House v. NCAA (filed 2020 in the Northern District of California) consolidated three antitrust class actions—House, Hubbard, and Carter. The plaintiffs (current and former Division I athletes) alleged that the NCAA and the Power 5 conferences violated Section 1 of the Sherman Act by: 1) capping athlete compensation and educational benefits; and 2) agreeing to bar athletes from monetizing their name, image, and likeness (NIL).

Although the NCAA loosened NIL rules in 2021, the plaintiffs pressed on, seeking back damages for the pre-NIL period and forward-looking relief that would let schools pay athletes directly. On June 6, 2025, the court granted final approval of a $2.8 billion settlement that applies to every Division I school and athlete beginning on July 1, 2025.

Key Settlement Terms

The settlement agreement had four major outcomes. The agreement will:

Provide $2.8 billion of back payment for student athletes who competed from 2016-2021 with no NIL earnings (the NCAA will fund 40% of this compensation while the Power 5 conferences will fund the remainder).

Structure direct revenue sharing between schools and athletes, allowing each school to share up to 22% of its athletics revenue with current student-athletes—in addition to scholarships and existing benefits.

Create the College Sports Commission (CSC)—a third-party that will review NIL deals over $600 via “NIL Go” to confirm fair-market value and bar disguised recruiting inducements.

Replace current scholarship limits with roster limits for each sport.

For former student athletes, the backpay will be made over the next ten years.

For current student athletes, schools will be able to share a portion of their athletic department revenue with the student athletes. There is no set structure for how the money will be distributed; schools could opt to mirror the backpay structure or they could portion the money to reflect the revenue each sport respectively generates. The revenue shared with athletes will be in addition to current scholarships, benefits, and NIL deals the student athletes receive.

The CSC will monitor and help facilitate the various terms of the settlement agreement. One important function is to review and approve any NIL deal over $600. This is to ensure that deals between athletes and boosters or third parties “are fair and comply with the rules” as well as to make sure that the deals reflect fair-market value. Deals structured before July 1, 2025 will not be reviewed or subject to CSC scrutiny.

The final key piece of the settlement agreement is the move away from imposing scholarship caps and implementing roster limits instead. Where colleges were previously able to have a football roster with 115 players, 85 of which were limited to scholarship, the roster will now be limited to 105 players. Scholarships will be granted at the school’s discretion, leaving it up to schools to decide whether there will be a limit on the number of scholarships at all.

The implications

Though the NCAA will be responsible for a large portion of the yearly backpay, much of the burden will be felt by schools—with much smaller pockets—as they bear the costs of direct revenue sharing in addition to their share of backpay. The revenue sharing in the settlement is optional, but nearly every school in a Power 5 conference has indicated it will share the maximum amount of its revenue with its athletes. These costs will have significant effects on the institutions as their athletic budgets will take a hit with the added expense. One option is to shift costs to fans through “talent fees” or to students through added tuition fees. Some have suggested that some schools will eventually scale back on staff and eventually do away with less attended and financially beneficial sports. Others have also suggested that these costs will shrink the size of sports rosters and potentially transition some sports to club teams.

These costs will also have effects on the athletes. The 22.5% share cap will result in significant disparity between schools; Power 5 conference schools will be able to pay their athletes eight times more than Group 5 schools will be able to pay their student athletes. This suggests that the talent gap between the conferences will only grow larger.

The roster limits outlined in the settlement require at least some student athletes to lose their spot on their team, however, the NCAA has approved grandfathering current athletes who were promised scholarship for four years. But keeping these athletes will be a strategic calculation for the school to decide whether that scholarship is worth the cost. The limits will likely eliminate walk-ons.

NIL deals over $600 will go through a clearinghouse (NIL Go) that will make sure athlete compensation is legitimate and fair. The evaluation is based on the relationship between the payor and the student athlete’s school, whether the payor has a valid business purpose for the athlete’s NIL, and if similarly situated athletes would be compensated the same. This is to avoid booster payments that look like “recruiting incentives.” Recent data shows that 70% of deals paid by boosters and third parties would have been denied by NIL Go while 90% of deals from public companies would have been approved. The hope of this provision is that NIL deals will significantly change, and many of the unjustifiably big deals will be reduced or eliminated.

One question that remains unanswered is whether student athletes that are paid directly by their school are now considered “employees.” If athletes are considered employees of the school, it would implicate a whole new set of legal and tax challenges for schools to face, such as workers’ compensation, paid leave, and the right to unionize.

Additionally, the settlement agreement also raises immediate questions about the tax treatment of the payments, how student-athletes should report the income, what compliance obligations they and their schools may face, and how this new system will coexist with colleges and universities’ nonprofit status.

Tailored Guidance

For Universities and Athletic Departments

Model the cash-flow impact of (i) your share of the back-pay fund and (ii) the optional—but competitively necessary—22% revenue share.

of (i) your share of the back-pay fund and (ii) the optional—but competitively necessary—22% revenue share. Draft (or amend) revenue-sharing policies: sport-by-sport allocation, academic-progress triggers, graduation incentives, claw-backs for misconduct.

sport-by-sport allocation, academic-progress triggers, graduation incentives, claw-backs for misconduct. Revise roster-management plans Decide which sports keep walk-ons, and document any grandfathering exceptions to align with scholarship promises.

Decide which sports keep walk-ons, and document any grandfathering exceptions to align with scholarship promises. Re-evaluate Title IX proportionality: any shift in roster slots, benefits or direct cash must meet equal-opportunity tests.

any shift in roster slots, benefits or direct cash must meet equal-opportunity tests. Build NIL-Go compliance workflows: educate coaches, collectives and local sponsors; pre-clear deals where possible.

educate coaches, collectives and local sponsors; pre-clear deals where possible. Monitor the employee-status landscape (including relevant NLRB or state legislature decisions) and budget for potential payroll taxes, workers’ comp premiums and bargaining obligations.

(including relevant NLRB or state legislature decisions) and budget for potential payroll taxes, workers’ comp premiums and bargaining obligations. Consider the impact of the private benefit doctrine , which generally prevents Section 501(c)(3) organizations from providing more than incidental benefits to private individuals.

, which generally prevents Section 501(c)(3) organizations from providing more than incidental benefits to private individuals. Unrelated business taxable income , which may arise when a tax-exempt organization earns income from activities not substantially related to its exempt purpose, potentially resulting in a corporate income tax obligation.

, which may arise when a tax-exempt organization earns income from activities not substantially related to its exempt purpose, potentially resulting in a corporate income tax obligation. Tax oversight and supporting student athlete’s compliance. Schools may have filing obligations such as issuing Form 1099s or W-2s, depending on whether the student athletes become employees in the future. Institutions may feel the responsibility to provide education, infrastructure, or access to resources that helps student athletes comply with their tax obligations.

Bottom line for universities: The settlement is optional only on paper. To stay competitive, you will likely pay the cap—so start stress-testing budgets, Title IX ratios, and compliance systems today.

For Student-Athletes

Know your roster math. Verify your sport’s new cap, confirm whether existing scholarships are grandfathered, and ask coaches about future walk-on opportunities.

Verify your sport’s new cap, confirm whether existing scholarships are grandfathered, and ask coaches about future walk-on opportunities. Track your share. Ask how your school will split the 22% pool: by sport revenues? per-athlete flat rate? academic incentives?

Ask how your school will split the 22% pool: by sport revenues? per-athlete flat rate? academic incentives? Prepare for NIL-Go screening. Deals over $600 must be reported and may be adjusted; keep contracts and invoices organized.

Deals over $600 must be reported and may be adjusted; keep contracts and invoices organized. Watch total compensation. Revenue-share funds are extra—they should not replace scholarships, stipends, or Alston awards.

Revenue-share funds are extra—they should not replace scholarships, stipends, or Alston awards. Title IX protections. Female athletes should receive proportional opportunities and benefits; raise concerns early if disparities emerge.

Female athletes should receive proportional opportunities and benefits; raise concerns early if disparities emerge. Stay informed on employment status. If athletes are ever deemed employees, you could gain workplace protections—but also tax obligations.

If athletes are ever deemed employees, you could gain workplace protections—but also tax obligations. Multi-state and potential foreign filing obligations . Student athletes will now have to consider their state filing obligations outside of their home state and whether the new revenue-sharing system will apply the “game day” methodology that professional sports follow. Some states and/or cities may also impose a “jock tax.” Student athletes playing games abroad may also have to contend with foreign tax agencies and filings.

. Student athletes will now have to consider their state filing obligations outside of their home state and whether the new revenue-sharing system will apply the “game day” methodology that professional sports follow. Some states and/or cities may also impose a “jock tax.” Student athletes playing games abroad may also have to contend with foreign tax agencies and filings. Filing obligations . Student-athletes will be responsible for properly reporting their income to federal, and if applicable, state authorities. This includes filing returns, making payments, and maintaining adequate records. The student athletes may be experiencing this responsibility for the first time. Additionally, they will need to be mindful of any in-kind compensation not included in their scholarship and include these amounts in their tax obligations. If student-athletes fail to file they may face penalties and interest.

. Student-athletes will be responsible for properly reporting their income to federal, and if applicable, state authorities. This includes filing returns, making payments, and maintaining adequate records. The student athletes may be experiencing this responsibility for the first time. Additionally, they will need to be mindful of any in-kind compensation not included in their scholarship and include these amounts in their tax obligations. If student-athletes fail to file they may face penalties and interest. Financial aid packages. Compensation may impact student athlete’s financial aid packages.

Bottom line for athletes: New money is coming, but so are roster cuts, deal reviews and paperwork. Stay proactive—understand your school’s payout model, protect your NIL contracts, and keep academics on track to maximize every benefit the settlement unlocks.

Conclusion

The landscape of college sports is evolving, and the House Settlement brings rapid changes for the 2025-2026 school year and the future of college sports. There are many things for current and prospective student athletes to consider and many things for schools to be cautious about as the future unfolds. Dentons is here to help you navigate this new landscape as the legal analysis changes almost daily. Contact us to learn more about how we can help you move forward.