement in a class-action lawsuit, which, if approved by a judge, would allow schools to directly pay athletes and provide back pay for lost licensing opportunities. This settlement includes the Atlantic Coast Conference, the Big Ten, the Big 12, the Pac-12, and the Southeastern Conference.
In addition to the federal legislation, individual states have enacted NIL laws. As of 2025, 29 states have NIL legislation in place, including Illinois, which permits athletes to receive market-value compensation for their name, image, and likeness. The Oregon School Activities Association approved student NIL deals in 2022, leading to the state's first high-school NIL deals. Missouri also enacted a state law in July 2023, allowing high-school NIL deals if athletes commit to a Missouri-based college.
The NCAA has left the issue of student-athlete compensation largely in the hands of its member schools, and compliance officers at these schools will be busy ensuring that NIL arrangements comply with state laws. While the NCAA's historic model of amateurism is changing, the organization continues to push for a federal law to provide clarity and consistency across the nation.
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Scholarships and stipends
The NCAA has long resisted efforts to compensate college athletes beyond scholarships and stipends, adhering to a model of "amateurism". In 2021, the NCAA started allowing athletes to be paid for the use of their name, image, and likeness in endorsement deals, a practice first adopted by California in 2019. This NIL policy paved the way for the formation of "collectives", groups of supporters who raise money to attract key players to their chosen schools. However, the introduction of NIL deals does not mean that direct pay from universities will become less significant.
Many schools award college athletes athletic scholarships that may cover part or all of the student athletes' tuition and other academic expenses. According to the NCAA, athletes participating in Division I and Division II sports receive $2.9 billion in athletic scholarships yearly. The average amount of an athletic scholarship is $18,000, only a small fraction of tuition for private universities or out-of-state tuition for public universities. Student-athletes in head count sports such as Division I football and basketball often receive full scholarships that cover tuition and fees. Other student-athletes in equivalency sports receive a fraction of the total scholarship amount, which is allocated to their coach and divided among players at the coach's discretion.
In 2024, the NCAA agreed to a proposed settlement in a class-action lawsuit, House vs. NCAA, which paves the way for schools to start sharing broadcast revenue with players. The settlement, which applies to the five biggest collegiate conferences, allows schools to pay athletes directly. Each school will be allowed to distribute up to $20 million to its athletes, based on a percentage of the average revenue earned annually by the power conference programs. This percentage begins at 22% and could increase over time.
The NCAA has also agreed to pay $200 million into a settlement fund as part of the Hubbard Settlement. This money will be divided among class members who competed between 2019 and 2022 and will also be used to pay for costs and fees approved by the court.
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NIL deals
NIL (Name, Image, and Likeness) deals are a way for college athletes to monetise their fame and receive compensation for the use of their name, image, and likeness in endorsement deals. In 2021, the NCAA started allowing athletes to enter into NIL deals, marking a significant shift in college sports. This policy change has allowed athletes to profit from sponsorship and endorsement opportunities, with companies such as Nike, Adidas, and Under Armour signing deals with top athletes.
The introduction of NIL deals has had a notable impact on the college sports landscape. Athletes in non-revenue sports, such as gymnast Olivia Dunne, have benefited financially from NIL agreements. Dunne, a gymnast at Louisiana State University, made nearly $4 million from NIL deals, showcasing the earning potential for athletes beyond traditional revenue-generating sports.
The value of NIL deals can vary significantly, with the biggest stars commanding multimillion-dollar valuations. Social media presence, business acumen, and athletic performance all contribute to an athlete's NIL valuation. For example, Colorado quarterback Shedeur Sanders has an NIL valuation of $4.7 million, while the top 20 athletes on the On3 list are each worth a minimum of $1 million.
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Frequently asked questions
Student athletes are not currently paid for participating in college sports in accordance with NCAA rules. However, some student athletes receive \"compensation\" through partial or full athletic scholarships.
Schools award college athletes with athletic scholarships that may cover part or all of the athletes' tuition and other academic expenses. The average amount of an athletic scholarship is $18,000, which is a small fraction of tuition for private universities or out-of-state tuition for public universities.
In 2021, the NCAA started allowing athletes to be paid for the use of their name, image, and likeness (NIL) in endorsement deals. Student athletes can also be compensated through \"collectives,\" which are groups of supporters who raise money to attract or retain key players at their chosen schools.
In 2024, the NCAA agreed to a proposed settlement in a class-action lawsuit, commonly referred to as House vs. NCAA, which would allow schools to share broadcast revenue with players. The settlement, which applies to the five biggest collegiate conferences, is awaiting approval by a judge.
There are concerns about the settlement's payout cap, which is set at 22% of the average revenue earned annually by Power 5 schools. This is much lower than the portion of revenue paid out in professional sports. There are also concerns about whether the settlement will resolve Title IX issues and whether men and women will be paid equally.
