Settlement: Colleges can now pay athletes directly.

I'm hoping Harvard reaches a settlement with Voldemort so they can receive federal funds...to pay their football team. What an embarrassment!

Landmark House v. NCAA Settlement Approved by Judge, Allowing Colleges to Pay Athletes

For the first time in history, Division I schools are now free to pay their athletes directly, marking the dawn of a new era in college sports.

By Louise Radnofsky, Laine Higgins and Rachel Bachman, WSJ

June 6, 2025

The NCAA settlement will allow schools to pay the athletes that pay for them for the first time. Photo: Patrick Smith/Getty Images

• Federal judge approves $2.6B settlement for college athletes, allowing schools to pay them.

• Each Division I school can distribute roughly $20M yearly to athletes, starting this fall.

• Settlement immunizes NCAA against similar claims but questions remain about Title IX and legal challenges.

A federal judge in California finally approved a $2.6 billion settlement for college athletes that upends a century-old tenet of college sports—the notion that schools cannot pay the athletes that play for them.

U.S. District Judge Claudia Wilken on Friday ushered in a new era—a professional era—for college sports by signing off on a plan for the NCAA and the five most prominent sports conferences to settle a class-action lawsuit with current and former college players.

The deal will give backpay to some, as well as creating a system in which each Division I school will be able to distribute roughly $20 million a year to their athletes. Schools are poised to begin implementing the new model this fall.

The decision has been months in the making, drawn out in its final weeks by the judge’s insistence that the NCAA find a way to stop current athletes from losing their roster spots.

The settlement would “enable NCAA schools to share their athletic revenues with Division I college student-athletes for the first time in the history of the NCAA,” Wilken wrote in her 76-page opinion. She added that it was “expected to open the door for Division I student- athletes to receive, in the aggregate, approximately $1.6 billion dollars in new compensation and benefits per year, with that amount increasing over the next ten years.”

Each school that elects to share revenue with athletes will start by distributing more than $20 million in the coming academic year. That amount will reach about $32.9 million per school by 2034-35, the end of the injunctive-relief settlement, Wilken wrote.

The settlement brings the biggest changes yet to college sports, which until recently had banned athletes from earning much more than a scholarship, room and board. It comes on the heels of years of upheaval that have included loosened restrictions on off-the-field compensation for players, liberalized transfer rules and blockbuster television deals for schools and the chaotic conference realignment that followed.

Yet during all of that time, many college sports leaders had still resisted paying athletes directly from the billions of dollars in revenue they helped generate. Now, that restraint is off.

Schools have been readying for months for the settlement effects to land on their athletic departments, most immediately by transforming how they recruit and manage rosters in football and basketball.

In a letter published Friday evening, NCAA president Charlie Baker called revenue sharing “a tremendously positive change and one that was long overdue.” He also predicted that implementation could be rocky. “Change at this scale is never easy. This is new terrain for everyone,” he wrote. “There will be a transition period and certainly bumps in the road.”

Private equity has already been circling college sports, pledging to inject capital into schools but also to advise them on how to grow their sports business.

And athletic departments are openly wrestling over what the ruling means for the future of Olympic sports on campus. Most of these sports do not generate much revenue, but American campuses serve as the primary Olympic training ground for Team USA.

The settlement largely immunizes the NCAA against similar claims, a provision the association considered essential as it seeks to move past decades of court battles over payments for players. But it will almost certainly not end litigation over the shape of college sports.

LSU gymnast Livvy Dunne was one of those who objected to the settlement on the grounds that it won’t recognize the value of the compensation they missed out on.

It isn’t clear whether the money needs to be distributed equitably in accordance with Title IX, the federal statute that requires publicly funded institutions to provide equal opportunities to male and female athletes.

Aside from preparing for schools to distribute roughly $20 million a year to athletes, the settlement didn’t specify how exactly much should be allocated to each sport. The majority will likely go to football, the financial engine of most athletic departments, as well as men’s basketball.

Female athletes have raised questions over the payouts they are set to receive and what fair compensation looks like for them going forward. “This settlement doesn’t come close to recognizing the value I lost,” LSU gymnast Livvy Dunne said in an unsuccessful attempt to object to the settlement.

There’s also the open question of whether athletes getting paid by their institutions are working for them—a distinction that could open up schools to more legal challenges. But even without employee status, the settlement will transform the relationship between players and schools.