As 22 conferences balk at House case damages bill, extent of industry tumult revealed
As Thursday’s settlement deadline fast approaches in the landmark House v. NCAA case, non-Football Bowl Subdivision leagues are making an aggressive, 11th-hour attempt to shift more of the burden of the damages bill to power conferences.
But at this late stage in settlement talks – a variety of sources told On3 on Monday – it is doubtful the non-FBS leagues wield enough leverage to alter the state of play in what is expected to be one of the most consequential weeks in the history of college sports.
The public display of discontent from non-FBS corners illustrates the immense chasm between the power leagues and the non-FBS ranks. It underscores the extent of the fracture between two vastly disparate groups that inexplicably try to operate under the same proverbial Big Tent umbrella.
There is no indication, at least at the moment, that stakeholders who wield the most leverage are willing to entertain reshaping the contours of the framework for the damages bill. And the clock is ticking.
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University leaders in the ACC, Big Ten, Big 12, Pac-12 and SEC conferences are voting on the settlement proposal in the coming days. The terms entail schools being able to pay athletes as much as $22 million annually in a revenue-sharing model that will radically reshape the enterprise.
But opting into the revenue-sharing model is optional. What is not optional is the damages bill of some $2.77 billion expected to be shared by the NCAA and all 32 Division I conferences, including those outside the named defendants (the NCAA and five power leagues).
All of the conferences learned earlier this month that they would be on the hook for the bill, sources said. They also received a memo last week laying out the financial breakdown, according to sources. Some 60% of the $1.6 billion that falls to conferences will come from leagues outside the Power Five fraternity and 40% will fall to power leagues.
Frustration builds in non-FBS ranks over damages
That breakdown has been the source of no shortage of consternation among leaders in the non-power five ranks.
It has spurred Big East Commissioner Val Ackerman to voice what she termed “strong objections” to the proposed damages framework in recent emails to NCAA President Charlie Baker and his legal counsel.
Plus, it has prompted the group of 22 commissioners outside the FBS ranks to propose an alternate damages framework, which would shift the percentage of the damages bill that falls to power leagues to nearly 60%.
“We have not been involved in the settlement negotiations or damage allocation modeling, and learned of the settlement status two weeks ago,” reads a letter from the 22 commissioners to several NCAA governing boards, a copy of which was obtained by On3.
Later, the letter states: “The NCAA [damages] model results in non-autonomy conferences bearing 60% of the burden even though 90% or more of the back damages will likely accrue to student-athletes from the autonomy conferences.”
Various NCAA governing boards include representation from members of non-FBS schools, so they will have a voice in the room during discussions. But as sources stressed, this settlement is not another step in seemingly endless layers of NCAA bureaucracy.
It’s a legal case between two parties, and the named defendants are the NCAA and power conferences, sources indicated.
Do non-power conferences have leverage?
In her May 18 memo, a copy of which was obtained by On3, Ackerman wrote: “The liability of the 22 non-FBS conferences (including the Big East) under the proposed formula appears disproportionately high, particularly because the primary beneficiaries of the NIL ‘back pay’ amounts are expected to be FBS football players.”
Ackerman details that, for the Big East, the withholding of NCAA distributions over the next decade could cost in the $5 to $7 million range annually.
“Smaller conferences would also see multimillion-dollar hits in future years,” Ackerman wrote.
“The damages liability in this case is separate from the ‘going forward’ revenue-sharing component, which is likely to add an additional layer of future expense to our schools, particularly in the sport of basketball,” Ackerman added.
But given the ticking clock and the position of non-FBS leagues in the industry’s hierarchy, perhaps Ackerman’s most relevant point was this concession:
“At this stage,” Ackerman wrote, “it is unclear how much time or leverage we will have to alter the plan the NCAA and the A5 [power leagues] have orchestrated.”