In a long-awaited decision, Judge Claudia Wilken of the U.S. District Court for the Northern District of California has approved the proposed settlement in House v. NCAA (In re College Athlete NIL Litigation). The suit, originally filed in 2020, challenged the NCAA’s prohibition on college athletes’ ability to earn compensation for their name, image, and likeness (NIL) and revenue derived from the broadcasts of athletic contests. In May 2024, the NCAA’s membership voted to settle the suit with $2.57 billion to be paid in damages to current and former student-athletes and a significant change to the collegiate model. With the proposed settlement now finalized, college athletics will quickly transition from the “NIL era” to the “revenue sharing era.”

Future Revenue Sharing

Beginning on July 1, 2025, Division I institutions will be permitted to share revenue derived from athletics directly with student-athletes for the first time. An aggregate of $1.6 billion dollars per year in new compensation and benefits will flow from universities to Division I athletes. These payments will largely come in the form of revenue sharing agreements. Institutions will have a cap on the amount of revenue they are permitted to share with athletes. The cap will be set at 22% of the average revenue of the NCAA’s Power Five conference members—expected to be $20.5 million per institution in the 2025–26 academic year and increasing each year thereafter.

Preliminary Revenue Sharing Contracts

Beginning in December 2024, some Division I institutions began providing student-athletes with revenue sharing contracts (or memorandums of understanding for future revenue sharing contracts). Largely, these MOUs have included language that transferred a significant portion of the athletes’ NIL licensing rights to the university, in exchange for the promised revenue sharing compensation.

Third-Party NIL Deals

Direct revenue sharing compensation will be independent of any third-party NIL arrangements or deals with an NIL collective. Agreements with third parties which exceed $600 will be subject to approval by a newly established clearinghouse, NIL Go. Beginning on June 7, 2025, all such third-party NIL deals must be reported to the clearinghouse. Deals will then be reviewed to ensure that NIL deals are for a valid business purpose and do not exceed a “reasonable” range of compensation. Many have speculated that the primary function of the clearinghouse will be to limit the funds disbursed by NIL collectives—booster funded entities that typically exist solely to fund NIL efforts at a particular institution. Athletes will have an opportunity to appeal any rejected deals to a neutral arbitrator.

Implications for College Athletes and their Agents

Collegiate student-athletes should immediately review any NIL agreements they have entered into that are currently in effect (i.e., they are still being paid, or the contract has not expired). While a number of NIL collectives rushed to disburse funds prior to June 30, 2025, others have taken a different approach. Many athletes still have an NIL collective contract that extends well into the new revenue sharing era. It is important to understand how that contract may be affected by the House settlement or future revenue sharing contracts and payments. Many NIL collective agreements that extend beyond June 30, 2025, explicitly permit the collective to reduce compensation on a dollar-for-dollar basis with revenue sharing payments or assign the agreement to the university in its entirety.

Moreover, athletes and their agents should review any obligations, rights, and responsibilities stemming from initial MOUs that may have been entered into prior to the House settlement being finalized. Likewise, athletes may be receiving longer-form revenue sharing agreements now that the final settlement has been approved.

What to Look for in Revenue Sharing Contracts

While the forthcoming revenue sharing era is viewed as a net positive for athletes nationwide, it does not come without its risks. Athletes should take particular care to understand the specific terms associated with their new revenue sharing agreements. Early revenue sharing agreements (and the preceding MOUs) have been extremely one sided in favor of institutions. Some examples of university-friendly terms have included:

• Unilateral amendment of an athlete’s compensation partway through a deal;
• “Clawbacks” of compensation paid if an athlete transfers or is kicked off a team;
• Overly broad termination language; and
• Waiver of an athlete’s future rights to bring a lawsuit against the institution.

Although these examples are common red flags that athletes should look for, there are dozens of other provisions that should be closely reviewed. Importantly for athletes and their representatives, these revenue sharing agreements are starkly different than the professional sports player contracts that are typically standardized and bargained for by a union (e.g., the NFLPA). There is no group that has represented the players in drafting the terms of these revenue sharing contracts. Otherwise, universities have drafted them entirely on their own accord and largely to their benefit. This underscores the even greater need for athletes and agents to consider working with experienced counsel before agreeing to the terms of an NIL revenue sharing agreement.