NCAA Refusal To Budge On Roster Limits Puts House Settlement At Risk

Judge Claudia Wilken has told the parties she will not approve the historic House settlement if they cannot agree on a change to the settlement’s egregious roster limit provisions. The Judge’s 5-page order comes after the parties (most likely at the NCAA/P4’s insistence) doubled down on the immediate implementation of roster limits, despite Judge Wilken’s explicit request that they find a way to “grandfather in” those already on rosters. Judge Wilken gave them two weeks to fix the issue. If the NCAA/Power 4 Conferences are unwilling to do so, this case (which is really a combination of three similar antitrust cases) will head to trial.

ForbesWhy The NCAA’s Decision To Keep Roster Limits Could Hurt In The Long RunBy Joe Sabin

Going to trial is a perilous proposition for the defendants. If the court finds that the NCAA and Power 5/4 Conferences (the Defendants) violated antitrust laws by fixing athlete compensation at $0, the dollar figure it could be on the hook for is nearly incalculable and could even render the NCAA insolvent. The gap between the theoretical NIL value of tens of thousands of athletes who contributed to a multi-billion-dollar industry and $0 is difficult to quantify, but that’s precisely what the court would try to do. Then they would triple that number, as required under antitrust law. The Defendants issued the following statement regarding Judge Wilken’s order, which would seem to indicate that they are hoping to avoid trial: “We are closely reviewing Judge Wilken’s order. Our focus continues to be on securing approval of this significant agreement, which aims to create more opportunities than ever before for student-athletes while fostering much-needed stability and fairness in college sports.”

Going to trial also presents some risks for the plaintiff athletes, future athletes, and even the plaintiffs’ attorneys. While most legal scholars believe that the NCAA’s business model, particularly as it pertains to compensation of athletes, violates antitrust laws, it’s no guarantee that a judge would rule that way. A win for the NCAA and defendant conferences would not only put the benefits to athletes the NCAA agreed to in the settlement in jeopardy, but it may empower them to (re)impose even more restrictive rules regarding athlete compensation. It would also reduce the currently agreed-upon $2.6 billion in payments to former athletes down to $0. Not to mention, the plaintiffs’ attorneys’ fees that currently sit around $500 million would also disappear. Notably, a full trial could take upwards of five years, continuing the uncertainty in college sports.

ForbesNCAA House Settlement Hearing Primer: The Decision Before The JudgeBy Joe Sabin

The Defendants’ decision to double down on roster limits despite Judge Wilken’s request is confounding. While they have made arguments defending why they should be allowed to implement roster limits, they have yet to coherently explain why they want or need to implement roster limits, an important distinction. Even after Judge Wilken offered them the low-hanging fruit of at least “grandfathering in” those already on rosters, the defendants refused to do so. In the brief accompanying their final revised settlement agreement, they argued that grandfathering in current athletes was impracticable and would “cause significant disruption” because “member institutions and student-athletes have been proceeding on the understanding that the roster limits would ‘likely’ go into effect immediately.” Judge Wilken (rightfully) wasn’t buying that argument. In her order, she stated “… the decision… to begin implementing roster limits before the Court granted final approval of the settlement agreement is not a valid reason for approval of the agreement in its current form…” She hammered the point home by adding, “Any disruption that may occur is a problem of Defendants’ and NCAA member schools’ own making.”

ForbesWhat Nico Iamaleava’s Holdout Means For The Future Of NIL ContractsBy Kristi Dosh

It’s worth emphasizing just how unpopular the immediate implementations of roster limits are. The NCAA has never been particularly self-aware, but for PR reasons alone, this would have been an easy win. Judge Wilken tried to get the NCAA to understand this point in the fairness hearing on April 7 stating “There are not that many. It’s not that expensive. It would generate a lot of goodwill.” There were also numerous objections (potentially hundreds) to the House settlement based on the roster limits, whether they be formal briefs from attorneys or informal letters from interested parties. Even after the NCAA/P4 filed their brief doubling down on the immediate implementation of limits, the court received over 120 letters and added them to the docket.

If you’re thinking this was a shrewd, risk-free move by the NCAA/P4 to test the waters on whether they could get away with immediately implementing their roster limits, think again. Had the NCAA/P4 acquiesced to Judge Wilken’s first request, they could have implemented a relatively restrictive scheme allowing limited waivers for who would get to keep their roster spots. They could have maintained a modicum of leverage and control. Now, the plaintiffs can essentially write whatever policies they desire regarding the implementation of roster limits. In a statement to ESPN’s Dan Murphy, co-lead attorney for the plaintiffs Steve Berman said “There is this one last issue. Given the leverage we now have — that the NCAA and defendants understand if we don’t fix this then we’re off to trial — I’m confident they’ll see the light.” If that wasn’t enough, Judge Wilken has requested that some of the objector attorneys (including one of the more effective objectors, Laura Reathaford) be involved in drafting/developing this part of the settlement agreement, essentially acting as the NCAA’s babysitters.

The NCAA/P4 will almost certainly cave (although it seemed obvious they would the first time Judge Wilken asked). A lengthy, expensive trial with prospects of an 11-figure judgement to pay out at the end is too big a risk for the defendants to bear. It’s safe to assume that the settlement would then be approved, allowing current athletes to keep their roster spots. The NCAA will undoubtedly attempt to gain some goodwill on this, highlighting their “willingness” to look out for current athletes while trying to stabilize the future of college athletics. This revisionist history should be ignored. Nobody should forget that the NCAA had to be bullied into doing the (obviously) right thing by a federal judge (again).