Thousands of college athletes who received traditional sports scholarships rather than a new version that covers the full cost of attending school will be compensated for the difference under a $208.7 million settlement reached Friday night between the NCAA and plaintiffs in a presumptive class-action antitrust lawsuit against the association and 11 major conferences.
The deal, which must be approved by a federal judge, would be the second-largest legal settlement in the NCAA’s history. Similar litigation in a case led by Stanford football football player Jason White ended in 2008 with an agreement worth just under $230 million.
According to documents filed Friday night, for athletes covered by the settlement who played their sport for four years, the average settlement payout will be nearly $6,800. In addition, if the proposed agreement is approved, athletes who are eligible for a payment will not have to file a claim form — they will simply receive a check.
The payout amounts will be based on the number of years the athletes were on scholarship and on the difference between the value of the scholarship they received and the cost of attendance at their school at the time.
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Athletes who have remaining eligibility when they receive a check will be able to accept the money without any impact on their ability to continue playing in college.
Friday’s proposed agreement, at its simplest level, would apply to scholarship athletes in Division I men’s basketball, Division I women’s basketball or Bowl Subdivision football whose award was limited by NCAA rules to basically tuition, room, board, books and fees. Those athletes would be eligible for money from the settlement if they were on scholarship during the 2009-10 school year — or if they were on scholarship at any time between then and Aug. 1, 2015, when an NCAA rules change let Division I schools begin giving athletes in any sport a scholarship that covers the full cost of attendance.
However, under certain circumstances, settlement money also will be available to scholarship athletes in the three covered sports even if their school, after the rules change, chose not to provide a scholarship covering the full cost of attendance. These athletes would be eligible for settlement money if their school has provided, is providing, or by June 1 indicates an intent to start providing during the 2017-18 school year any money toward the difference between the value of a traditional athletic scholarship and the full cost of attendance.
The settlement does not impact another portion of this case — or another. related case — that is challenging the NCAA’s cost-of-attendance-based limits on the compensation athletes can receive while playing college sports. In that portion of this case, and in the related case, the plaintiffs are seeking an injunction that would nullify the current limits.
All of these cases are being handled by U.S. District Judge Claudia Wilken, who oversaw the Ed O’Bannon antitrust case. She already has granted class-action status to the groups of athletes seeking to nullify the current NCAA limits. Class-action status was being pursued in the portion of case affected by Friday’s proposed settlement.
The deal joins settlements in the past three years that the NCAA has reached with plaintiffs who pursued complaints concerning the use of athletes’ names and likenesses in video games and issues caused by concussions.
Those agreements have resulted in the NCAA paying, or committing to pay, more than $300 million.
That figure does not include the association’s legal costs or the roughly $42 million in legal fees and costs that have been awarded for now to the plaintiffs’ lawyers in the O’Bannon antitrust case, which went to the 9th U.S. Circuit Court of Appeals and was brought to the Supreme Court, which chose not to hear it. (The NCAA has appealed the fees and costs award to the 9th Circuit.)
According to documents filed Friday night, the amount of the proposed settlement corresponds with “nearly to full recovery” of the amount that a plaintiffs’ expert estimated as the combined total difference between the value of the scholarships that the affected athletes received and the value of the scholarships they would have received if those awards had been based on full cost of attendance. Under antitrust law, this amount would been tripled if the case had gone to trial and the plaintiffs had won. Under that scenario, it’s likely that the NCAA also would have had to pay the plaintiffs’ legal costs.
“We’re very pleased that we could get a 100% settlement for these kids,” Steve Berman, the plaintiffs’ lead attorney, told USA TODAY Sports. “It’s very unusual to get 100% in a settlement.”
The proposed $208.7 million settlement will include money that will go to the plaintiffs’ lawyers for their fees and costs. According to documents filed Friday night, they said they will ask Wilken for an amount not to exceed 25% of the settlement fund — or roughly $52 million.
Although conferences are co-defendants, all of the money in the proposed settlement pool will come from the NCAA’s financial reserves, the association said in a statement Friday night. That would all but deplete hundreds of millions of dollars the NCAA had accumulated, in part, through the establishment of a type of endowment fund intended to give the association a substantial cushion in case of a catastrophic loss of revenue from its main funding source – its multi-billion-dollar TV and marketing rights contract for the Division I men’s basketball tournament.
In addition to the legal settlements, the association’s Board of Governors — its top policy-making group, which is mainly comprised of CEO’s of Division I schools — over the past two years has approved two special distributions to Division I schools totaling a combined $219 million. That money was earmarked to help schools pay for cost-of-attendance-based scholarships, additional food that can be made available to athletes or various academic and health-related projects.
Those outlays were intended to be in addition to the NCAA’s usual annual distributions to Division I schools and conferences, which in each of the past two years have totaled roughly $550 million.
The newly settled case began in March 2014 in U.S. District Court on behalf of former West Virginia football player Shawne Alston led by the Seattle-based firm Hangens Berman Sobol Shapiro LLP. The firm also has led cases against the NCAA concerning video games and concussions that settled or have settlement pending.