By Deborah A. Gubernick and Hayden Burnight
After a year of chaos in the collegiate athletics space, clarity has arrived: On June 6th, Judge Claudia Wilken issued the final approval of the House settlement in the Northern District of California.[i] The approval comes five years after the initial class action suit was brought by lead plaintiff Grant House, a former Division I swimmer at Arizona State University. The suit challenged NCAA restrictions on student athletes’ ability to receive payment for their name, image, and likeness (NIL). After a preliminary approval of the settlement on October 7, 2024, the parties made revisions at the request of Judge Wilkins, and the settlement was approved eight months later. The House settlement marks the end of a pivotal legal dispute in college athletics and is expected to bring structure to the path ahead while compensating some athletes for missed opportunities.
Although student-athletes have been able to accept NIL compensation from third parties since 2021, the groundbreaking terms of this settlement bring sweeping implications for institutions, student-athletes, and fans of college athletics. The settlement is multifaceted and involves a retroactive payout to prior student athletes, introduces a revenue sharing arrangement that allows schools to pay players directly, imposes roster size limitations, and completely reforms the system for enforcement of these policies.
A payout by the NCAA of almost $2.8 billion dollars will compensate Division I athletes who competed any time in the last nine years for NIL opportunities that were forfeit due to the pre-House NCAA rules. Nearly all of this payout (almost 95%) will go to football, men’s basketball, and women’s basketball players.[ii] In addition to this retroactive payment, current players will now be able to receive compensation from universities directly. Throughout the 2025-2026 academic year and beyond, universities can share as much as $20.5 million with their athletes. It remains to be seen how the revenue will be shared among different sports, but the decision will ultimately lie with each university.
The elimination of roster spots is the most contentious aspect of the settlement, with the number of athletes per team being rigidly capped at a certain number for each sport. This was the main issue that held up the approval of the settlement, with Judge Wilken refusing to proceed until the parties figured out a way to mitigate any adverse effect on current student-athletes. The compromise reached allows Division I programs to remain over the roster limits until current players have depleted their NCAA eligibility. In the near future, there will be less total roster spots available in college sports.
The House settlement has also reimagined the way in which NIL compensation rules will be monitored and enforced. The College Sports Commission LLC (CSC) has been established to oversee the implementation of the settlement terms. The CSC is intended to be an impartial regulatory body that can fairly monitor revenue sharing and third-party NIL deals for compliance with the new rules. The CSC will also handle alternative dispute resolution for disputes arising out of NIL deals – arbitration for these cases would occur with the CSC acting as the arbiter.
The CSC will also oversee a new system called NIL Go, to which athletes must self-report any NIL deals worth $500 or more. The accounting firm, Deloitte, will audit these deals as they are reported.[iii] As part of the new oversight and enforcement scheme created by the settlement, the CSC plans to ensure that each deal has a “valid business purpose” and is not merely a payment as a recruiting incentive.[iv] In a letter sent to schools on July 10th, the CSC notified universities that it has begun to reject some NIL deals between athletes and donor-backed collectives, finding that these arrangements have no “valid business purpose.”[v]
Considerations for Universities
Compliance with the conditions of the Settlement will require great preparation and care. It is also important to note that conferences are entitled to set independent policies for their institutions, so exact requirements may not be uniform across all Power Five schools. It will be necessary for universities to overhaul their athletics compliance offices to adequately equip them to keep up with these significant changes and ensure they stay informed of new developments.
Title IX issues may be implicated as institutions decide how they want to apportion revenue sharing to different sports. If current predictions are accurate, a majority of the $20.5 million will go to football players at schools with robust football programs. Third-party NIL endorsements are outside the scope of Title IX, but revenue sharing from the university itself is likely to be subject to the requirements of the statute. Universities that opt-in to the settlement should seek confirmation from the NCAA that they are in compliance with Title IX before issuing payments pursuant to revenue sharing agreements.
Considerations for Student-Athletes
Student-athletes stand to gain in significant ways from the House settlement but should be apprised of its rules and effects before participating in revenue sharing agreements or new NIL deals. They should familiarize themselves with the reporting requirements and with NIL Go.
Taxation presents another consideration for athletes. As with third-party NIL payments, any money paid by an institution pursuant to a revenue sharing agreement will be treated as taxable income. The IRS treats all income from NIL activities as taxable income.[vi] There is typically no tax withheld from third-party NIL agreements, and this requires student-athletes to calculate how much they will owe in tax at the end of the year. It remains to be seen whether tax withholdings will be part of the structure of revenue sharing agreements, but regardless, the tax treatment of revenue sharing distributions is a significant aspect to monitor for student athletes. It is important for athletes to set aside enough to pay their taxes to avoid significant penalties and late fees that can quickly multiply if not paid timely.
Courts are yet to provide guidance on what the House settlement means for student-athletes’ status as employees, but this too could have tax implications. Athletes may wish to consult a tax advisor for proper guidance.
Looking to the Future
While the House settlement brings a measure of clarity to college athletics and the NIL space, significant questions and uncertainties remain. For example, will schools need to ensure gender equity in direct payments or benefits tied to NIL or revenue sharing? How will this impact budgeting across men’s and women’s sports and Title IX issues? Will NIL Go achieve the transparency and fairness intended by the system? Will student-athletes ultimately be classified as employees down the road? And most importantly, are universities and schools prepared to navigate this new landscape?
While there is no current national NIL rules, soon after the House settlement was finalized, Congress introduced the College Student-athlete Protections and Opportunities through Rights, Transparency, and Safety Act (“College SPORTS Act”). The College SPORTS Act is aimed at providing consistency and clarity at the federal level regarding NIL rights, scholarship security, and employment status. Time will tell whether the legislation is adopted.
In the meantime, the academic year is set to start next month and sports programs across the country will again take the field. The 2025-2026 season is poised to generate headline-making moments and continued evolution in the NIL space. With NIL developments continuing to unfold, this season is shaping up to be one of the most dynamic and memorable in history. We will all be watching.
Deborah Gubernick is an intellectual property and commercial litigation partner at Snell & Wilmer where she helps small and large clients protect and defend their brands and business in the U.S. and abroad.
Hayden Burnight is a 2025 summer associate at Snell & Wilmer and a 2026 J.D. Candidate at the University of Notre Dame. He is not yet admitted to practice law.
[i] The settlement resolves three lawsuits, House v. NCAA and Carter v. NCAA, filed in U.S.D.C. – Northern District of CA, Case Nos. 4:20-cv-3919 and 4:20-cv-04527 (known as House or collectively known as In re College Athlete NIL Litigation) and Hubbard v. NCAA et al., U.S.D.C. – Northern District of CA, Case Number 4:23-cv-01593.
[ii] Knight Commission on Intercollegiate Athletics, Brief on House v. NCAA Settlement, James L. Knight Found. (Feb. 12, 2025), https://www.knightcommission.org/wp-content/uploads/KnightCommissionBrief_HousevNCAA_182025.pdf.
[iii] Dan Shanoff, The Launch of NIL Go Signals a High-stakes Evolution in College Sports: MoneyCall, The Athletic (June 11, 2025), https://www.nytimes.com/athletic/6418924/2025/06/11/nil-go-deloitte-bryan-seeley-college-sports-commission-moneycall/.
[iv] Dan Murphy, Judge OK’s $2.8B Settlement, Paving way for Colleges to Pay Athletes, ESPN (June 6, 2025), https://www.espn.com/college-sports/story/_/id/45467505/judge-grants-final-approval-house-v-ncaa-settlement.
[v] Eddie Pells, The New College Sports Agency is Rejecting Some Athlete NIL Deals with Donor-Backed Collectives, Associated Press (July 10, 2025), https://apnews.com/article/nil-college-payments-71c0e114c9feb1e1a9e3651df2149123.
[vi] Internal Revenue Service, Name, Image, and Likeness (NIL) Income, IRS (Apr. 23, 2025), https://www.irs.gov/businesses/small-businesses-self-employed/name-image-and-likeness-income#:~:text=Generally%2C%20all%20income%20from%20NIL,like%20merchandise%20or%20gift%20cards.
