Colleges across US can pay athletes directly in landmark NIL agreement

Schools across the United States can now directly pay college athletes under a landmark settlement approved by a federal judge on Friday, June 6. The agreement, valued at $2.8 billion, established a 10-year revenue-sharing model in college sports, enabling athletic departments to distribute approximately $20.5 million in name, image and likeness (NIL) revenue to athletes during the 2025-26 season.

Additionally, the NCAA will pay nearly $2.8 billion in damages to Division I athletes who were previously prohibited from signing NIL deals, with compensation dating back to 2016. U.S. District Judge Claudia Wilken initially declined to approve the settlement due to concerns over scholarship limits, which would have caused thousands of athletes to lose spots on Division I teams.

After revisions, implementation of these limits may now be delayed for several years, allowing schools more time to adapt. The changes will also allow colleges to offer more full or partial athletic scholarships, reshaping the financial and competitive aspects of college sports.

Participation in the revenue-sharing model is voluntary, and institutions that choose to take part are not required to pay the full $20.5 million. The Ivy League, for example, opted out of the settlement, choosing to continue its longstanding amateurism rules for student athletes. The league recently won an antitrust lawsuit upholding its policy against offering athletic scholarships.

The settlement builds on legal challenges that have reshaped NCAA regulations in recent years. In June 2021, the U.S. Supreme Court unanimously ruled against the NCAA in a landmark decision, asserting that college athletics should be treated more as a commercial enterprise than as an education-focused activity. This ruling triggered a wave of lawsuits and scrutiny that have greatly disrupted the collegiate sports landscape.

NCAA President Charlie Baker expressed optimism about the settlement, calling it a pivotal moment for college athletics.

“Approving the agreement reached by the NCAA, the defendant conferences and student-athletes in the settlement opens a pathway to begin stabilizing college sports,” Baker said. “This new framework that enables schools to provide direct financial benefits to student-athletes and establishes clear and specific rules to regulate third-party NIL agreements marks a huge step forward for college sports.”

The agreement signals a transformative shift in the treatment of college athletes, challenging traditional notions of amateurism while advancing their financial rights. By allowing direct payments to athletes, the settlement introduces a new era in which student-athletes are recognized as contributors to a lucrative entertainment industry, with wide-ranging implications for recruitment practices, competitive balance and the prioritization of sports programs at higher education institutions.