Friday Feature: What You Need to Know About the House Settlement Opinion
The Legal Takeways from the Latest NIL Drama
Introduction
On June 6, 2025, Judge Claudia Wilken of the U.S. District Court for the Northern District of California granted final approval of the class action settlement in House v. NCAA. The plaintiffs, who are current and former Division I student-athletes, challenged NCAA regulations that limited opportunities for athlete compensation. The defendants included the NCAA and the Power Five conferences, which consist of the SEC, Big Ten, Pac-12, ACC, and Big 12. Judge Wilken’s opinion also addressed claims involving restrictions on third-party NIL compensation, broadcast-related NIL payments, pay-for-play compensation, and scholarship limitations.
The Make Up of the Classes
The settlement covers four certified classes. Three damages classes—Football and Men’s Basketball, Women’s Basketball, and Additional Sports—were certified under Rule 23(b)(3) and include athletes who competed from 2016 to 2024. A fourth class, the Injunctive Relief Class, was certified under Rule 23(b)(2) and includes all Division I athletes from June 15, 2020, through the 10-year period following the settlement.
The class was represented by Hagens Berman Sobol Shapiro LLP and Winston & Strawn LLP. Notification efforts reached approximately 463,000 individuals through email, direct mail, and digital media. The claims process had a 26.2 percent response rate, with more than 101,000 athletes submitting valid claims or confirming their eligibility. Only 357 individuals opted out, and 73 formal objections were filed out of an estimated 389,700 class members.
The court found that the settlement satisfied all criteria under Rule 23(e)(2), including adequacy of representation, fairness of negotiations, and reasonableness of the relief in light of the legal risks. The distribution formula was found to be economically sound and appropriately based on claim strength and quantifiable harm..
Settlement Overview
The approved settlement provides $2.576 billion in monetary relief over a 10-year period. It is divided into two main funds: the NIL Settlement Fund and the Additional Compensation Claims Settlement Fund.
The NIL Settlement Fund totals $1.976 billion and compensates athletes for prior restrictions on NIL earnings. Within this amount, $1.815 billion is designated as backpay for harms related to broadcast NIL, $71.5 million addresses video game-related NIL harms, and $89.5 million compensates for losses from missed third-party NIL opportunities.
The Additional Compensation Claims Settlement Fund totals $600 million and covers damages from lost pay-for-play compensation. Of this, 95 percent will go to athletes from Power Five football, men’s basketball, and women’s basketball programs. Funds will be distributed using a 75-15-5 percentage split among these three sports. Individual payments will be based on a formula that considers base amounts, athlete seniority, recruiting rankings, and performance statistics. This approach is intended to reflect varying levels of impact and contribution during the relevant period.
The remaining 5 percent of the Additional Compensation Claims Fund will be allocated to athletes in other sports, specifically those who received full or partial athletic scholarships from the 2019–20 academic year through the end of the class period. Athletes in high-revenue sports at non-Power Five schools may receive a larger share to reflect the financial importance of those programs.
Injunctive Relief Provisions
The injunctive relief provisions establish a major shift in college athletics governance. Under the terms of the settlement, the NCAA and participating schools may revise existing rules and create new ones regarding athlete compensation and roster management over a 10-year period. However, schools must opt in to be governed by the injunctive relief provisions.
These rules now allow schools to directly compensate student-athletes up to 22 percent of the average revenue generated by Power Five programs. This "Pool" will increase annually. According to economist Dr. Daniel Rascher, the Pool is expected to start at over $20 million per school in the 2025–26 academic year and rise to $32.9 million by 2034–35. Across all Power Five schools, this could result in up to $1.6 billion in athlete compensation in the first year and $2.3 billion in the final year, totaling at least $19.4 billion over the full term.
Roster Management & Scholarships
Another major reform is the elimination of traditional scholarship caps. Instead of limiting the number of scholarships, schools may now impose overall roster limits for each sport. This change is projected to create more than 115,000 new scholarships across Division I programs.
Following concerns raised by the court regarding the original roster limit proposal, a “grandfather” clause was added. It allows current athletes to remain on rosters without being counted against the new limits. These athletes are designated as “Designated Student-Athletes” and retain eligibility throughout their NCAA careers.
Oversight of NIL
The court also significantly narrowed the NCAA’s authority to restrict NIL compensation. Restrictions may only apply to payments made by “Associated Entities” (organizations closely tied to athletic programs) or “Associated Individuals” (those who have contributed more than $50,000 or participated in recruiting activities). Even in those cases, restrictions are only allowed if the payment lacks a legitimate business purpose or is not consistent with fair market value.
To ensure compliance, all NIL deals worth more than $600 must be reported to the NCAA for review. The NCAA will use NIL Go, a platform developed by Deloitte, to manage this process starting July 1. Disputes over NIL enforcement will be handled through neutral arbitration rather than NCAA-run proceedings or litigation.
Key Issues to Look Out For
While the settlement releases most claims related to compensation and scholarships through its duration, it does not cover labor law claims under the Fair Labor Standards Act, most Title IX claims, or claims brought by future student-athletes who have not yet had an opportunity to object. It also does not address the NCAA’s transfer portal rules.
All 73 formal objections were overruled. The court considered and rejected concerns about revenue-sharing limits, voluntary school participation, NIL enforcement mechanisms, fund distribution, and the treatment of non-scholarship athletes. It also determined that the settlement does not interfere with student-athletes’ rights to unionize or collectively bargain, although it did not decide whether student-athletes are employees.
The injunctive relief provisions take effect immediately. Monetary payments will begin once the final judgment becomes non-appealable and administrative steps are completed. The court will retain jurisdiction to enforce the settlement terms and may appoint a Special Master to resolve disputes.
However, legal challenges remain. An appeal has already been filed by eight former women’s college athletes who argue that the backpay distribution violates Title IX.
Conclusion
The House v. NCAA settlement represents a historic turning point in college athletics. With $2.576 billion in backpay and a new decade of structural reform, Judge Wilken’s ruling not only compensates athletes for past restrictions but also introduces a framework for direct payments, expanded scholarship opportunities, and enhanced NIL oversight.
Although the transition will require continued oversight and institutional adaptation, the settlement sets a lasting precedent. The economic contributions of student-athletes must be acknowledged within a system that values opportunity, compliance, and fairness. Future challenges involving backpay, NIL valuations, eligibility, and transfers are likely, but the House case has laid the groundwork for a more equitable and modern era in college sports.