BlogLine

Paying college athletes – it’s about Title IX, not titles won

6/17/24

By: Noël Couch

On the heels of the U.S. Department of Education announcing the release of its final Title IX Regulations on April 19, 2024, the NCAA and its five power conferences agreed on May 23, 2024 to a multi-billion dollar settlement in the House v. NCAA, Hubbard v. NCAA, and Carter v. NCAA federal antitrust lawsuits. The Title IX Regulations prohibit discrimination on the basis of sex in education programs or activities receiving federal financial assistance. The proposed settlement agreement requires the NCAA to pay more than $2.7 billion in damages over ten (10) years to past and current athletes who were prohibited from marketing and profiting off of their name, image and likeness, and also allows schools to share millions of dollars in revenue per year with their athletes. Schools will have to consider carefully how they distribute those dollars to ensure they do so in a way that complies with Title IX. This is uncharted territory and schools currently do not have clear instruction for how to ensure such compliance under the revenue-sharing model.  

Title IX requires schools to provide equal opportunity based on sex, measured by (1) the benefits, opportunities, and treatment given to men’s and women’s teams; (2) how a school awards athletic scholarships and financial assistance; and (3) how a school is meeting students’ athletic interests and abilities. The Department of Education provides guidance to schools for how they can ensure compliance with the law. However, it is not evident what requirements a school must meet regarding direct payment to athletes. 

As a portion of the $2.7 billion in damages will be distributed to former athletes, such distribution may not be subject to Title IX regulations. Regarding the revenue-sharing dollars, should the payout be considered a benefit (falling under the first measurement of a school’s compliance with Title IX), compliance may be evaluated based on whether men’s and women’s teams are offered dollars in equity. This would be similar to how schools currently evaluate their compliance with travel and daily allowance, in which they assess whether athletes on men’s and women’s teams are offered equivalent meal allowances when traveling to games.  

On the other hand, there is debate over whether the dollars are athletic scholarship aid (falling under the second measurement of a school’s compliance with Title IX). It appears the payouts are dissimilar from a scholarship, yet could be comparable to athletic financial assistance. Therefore, it is possible that the revenue-sharing dollars would need to be divided in equity among men and women athletes as required under Title IX. 

The settlement agreement would not resolve all pending legal issues surrounding the business of college athletics, including designating college athletes as employees or allowing collective-bargaining. Title IX is not applicable in the employment context. Should the industry eventually move in that direction, schools would likely be faced with new considerations in how they are complying with Title IX. As the industry evolves, uncertainty regarding compliance is almost certain to persist and schools are likely to seek legal guidance for years to come.  

The settlement agreement remains subject to approval by U.S. District Judge Claudia Wilken. Further, in its press release announcing the new Regulations, the Department of Education indicated its rulemaking process is still ongoing for a regulation related to athletics, with no indication of the specific issues it would cover. The absence of direct instruction as of yet from the Department of Education regarding paying student-athletes under a revenue-sharing model means that legal experts will serve as a resource for schools in proceeding with the distribution of dollars and gauging any potential exposure to litigation related to Title IX. 

For more information, please contact Noël Couch at noel.couch@fmglaw.com or your local FMG attorney.