The National College Athletic Association (NCAA) has been around since 1906. In its 119-year history, institutions have never directly paid athletes (legally). That has all now changed, as Judge Claudia Wilken approved the House settlement on Friday in the U.S. Northern District of California, 59 months after the initial class-action House vs NCAA suit was filed.

The settlement arose out of three different lawsuits over the issue of compensation for collegiate athletes. More than 390,000 current and former college athletes acted as the plaintiffs in the suit, and the defendants were the NCAA and five athletic conferences.

After more than a year of negotiating, the saga finally comes to a close.

What exactly does the settlement do

Beginning July 1, schools will be able to share $20.5 million with athletes, with football expected to receive 75 percent of the share, followed by men’s basketball (15 percent), women’s basketball (five percent) and the remainder of sports (five percent). The amount shared in revenue will increase annually. This number will act as base pay for the athletes competing in Division I programs, earning money at the school’s discretion of how they want to split up the funds.

The second main thing regards back-pay for athletes who competed in collegiate sports dating back to 2016, but were unable to capitalize on their Name, Image and Likeness (NIL). Instead of facing $20 billion in back damages, “the NCAA and Power Five conferences signed off on a 10-year settlement agreement that includes $2.776 billion in back damages.”

The NCAA is responsible for paying $277 million annually over the next decade. It has been estimated that 60 percent will come from a reduction in distribution to institutions, and the NCAA is expected to come up with the other 40 percent, which will come through reducing operating expenses, according to On3.

The third issue was oversight. The NCAA is a self-disciplined machine. All suspensions, investigations of wrongdoing and eligibility hearings were done in-house. Judge Wilkins wanted to ensure the beast of revenue sharing had enough checks and balances, so she approved of an “NIL clearinghouse.”

Titled “NIL Go” and run through Deloitte, “all third-party NIL deals of $600 or more must be approved by the clearinghouse.” If not approved, the settlement says a new third-party arbiter could deem athletes ineligible or result in fines to the school. This could even the playing field by cutting out the fake deals or forcing college coaches to be more transparent, but it also could be the most controversial if that information is made public.

The final topic heavily debated surrounded roster limits. At the preliminary approval hearing on Oct. 7, 2024, the two sides agreed to increasing the number of scholarships each football team can distribute to 105 by next fall, but it would not allow for any walk-on spots or other non-scholarship players over the 105 limit. It worked similarly for other non-revenue sports increasing the number of scholarships given out, but reducing the overall roster size.

When Wilkens met with the attorneys from both sides to approve the settlement in April, she made them go back to the drawing board, pushing back strongly against roster limits and asking that roster spots be grandfathered in.

Under the new agreement, athletes who had their positions cut will be eligible for reinstatement at schools’ discretion. It also permits athletes who leave or are not kept by their current school to keep their grandfathered status at a new school. Proposed rosters include 105 spots for football, 15 for men’s and women’s basketball, 34 for baseball, 28 for men’s and women’s soccer, 25 for softball and 18 for volleyball. This will is effective at the start of the 2025-26 academic year.

“Despite some compromises, the settlement agreement nevertheless will result in extraordinary relief for members of the settlement classes,” Wilken wrote in her 76-page final opinion. “If approved, it would permit levels and types of student-athlete compensation that have never been permitted in the history of college sports, while also very generously compensating Division I student-athletes who suffered past harms.”

How does this impact Michigan

This is a massive win for University of Michigan athletes, but it is also a difference-maker in staying competitive for years to come. The university already has one of the largest budgets in college athletics and the second-largest alumni network in the country, and it has already generated more than $30 million in NIL funds, putting it in the top tier of college athletics.

Between flipping Bryce Underwood, landing the No. 1 ranked basketball transfer in Yaxel Landeborg, and having banner-hanging seasons in softball, men’s gymnastics and men’s basketball, the Wolverines are already at the top of the college athletics totem pole, and that should not change given the investments already made.

Michigan also has untapped areas of revenue it hopes to cash in this next academic year. Athletic Director Warde Manuel announced last fall that Michigan was looking into putting sponsorships and advertisements in the Big House, something Michigan has never done since Michigan Stadium was built in the 1920s. What was originally a survey has since been put into practice, and fans saw advertisements and videos played throughout the 2025 spring game. This untapped revenue space could generate $15-20 million next year alone, making up for the $20.5 million in revenue sharing the athletic department is expected to dish out.

Manuel also introduced alcohol sales to sporting events in 2024. After the Wolverines’ first full season since the state legalized in-stadium sales in 2023, the university reported a profit of $5 million in alcohol sales, including $4.6 million at football games alone. With such a successful year, you can expect even more of this moving forward.

Finally, Michigan’s Athletic Department has publicly supported revenue sharing for a while, and Manuel has even said they will not be cutting any varsity sports. That may not be the case at every school, and we could see major shake ups across college sports outside of Ann Arbor.

The bottom line is Michigan is prepared and equipped for the settlement. As previously stated, it creates a base pay for athletes in revenue-generating sports, but the NIL collectives will still serve as the sprinkles and whipped cream on top of the sundae for all college athletes. Champion Circle, Hail Impact, and Stadium and Main will not be going away, and neither will Michigan football general manager Sean Magee.

If you thought the introduction of NIL was a big change, just wait. This is the beginning of one of the biggest changes in American sports history, and we are witnessing it in real time.

In wake of Judge Claudia Wilken’s order granting final approval of the House v. NCAA settlement, NCAA president Charlie Baker penned a letter to membership. He walked through the next steps once the agreement goes into place, as well as what the landmark moment means for the future of college athletics.

Baker called final approval a “new beginning” for college sports now that revenue-sharing is on the way, as well as roster limits. Schools will soon be able to directly share up to $20.5 million with athletes in the first year of the settlement agreement, and that figure will go up 4% each year for 10 years.

Judge approves landmark House v. NCAA settlement

While April’s final approval hearing was a date many circled, Baker said Friday will be the moment the “new beginning” for the NCAA. He also noted the trouble enforcing NIL rules and the way the landscape transformed as a result.

“Many looked to April’s hearing about the House settlement as a culmination of sorts, but the court’s final approval of the settlement in fact marks a new beginning for Division I student-athletes and for the NCAA,” Baker wrote. “For several years, Division I members crafted well-intentioned rules and systems to govern financial benefits from schools and name, image and likeness opportunities, but the NCAA could not easily enforce these for several reasons.

“The result was a sense of chaos: instability for schools, confusion for student-athletes and too often litigation. Sometimes member schools even supported that litigation — some of which spurred hastily imposed court orders upending the rules.”

As a result of the settlement’s final approval, the College Sports Commission has been formed. The expectation is Major League Baseball executive Bryan Seeley has been named CEO, and the commission will take on a key role in creating stability following approval.

However, Charlie Baker also noted the NCAA will still have a role in regulation of other areas. Additionally, the NCAA will take the lead on paying back damages as part of the settlement.

“Beyond the rules that will be managed by the defendant conferences, Division I will continue to regulate in key areas (e.g., eligibility, playing seasons, sports betting and minimal recruiting rules) while prioritizing educational success through setting and monitoring academic standards,” Baker wrote. “The NCAA will finance the back damages portion of the settlement. To do that, we are both reducing costs and generating more revenue, all while investing in the student-athlete experience.

“Together the NCAA, the defendant conferences and the Division I membership have identified the existing NCAA rules that must change to reflect the settlement. These include replacing scholarship limits with roster limits — a change that will enable schools to vastly increase the scholarship opportunities student-athletes receive and potentially double the number of athletics scholarships made available to women.”

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The landscape of college sports has been in constant change over the last few years, and now a major development has taken place that will ensure it is never the same again. On Friday night, Judge Claudia Wilken approved the House settlement in the House vs. NCAA lawsuit.

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The biggest point in the settlement is that it now allows schools to pay their own athletes, instead of all payment having to go through NIL collectives. This ruling doesn’t end the controversy about whether athletes are considered employees of the universities that they play for, but schools being able to pay them is a massive development in the ongoing debate.

Schools will be able to pay athletes $20.5 million over the course of the year, with a decided split in which sports get how much money, according to Pete Nakos of On3 Sports.

“Beginning July 1, schools will be able to share $20.5 million with athletes, with football expected to receive 75%, followed by men’s basketball (15%), women’s basketball (5%) and the remainder of sports (5%),” Nakos wrote. “The amount shared in revenue will increase annually.”

That means that football programs will have about $15 million, give or take, to spend on their rosters.

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The settlement will also introduce roster limits, which was a big sticking point between the two sides over the course of the last few months. Those roster limits will be grandfathered in, a stipulation that Wilkin required in order to go through with the approval of the settlement.

On Friday night, NCAA president Charlie Baker released a letter titled “A new beginning for Division I student-athletes and the NCAA.”

“Approving the agreement reached by the NCAA, the defendant conferences and student-athletes in the settlement opens a pathway to begin stabilizing college sports,” part of the letter read. “This new framework that enables schools to provide direct financial benefits to student-athletes and establishes clear and specific rules to regulate third-party NIL agreements marks a huge step forward for college sports.”

How this settlement affects the teams on the field and the court in 2025-26 remains to be seen, but there is no question that this massive change will impact the way that college sports work forever.

Related: Former NCAA athletes to be paid $2.8 billion for lost NIL earnings

Related: Former MLB exec to be new head of College Sports Commission

College sports changed radically Friday night.

Schools will begin directly paying their athletes in less than a month, thanks to a legal settlement that was officially approved in federal court Friday. Judge Claudia Wilken said the deal would create “ground-breaking changes in NCAA rules that govern student-athlete compensation.”

The battle to let players share in the spoils of an industry that has long outgrown any amateur roots it ever had started more than 20 years ago. While Friday’s decision was a long-awaited milestone, both players and administrators said they view it as a fresh starting point for the future of college sports, not a finish line.

Sports fans can be forgiven for tuning out of the tedious legal process that led up to this point. Let’s get up to speed on what this means for the immediate future in college sports and what major questions remain unanswered:

New limits

Starting July 1, each school will be allowed (but not required) to spend roughly $20.5 million in new payments to their athletes.

That figure comes from a negotiated formula that caps athlete payments at 22% of the average annual revenue that FBS-level schools get from ticket sales, broadcast rights and a few other items. The cap will grow on a regular basis during the 10-year lifespan of the settlement as the schools’ revenue expands and via scheduled incremental increases. Sports economist Daniel Rascher, a subject matter expert used in the settlement process, wrote that he expects it will grow to more than $30 million per year by the time the deal expires.

Each school’s athletic department can decide how it will divide that money among athletes. Not many major programs have shared their budget plans, but those that have say they will spend the overwhelming majority (up to 90%) of their money on football and men’s basketball players.

Athletes are also still allowed to make money from selling the rights to their name, image and likeness (NIL) to other parties. The settlement creates a new set of rules and a brand-new organization called the College Sports Commission that will try to stop boosters from using NIL deals as additional salary payments, a practice that became commonplace in the past several years.

However, many teams are already working in concert with booster collectives to find creative ways to pad their payrolls with third-party NIL deals that fit within the new rules. Industry experts say football and basketball teams will likely have to find ways to provide several million dollars beyond the salary cap limits if they want to field a team that can compete for championships.

New legal challenges

Friday’s settlement ends a trio of federal antitrust lawsuits that had the potential to financially weaken the NCAA. But the deal does not end the long list of legal problems for the college sport industry’s business model.

The contracts that athletes are now signing with their schools will likely bolster ongoing legal arguments that at least some college players should be considered employees of their schools. The NCAA is fighting more than a dozen lawsuits that challenge rules about how long athletes are allowed to remain in college sports.

Many sports lawyers expect that key parts of the settlement will spur a new barrage of lawsuits — both the negotiated salary cap and the College Sports Commission’s attempts to stifle deals between athletes and third parties could be the target of future antitrust challenges. Schools will also likely have to defend their decision to provide most of the new payments to men’s sports teams against claims that their budgets violate Title IX — a federal law that prohibits gender-based inequity.

The NCAA’s next steps

NCAA president Charlie Baker and many of his colleagues say the only way to solve these remaining legal problems is for Congress to write a new law that blocks athletes from becoming employees and gives the association an antitrust exemption to make rules that would limit players’ earning power.

“In the weeks ahead, we will work to show Congress why the settlement is both a massive win for student-athletes and a road map to legislative reform,” Baker wrote in an open letter Friday night.

The NCAA and its schools have been lobbying federal lawmakers for help during the past several years, but they have made little progress toward a new law. They hope that the expensive compromises they made in the settlement will spur some action in the coming year.

The players’ next steps

A growing group of athletes and their advocates say the best way to solve the industry’s remaining legal problems is through collective bargaining.

Professional sports are able to set legal salary caps and restrict player transfers by negotiating for those powers with a player’s union. Because college athletes are not employees, they can’t form unions. Without unions, it’s not clear that any of the limits negotiated in the new settlement can stand up to future antitrust lawsuits.

Sedona Prince, a lead plaintiff in one of the lawsuits that led to the settlement, told ESPN on Friday night that she and her peers hope the settlement is a launching pad to increase players’ power in shaping new rules.

“We just walked into a new world,” said Prince, who wrapped up her college basketball career earlier this year. “It’s a guideline for us to build and add to in the future. We needed this foundation. Now we’re being treated like semipro athletes, but there are a lot of concerns going forward for improvement in player health and player representation in decision making.”

Prince is a member of Athletes.org, one of several groups that is aiming to form players’ associations that could evolve into unions in the future.

Those groups and college administrators are already gearing up for the next tedious stages of a battle that will continue to play out in courtrooms and the halls of Congress for years to come.