NCAA faces seismic shift in athlete compensation with $2.78bn antitrust settlement

In a watershed moment for collegiate athletics and American antitrust law, the U.S. District Court for the Northern District of California has granted final approval to a $2.78 billion settlement in a class-action lawsuit against the National Collegiate Athletic Association (NCAA). The ruling affirms a settlement negotiated by plaintiffs’ firm Hagens Berman that is poised to reshape how nearly 400,000 current and former college athletes are compensated for the use of their name, image and likeness (NIL).

This decision not only unlocks massive back payments to affected athletes but also sets the stage for an industry-wide transition to a revenue-sharing model expected to funnel more than $20 billion to college athletes over the next decade. Legal experts, sports economists, and institutional stakeholders now see this case as a turning point in the monetization framework of U.S. college sports — long dominated by regulatory exemptions and amateurism clauses.

What is the NCAA antitrust lawsuit and why was it filed?

The class-action lawsuit consolidated three parallel cases — House v. NCAA, Hubbard v. NCAA, and Carter v. NCAA — which collectively challenged the NCAA’s restrictions on student-athlete compensation as violations of U.S. antitrust laws. At the heart of the litigation was the claim that the NCAA and its member conferences engaged in unlawful collusion by limiting how athletes could earn from NIL rights, even as collegiate sports evolved into a multibillion-dollar enterprise.

The lawsuit dates back to legal efforts beginning in 2004 when Hagens Berman’s managing partner Steve Berman initiated a wave of litigation targeting financial inequalities in college athletics. The firm argued that NCAA rules denying athletes the right to share in the commercial value of their performance and image were not only outdated but legally indefensible under modern antitrust standards.

Judge Claudia A. Wilken, who previously presided over O’Bannon v. NCAA and Alston v. NCAA, oversaw the latest settlement. The final approval came after an April 2025 fairness hearing, where the court asked for additional safeguards regarding scholarship caps and roster sizes.

How much will athletes receive and who qualifies?

As part of the approved terms, the NCAA and its five major athletic conferences — the SEC, Big Ten, ACC, Big 12, and Pac-12 — will jointly pay out $2.78 billion over a 10-year period. This will primarily compensate athletes who competed in NCAA-sanctioned events from 2016 onward and were denied the opportunity to monetize their NIL rights during that window.

Beyond the damages, the NCAA has agreed to remove restrictions preventing schools from making direct payments to athletes. Starting with the 2025–2026 academic year, universities across all Division I sports will be allowed to implement revenue-sharing programs and offer expanded NIL benefits — a policy shift that affects more than 170,000 current student-athletes.

The legal team estimates the combined value of damages and future benefits could exceed $20 billion, making it the most financially consequential settlement in U.S. sports litigation history.

How are institutional stakeholders reacting to the NCAA ruling?

While official statements from NCAA leadership have been measured, institutional sentiment across the collegiate sports ecosystem is trending toward acceptance of the new revenue-sharing reality. University athletic departments are actively developing NIL frameworks, and several schools in the Big Ten and SEC have already piloted partnerships with external NIL collectives to manage payouts.

Legal analysts suggest the ruling reduces the risk of future litigation against individual schools, as the settlement provides a clear compliance roadmap for athlete compensation. Several sports law experts also note that this shift may relieve regulatory pressure from state legislatures, which in recent years have passed conflicting NIL statutes.

Private equity stakeholders and sports management firms, including Wasserman and CAA, are reportedly advising universities on how to structure athlete marketing deals under the new guidelines.

What role did Hagens Berman play in the NCAA case?

The Seattle-based litigation firm Hagens Berman Sobol Shapiro LLP served as co-lead counsel in the consolidated class action. Managing partner Steve Berman has long been a legal adversary of the NCAA, having previously led successful challenges in the O’Bannon and Alston cases.

“This result — 20 years later — is a fantastic win for hundreds of thousands of college athletes,” Berman said after the court’s final approval. “We hope this settlement inspires all to see the capabilities of class-action law to bring about tangible benefits and change.”

The firm acknowledged the contributions of Sedona Prince and Grant House, two former college athletes who served as named plaintiffs and helped initiate the NIL movement within college athletics.

Founded in 1993, Hagens Berman is known for its aggressive plaintiff-side litigation against large institutions in pharmaceuticals, automotive, and financial services. The firm has consistently ranked among the top class-action law firms in the United States by legal analytics platforms including Law360 and Chambers.

What is the financial impact on the NCAA and its member conferences?

From a balance sheet perspective, the $2.78 billion payout will be shared across NCAA divisions and conferences based on participation levels, media revenues, and historical exposure. According to financial analysts, the Power Five conferences — especially the SEC and Big Ten — are expected to absorb the majority of the costs, given their dominant market share in media rights and sponsorships.

Institutions with larger athletic budgets and donor pools are better positioned to comply with the revenue-sharing provisions. Meanwhile, mid-major schools are exploring third-party funding mechanisms, including collective-driven trusts, to keep their programs competitive.

Industry observers caution that without federal legislation or an NCAA-wide standard, disparities between schools may widen — leading to competitive imbalance and potential legal exposure in the future.

How will this reshape the future of college sports?

The settlement is widely regarded as the beginning of a multi-phase evolution of the NCAA model. By eliminating restrictions on direct payments and expanding NIL access, the ruling effectively ends the NCAA’s long-standing claim to amateurism as a legal shield.

Analysts expect that the next wave of reforms may include formal employment classification of athletes, unionization efforts, and collective bargaining frameworks. Ongoing federal legislative efforts, such as the College Athlete Compensation Act, may also gain momentum following the court’s decision.

Over the long term, the NCAA’s legal risk profile will depend on how effectively it can standardize NIL enforcement, prevent pay-for-play abuses, and establish transparent revenue-sharing models.

For now, class members are encouraged to visit collegeathletecompensation.com to learn more about eligibility, claims timelines, and distribution schedules.