Judge set to hear NCAA settlement objections

The California-based federal judge overseeing the trio of antitrust lawsuits that could reshape college sports will weigh in for the first time Thursday on a proposed new model for paying athletes.

Judge Claudia Wilken will ask questions and gather information from plaintiffs, defendants and other parties to decide whether to grant preliminary approval for a proposed settlement between the NCAA, its five power conferences and a class of former and current Division I athletes.

Her approval would be the next, but not last, step toward implementing a system that would bring an unprecedented level of change to major college sports. Wilken does not have to decide from the bench Thursday — a ruling could come days or weeks later — but the hearing provides the first chance to gain insights about whether she feels the deal is a fair and adequate system for compensating college athletes for the next 10 years.

“I don’t think it’s possible to overstate how important this could be in the grand scheme of things for college sports. We are closer than ever to an entirely new era,” said Gabe Feldman, director of the sports law program at Tulane University and an expert in NCAA legal issues. “Part of what we’re looking for is to see if Judge Wilken has concerns about the settlement.”

The NCAA and conferences agreed in May to pay roughly $2.7 billion in damages to athletes who say their earning potential while in college was illegally restrained by the association’s rules. The parties also agreed to a forward-looking system that will allow schools to directly pay athletes via name, image and likeness deals up to a limit, which is expected to be between $20 million and $23 million per school next year and rise on an annual basis. In exchange, the NCAA would have far more leeway to enforce rules it says are designed to protect a competitive balance between schools and preserve what makes college sports unique.

Since the two sides submitted terms of their agreement in July, five groups have responded to the court with formal objections, and several other groups have raised concerns via public statements. The objectors say the deal unfairly restricts future athletes or too broadly addresses NCAA issues that don’t fall within the scope of the three cases they are agreeing to settle, among other concerns.

One group of athletes, led by former Colorado football player Alex Fontenot, argues that the settlement would unfairly eliminate their separate, pending antitrust case challenging the NCAA’s limits on what schools can pay players directly. The settlement also undervalues the potential damages that athletes could receive from the Fontenot complaint, his lawyers wrote in their objection.

A separate group of former and current women’s rowers filed an objection claiming that the settlement’s plans to distribute the overwhelming majority of the $2.7 billion in damages to football and men’s basketball players is unfair to women athletes.

As for the forward-looking terms of the settlement, multiple groups argued that the 10-year length of the settlement would bind future college athletes — some still in grade school — to the terms of a revenue-sharing deal in which they have no say. Those athletes would have the ability to object to the revenue-sharing terms but would need to convince Judge Wilken to reconsider the terms in order to create change.

Lastly, Fontenot’s attorneys argue that having the same parties negotiate the past damages and the future revenue-sharing model creates a potential conflict of interest — one in which the plaintiffs’ attorney could make concessions on the future revenue-sharing plans in an effort to make sure the lucrative damages agreement is completed. The attorneys argued that Wilken should deny the proposal and assign different groups of attorneys to represent the different classes of athletes involved in the case.

Steve Berman, co-lead attorney representing the plaintiffs in the settlement, said the objections were “silly.”

“This is an extraordinary settlement, something I didn’t think we’d be able to achieve when I started the case,” Berman told ESPN. “For all these Monday morning quarterbacks to come in and say that it’s not enough or it’s not perfect, it’s just misconceived. They’ve lost sight of the big picture.”

The NCAA did not immediately respond to a request for comment.

Wilken can ask questions of the formal objectors during Thursday’s hearing and raise their concerns to Berman and the other lawyers who negotiated the terms. Wilken, who has ruled on a series of major NCAA-related lawsuits in the last decade, is also free to broadly consider how the deal might impact the college sports industry moving forward.

Legal experts say it’s rare for a judge to deny preliminary approval in an antitrust settlement case. Tulane’s Feldman said the volume of objections is not unusual or surprising, especially in a case that affects such a large and disparate group. However, some antitrust experts say the proposed settlement is novel and broad enough that it might invite extra scrutiny from the judge.

Marc Edelman, a law professor at Baruch College and an expert in sports antitrust issues, said the parties are, in effect, attempting to use the settlement to negotiate a collective bargaining agreement with a salary cap (like those that exist in professional sports) without input from a players’ union. Several objectors noted that antitrust law prohibits any industry-wide cap on compensation unless it’s negotiated by a formal union.

The settlement could increase athlete compensation, Edelman said, but the deal is still a cap that could violate the law. While the settlement doesn’t prevent athletes from filing future antitrust claims, the financial incentive for lawyers to pursue those cases would be drastically reduced by the settlement’s terms. Edelman said that, in practice, the deal could stymie the types of legal challenges that have been the main catalyst for most major changes to the college sports industry in the last decade.

“This is backward, not forward,” Edelman said. “Even if the settlement in many ways is an important step in the right direction, at the same time it makes it more difficult to gain further reforms while imposing a new salary cap that reasonably still violates antitrust law.”

If Wilken does grant preliminary approval, current and former Division I athletes will have a window to opt out of the deal or raise further objections before it’s finalized. Berman said the plaintiffs have asked the judge for 60 days to prepare information for athletes and another 90 days to give athletes the chance to learn about the terms and raise concerns. On that timeline, the settlement would not be finalized until February at the earliest.

The settlement states that if enough athletes opt out, the deal is no longer valid. The specific number of opt outs needed to kill the deal is redacted in public court documents.

Multiple organizations with the potential to rally large groups of athletes have publicly disapproved of the current terms of the settlement. While none has started any efforts to urge players to opt out, leaders of those organizations say they will be watching Thursday’s hearing closely and will decide their next steps based on Wilken’s ruling.

The National College Players Association, which has spearheaded an ongoing National Labor Relations Board case in Los Angeles aimed at helping some college athletes achieve the right to form unions, issued a statement last week saying the settlement could give schools legal protection to create rules that would decrease the money and scholarships currently flowing to athletes.

The organization’s founder, Ramogi Huma, said he’s concerned that the settlement would allow conferences to set limits that are more restrictive than the proposed NCAA-wide spending cap. Unlike professional sports’ collective bargaining agreements, the settlement does not mandate schools share a minimum of their revenue with athletes, which Huma says creates a ceiling for athlete pay without creating a floor. The settlement also aims to eliminate a large portion of the money that currently flows to athletes from booster-led NIL collectives, which has served as a de facto salary for players over the past several years.

When combined, Huma said, those elements could lead to athletes earning less money than they do now in the NIL-driven market.

“Our hope is that [Wilken] rejects the preliminary settlement and hits the reset button on this process where the parties can go back to the drawing board and come up with something that’s fair for players,” Huma said.

Berman said he is confident that schools will want to pay players as much money as possible to remain competitive, and that Huma’s concerns were “not grounded in the economic reality of what’s out there.”

While the settlement terms do not prohibit athletes from collectively bargaining for more benefits if they win the right to unionize, the NCAA and its schools are lobbying Congress to write laws that would block college athletes from being employees of their school, and thus the ability to form a union. College sports leaders, including NCAA President Charlie Baker, have said they hope the settlement will convince federal lawmakers to act.

Russ White, who heads a trade association of booster collectives, said rather than filing objections to the settlement, his group has been focused on lobbying Congress against the NCAA’s requested federal law. The NCAA is also asking Congress for a limited antitrust exemption, which would give the association more power to limit how much collectives are allowed to pay athletes.

Without a new federal law, White said he thinks it will be impossible for the NCAA to enforce limits on booster spending without facing further lawsuits. White said his organization has had some conversations with player advocacy groups about organizing a large opt out from the settlement if necessary. The group currently has members from 42 schools, which gives them an open line of communication with roughly 28,000 athletes.

“We could provide access to those athletes pretty quickly if needed,” White said. “Everything is on the table, but we’re waiting to see how the judge rules and where it goes from there.”