On June 6, 2025, will go down in the history of sports in the United States, as late that day, a federal judge approved an agreement between the NCAA, the main conferences, and the lawyers representing Division I athletes that will allow college athletes to receive direct payment for their participation in college competitions, especially football, basketball, and baseball.
These direct payments will be officially considered as a “profit sharing”.
Judge Claudia Wilken authorized the settlement in the case House v. NCAA, which ends three legal proceedings that argued that the college athletic association illegally restricted the economic opportunities of athletes.
The decision puts an end to decades of disputes and claims, as universities could receive millions in revenue from television and commercial contracts, but the athletes who were required to be considered “amateurs” received nothing in return.
Why weren’t college athletes being paid?
For years, the NCAA argued that the purpose of college sports was educational and that many outstanding players received a scholarship in return. For example, Michael Jordan graduated with a degree in Cultural Geography from the University of North Carolina and Tom Brady received a degree in General Studies with a focus on business and psychology from the University of Michigan.
But with the massification of cable television in the 90s and the consolidation of sports channels, universities began to sign multimillion-dollar contracts while athletes were not even allowed to receive gifts from sports brands.
The Big Ten Conference, which includes universities like Ohio State, Michigan, Michigan State, Illinois, UCLA, and USC, has a 7-year $7 billion contract with NBC, CBS, and FOX. Meanwhile, the SEC Conference of Alabama, Florida, Georgia, Texas, Oklahoma, among others, signed a $3 billion agreement with ESPN.
Such disparity fueled criticism, questioning, and legal resources.
A first step towards achieving greater equity was taken in 2021, when college athletes were allowed to earn income through sponsorship agreements related to the use of their name, image, and likeness (NIL). This practice led to the creation of groups of individuals who handled large sums of money to incentivize talent recruitment, particularly in sports such as American football and basketball.
How will the payment be materialized for college athletes?
Universities plan to start making direct payments to athletes starting on July 1, which has forced institutions to accelerate the implementation of administrative and financial structures to adapt to the new scenario.
As part of the agreement, the NCAA commits to distribute around 2.8 billion dollars in retroactive compensations over the next decade. These funds will be allocated to athletes who competed from 2016 to the present date.
Starting from the 2025-2026 season, each university will be able to pay their teams up to a maximum of approximately 20.5 million dollars annually, a figure that will progressively increase during the ten years of the agreement. These new payments do not replace, but rather add to the scholarships and benefits previously established.
With the new model, these funds will begin to be channeled directly through the universities’ sports departments.
In addition, the College Sports Commission will be created, formed by the five major conferences involved (Big Ten, Big 12, ACC, SEC, and Pac 12) to implement this agreement, and the first CEO will be Bryan Seeley, former executive vice president of Major League Baseball.
The president of the NCAA, Charlie Baker, has stated that this new regulatory framework will allow university institutions to regain some control in an environment that had become chaotic and uncontrollable due to the lack of regulation on payments made by third parties.
In fact, as part of the agreement, universities will have the authority to establish rules to reduce the influence of sponsorship groups (known as boosters, which are groups of millionaires who assist different teams).
University leaders have asked the US Congress to intervene with federal legislation that prevents athletes from being classified as employees and grants the NCAA an exemption from antitrust laws, thus facilitating the imposition of salary limits and transfer conditions similar to those in professional sports.
But unlike professional leagues, where rules on salaries and player movements are negotiated with unions, universities argue that they could not sustain their sports programs if athletes were required to have formal employment status.