College athletics has officially entered a new era. On May 6th, Judge Claudia Wilken approved the fourth amended settlement agreement in In re: College Athlete NIL Litigation, marking a major shift in how student-athletes are compensated and how schools operate within the NCAA framework. With this ruling, the longstanding debate over amateurism in college sports takes a major turn toward a professionalized model, reshaping the financial and legal landscape of collegiate athletics.
For a recap of the settlement’s evolution, check out FMJ Law Podcast episodes from May 2024, October 2024, and April 2025.
A Historic Settlement
The approved settlement, which consolidates three separate antitrust class actions: House v. NCAA, Carter v. NCAA, and Hubbard v. NCAA, provides about $2.8 billion to a back pay class of nearly 400,000 former Division I athletes who competed between 2016 and 2024, when name, image, and likeness (“NIL”) compensation was still restricted under NCAA rules. The funds will be distributed over a ten-year period, with approximately $280 million paid annually to athletes who were denied opportunities to profit from their NIL during that window.
In addition to back pay, the settlement establishes a forward-looking revenue-sharing model. Member schools may allocate up to $20.5 million annually to current athletes, with that cap to rise in future years. The $20.5 million figure is based on 22 percent of the average shared athletic revenue generated by schools in the ACC, Big Ten, Big 12, Pac-12, and SEC, along with Notre Dame. This calculation includes revenue from media rights, ticket sales, sponsorships, royalty payments, bowl game distributions, and similar sources.
Judge Wilken, a Minneapolis native who has presided over other landmark college sports cases such as O’Bannon v. NCAA and Alston v. NCAA in the U.S. District Court for the Northern District of California, approved the settlement after determining that its terms were fair, reasonable, and adequate. Her ruling marks a pivotal moment in the evolution of college athletics, setting in motion what may become the most significant redefinition of athlete compensation and NCAA governance since the beginning of the NIL era.
What Changes for Schools and Athletes?
Roster Caps and Designated Student-Athletes
One of the most significant structural shifts is the move from scholarship limits to roster caps. For example, FBS football programs that previously offered 85 scholarships with no cap on overall roster size will now be limited to 105 total rostered athletes, whether or not they receive athletic aid.
While intended to offer more flexibility in compensation planning, the change presents difficult decisions around walk-on opportunities and roster depth in non-revenue sports. To ease the transition, the settlement agreement includes a grandfathering provision through a new player-designation system intended to protect current athletes from immediate fallout.
Athletes may qualify as a “Designated Student-Athlete” in one of two ways. First, if an athlete was eligible to practice or compete during the 2024–25 academic year and was, or would have been, removed from their school’s 2025–26 roster due to the new roster limits, they qualify. This includes athletes who remain at their current school or who transfer elsewhere. Second, incoming athletes (including 2025 high school graduates) who were actively recruited or assured by a coach or staff member that they would have a roster spot for 2025–26 and were displaced by the possibility of roster limits also qualify as Designated Student-Athletes.
Designated Student-Athletes will not count toward any team’s roster limit, and schools may roster as many of them as they choose. Once designated, athletes retain the status for the remainder of their college eligibility, whether they stay at their current school or transfer. The settlement agreement requires schools to identify Designated Student-Athletes in good faith and to provide a list of these athletes to class counsel.
College Sports Commission
Another critical operational change is the creation of the College Sports Commission, which will coordinate a Deloitte-run clearinghouse to review NIL agreements exceeding $600. The clearinghouse is intended to verify that contracts fall within a reasonable range of compensation and serve legitimate business purposes, acting as a safeguard against pay-for-play schemes and improper inducements.
However, the clearinghouse’s authority may be challenged by conflicting state laws. In Nebraska, for example, NIL statutes restrict the disclosure of agreements to third parties, potentially placing them at odds with the settlement’s oversight framework. How these legal conflicts will be resolved remains uncertain and could lead to litigation as the system rolls out. Meanwhile, Tennessee has taken a more aggressive approach, enacting legislation that allows schools to exceed the settlement’s compensation limits and prohibits the NCAA and related entities from penalizing institutions that do so. Tennessee’s law effectively seeks to insulate its schools from enforcement and casts further doubt on the uniformity of the settlement’s application across states.
Title IX and Gender Equity Concerns
While the settlement is a clear step forward in athlete rights, it raises new challenges around Title IX. During the April 23, 2025 fairness hearing, Judge Wilken acknowledged concerns that most back pay and future revenue will benefit male athletes in football and men’s basketball. Female athletes, especially those in non-revenue sports, may be underrepresented in the payout structure, even though Title IX mandates equitable treatment across genders in federally funded programs. Judge Wilken made clear that Title IX issues would not prevent settlement approval because (a) objectors did not sufficiently show that damages awards distributions are subject to Title IX, and (b) the settlement agreement does not prevent schools from distributing benefits in a manner that complies with Title IX. Still, she recognized that the agreement might give rise to future litigation if equity concerns are not addressed.
While the parties have stated an intent to develop future policies that better reflect gender equity, advocates have already warned of potential follow-up litigation if these concerns are not meaningfully addressed as the revenue-sharing model rolls out.
What Happens Next?
With court approval in hand, member institutions must accelerate planning for the rollout of revenue sharing, NIL oversight, and new roster management rules. The NIL Go clearinghouse launched on June 11, and it requires compliance from all Division 1 athletes, even those whose school opted out of the settlement. The NCAA and its conferences will likely play a central role in developing standardized procedures to help schools administer payments and manage contracts. An appeal over the backpay distribution has already been filed, and more appeals are likely. This introduces a layer of uncertainty, as some aspects of the framework may remain in flux even as schools prepare to comply.
Separately, the settlement is likely to reignite interest in federal NIL legislation. The NCAA has long argued that a patchwork of state laws is untenable and that a uniform federal standard is necessary to preserve competitive balance and academic priorities. President Donald Trump has proposed a federal commission on collegiate athletics led by former Alabama football coach Nick Saban, and the House of Representatives has discussed a bill that would standardize NIL laws nationally. While it remains to be seen whether these proposals gain traction, this approved settlement may give new urgency to efforts in Washington.
What the House Settlement Means for the Future
The approval of the House settlement marks a turning point in the structure of college sports. The NCAA’s decades-old compensation model, based on amateurism and limited stipends, has now been replaced by a system that reflects the financial reality of modern athletics and gives athletes a meaningful share of the revenue they help generate.
This shift introduces new challenges across the board. Athletic departments must now navigate new issues related to revenue sharing, roster management, and compliance with Title IX and other regulatory standards. Clear internal policies, active compliance programs, and legal guidance will be essential as institutions adapt to this evolving landscape.
How Can FMJ Help?
FMJ’s Sports & Entertainment Practice Group has extensive experience advising athletic departments, conferences, and individual athletes on legal issues involving compensation, NIL, Title IX compliance, and more. If you have questions about how the House v. NCAA settlement affects your institution, organization, or you as an athlete, contact Nate Snyder or any of the other attorneys in FMJ’s Sports & Entertainment Group. And a special thank you to FMJ Law Clerk Erick Kriewaldt for his help in putting this article together.
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