The National Collegiate Athletics Association and the five most prominent athletic conferences agreed to a $2.77 billion settlement of a class-action lawsuit on Thursday, ushering in a new era of college sports in which schools can pay athletes directly.
The move marks a dramatic shift for the NCAA, breaking with its century-old stance that college athletes are amateurs and therefore cannot share in any of the money they generate for their universities.
The settlement will resolve a case that began in 2020 and was seeking back pay for athletes who were barred from earning compensation from endorsements, as well as a cut of future broadcast revenues.
It also marks the latest rule the NCAA has been forced to change amid an onslaught of legal challenges in recent years.
First, the NCAA allowed athletes to receive academic bonuses and profit from their name, image and likeness. Now, the biggest domino of all has fallen: For the first time ever, some players are going to be paid directly by their schools for playing their sports—a seismic shift that will completely reshape the business model for the top end of this billion-dollar industry.
The result is the creation of a system that will give Division I schools the ability to distribute roughly $20 million a year to their athletes, said people familiar with the matter. Though a final agreement is likely months away, the NCAA’s willingness to modify its stance on athlete compensation so dramatically—after a century of treating the notion of paying players as an existential threat—signals a landmark shift.