The Wild West of name, image, and likeness: The new era of college sports – NCAA settlement ushers in direct pay for athletes

Part 8 in the series “The Wild West of name, image, and likeness.”

College sports just crossed a threshold that will redefine its financial and legal landscape for decades to come. With the formal approval of the House v. NCAA settlement on June 7, 2025, schools are now legally allowed to pay their athletes directly – marking a seismic shift in how amateur athletics is governed, funded, and regulated.

What the settlement means

U.S. District Judge Claudia Wilken’s approval ends three federal antitrust lawsuits that challenged the NCAA’s long-standing restrictions on student-athlete compensation. Under the terms of the settlement:

The NCAA will pay $2.8 billion over ten years in back damages to athletes who competed in Division I sports from 2016 to the present. Beginning in 2025-26, each school can distribute up to $20.5 million annually in direct payments to athletes, in addition to scholarships and other benefits. These limits are expected to increase yearly throughout the decade-long agreement.

This watershed moment comes just four years after the Supreme Court’s unanimous decision against the NCAA in Alston v. NCAA, which opened the door to NIL compensation from third parties. That change gave rise to so-called “collectives,” where booster-funded groups operated in a gray zone, offering athletes millions in NIL deals that effectively functioned as salaries. Now, the paychecks will come directly from schools’ athletic departments.

The House v. NCAA settlement was immediately appealed by eight female athletes who argue that the damages model violates Title IX, allocating 90% of over $2.8 billion in backpay to football and men’s basketball athletes. The Ninth Circuit will now weigh whether these distributions are equitable under federal law.

Importantly, the forward-looking provisions of the settlement, including the ability for schools to pay athletes directly for NIL use starting July 1, are not affected by the appeal. But payment of back damages could be delayed months or years as the funds remain in escrow.

A new enforcement regime

The NCAA and Power 4 conferences are handing over enforcement duties to a newly formed organization: the College Sports Commission (CSC). Its CEO, former MLB VP of investigations, Bryan Seeley, will oversee compliance with new rules surrounding revenue sharing between schools and athletes, NIL deals – now requiring legitimate business purpose vetting, and roster limits – redefined to avoid cutting current athletes

LBi Software and Deloitte have been contracted to monitor salary cap adherence and oversee an NIL clearinghouse platform, “NIL Go.” Starting June 7, college athletes must submit any NIL deal worth more than $600 to the NIL Go compliance portal – within five days of signing the agreement.

Athletes who fail to comply with the NIL Go filing requirement will not be punished directly. Instead, schools are now the enforcement target. If a school fails to ensure compliance, it faces a “menu of penalties” from the CSC, which could include multi-game suspensions for coaches, reductions in revenue-sharing pools, transfer restrictions, and significant institutional fines.

Once submitted, the CSC will evaluate whether each deal has a “valid business purpose” and falls within a “reasonable range of compensation.” This assessment considers the deal’s performance obligations, the athlete’s performance and social media reach, and the market size and brand of their program/institution.

This structure inherently favors athletes at schools in large or high-visibility markets. More troubling is the subjectivity baked into these assessments. It’s unclear how these valuations will be made, what data will be used, or who will have access to the evaluative process. Legal challenges – especially around fairness, transparency, and Title IX – are inevitable.

Suppose a deal with an “Associated Entity” (collective, booster, etc.) is rejected. In that case, the athlete can cancel the deal, the parties can renegotiate and resubmit, or they can pursue arbitration under a yet-to-be-defined dispute resolution process. Athletes who accept payment from a fully rejected NIL deal risk being declared ineligible.

Notably, the arbitration terms have not been negotiated with athletes. They have no choice in the matter, no say in the forum, and no information about who will hear the case. It’s uncertain whether courts will defer to decisions made in an opaque, mandatory arbitration process imposed without mutual consent.

Stability through regulation – but with open questions

The settlement aims to bring stability after years of legal and regulatory chaos. NCAA President Charlie Baker characterized the deal as “disruptive, but necessary,” allowing for controlled change instead of risking financial catastrophe.

But questions remain. Will schools opt into the full $20.5 million cap? How will enforcement be handled in cases of noncompliance? What happens if courts eventually rule that athletes are employees entitled to unionize? These uncertainties are why leaders across college sports continue their calls for federal legislation to create national standards and preempt a patchwork of state laws.

Commissioners from the ACC, SEC, Big Ten, Big 12, and Pac-12 appeared unified in support of structure, oversight, and shared responsibility. They acknowledged that this is uncharted territory – but also a rare chance to reset the system on more equitable terms.

What’s next?

Schools have until June 15 to formally opt in, though there’s talk of extending that deadline. July 1 is when revenue sharing officially begins. Some institutions are already adjusting: the University of Michigan recently announced a 10% reduction in athletic department staff to help manage new costs.

Congress weighs in: two new bipartisan NIL bills were introduced this week in the House of Representatives. Among their provisions:

• Prohibit athletes from being classified as school employees;
• Codify NIL settlement terms into law;
• Grant antitrust immunity to the NCAA and College Sports Commission; and
• Establish athlete benefits: post-grad medical coverage, degree completion aid, and independent medical care

These bills are the latest in a string of proposals over the last several years. Most have fizzled out in committee.

Final takeaway

The rollout of NIL Go is a compliance headache waiting to happen. Athletes do not understand the rules, schools bear the risk, and the legal architecture behind enforcement is half-built and untested. Arbitration without consent, value judgments without transparency, and enforcement mechanisms with political overtones all make this a fertile ground for litigation.

For now, schools must prepare for scrutiny, athletes must act fast to stay compliant, and everyone involved should keep counsel close. McDonald Hopkins continues to monitor these developments closely. For legal counsel regarding compliance, NIL structure, or education law implications, contact our team of experienced attorneys.