The NCAA model took another hit late Friday when a federal district judge awarded class-action status to an ongoing antitrust lawsuit against the NCAA.
U.S. District Judge Claudia Wilken ruled in House v. NCAA that not only the original plaintiffs could proceed with their lawsuit but potentially thousands of NCAA athletes could be grouped into a class that may potentially have been harmed. The lawsuit filed in 2020 seeks $1.4 billion in damages representing name, image and likeness revenue those athletes could have earned if it had been allowed during their enrollment.
The lawsuit seeks backpay for NIL and a portion of broadcast revenues. Former Arizona State swimmer Grant House is the lead plaintiff in the case; he is joined by former Oregon basketball player Sedona Prince and former Illinois football player Tymir Oliver.
Under antitrust law, damages would be tripled if the NCAA loses -- meaning a potential payout of $4.2 billion. The NCAA's net assets for fiscal 2022 were $458 million.
Two legal experts who spoke with CBS Sports questioned the NCAA for not settling. The strategy may impact the association's ability to govern or even exist.
"It's really a worst-case scenario for the NCAA," said Arkansas-based attorney Thomas Mars, who is steeped in NCAA legal affairs. "That makes it a [potential] kill-the-company case. It's generally not a good idea to gamble on kill-the-company. That's why boards and CEOs always settle class actions before certification if they can."
Beyond finances, an NCAA loss in this case could basically destroy the collegiate model, which is based on uncompensated athletic participation being part of the educational experience. The ruling is also significant because Wilken is the same judge who ruled against the NCAA in the landmark O'Bannon v. NCAA and NCAA v. Alston antitrust cases.
Those cases -- eventually decided in favor of the plaintiffs -- weakened the NCAA. Legions of experts have speculated that the age of paying players as employees or the debut of collective bargaining is near.
"No. 1, financially, if the NCAA has to pay $4.2 billion, that puts the whole entity, enterprise at risk," said Mit Winter, an attorney and sports law expert. "I don't know if they can pay that. In terms of the model going forward, assuming plaintiffs end up winning, schools would be able to pay athletes directly. It would eliminate all restrictions."
A trial is scheduled for January 2025. The NCAA already faces significant legal cases that could impact its ability to govern or even exist.
- Johnson v. NCAA asks that athletes be labeled employees subject to the Fair Labor Standards Act.
- Hubbard v. NCAA seeks back payment for Alston revenues not paid to athletes. The NCAA sought to limit benefits related to education, such laptops, study abroad etc. The Supreme Court removed that limitation.
- Two basketball prospects recently sued the NCAA over being declared ineligible at Chicago State because of their participation with Overtime Elite Academy. Before the 2022 school year, Overtime Elite began offering scholarships instead of salaries. Other athletes have been declared eligible after playing basketball at Overtime Elite.
- Several complaints are asking the National Labor Relations Board to declare employment status for athletes in the Big Ten, Pac-12 and Dartmouth.
"Big picture, if I'm a school, I'm really questioning [whether] I remain a part of the NCAA," Winter said. "What am I really getting out of that? I'm continually part of an organization that gets sued … for ever-increasing sums. Where is that endeavor going to be? Is it better to leave the NCAA and start something new with a group of schools where I know I won't get sued?"
The NCAA's unsuccessful strategy attempting to push cases to the limit goes back more than 25 years. In 1998, the NCAA lost a case brought by assistant coaches whose wages were capped by the association. The NCAA paid $67 million after damages were tripled. The decision to take Alston to the Supreme Court two years ago was criticized by many because it opened the door to unregulated NIL benefits.
"The problem with organizations like the NCAA deciding to fight until the last dog's dead is that sometimes they end up being the last dog," Mars said.
