The Flawed Plan to Control College Athletes’ Pay

March Madness culminates on April 7, when the NCAA men’s basketball championship game is played in San Antonio. Whichever team wins, it will be the second-most important thing to happen that day in college sports. The main event is slated for a federal courtroom in Oakland, California, where a district judge will hold a hearing on final approval for a settlement between the National Collegiate Athletic Association and former players who’ve sued in class actions over restrictions on pay. Under the agreement, which is expected to be approved, the NCAA would pay $2.8 billion in damages to former athletes and establish a framework for schools to compensate current players, with total pay capped at 22% of the average athletic department’s revenue (about $21 million for next season). It’s a watershed moment. After decades of fighting, the NCAA is fully surrendering the pretense of amateurism in college sports.

It’s also an ambitious gambit to regain control of the market for talent. Along with setting aside money for current and former athletes, the settlement would establish a clearinghouse for player sponsorship deals. Beginning in July, any contract for more than $600 would be subject to a “fair market value” assessment by accountants at Deloitte. At that threshold, most basketball and football deals in the current market would be included. Although it may sound like a routine bit of paperwork, the process promises to be highly contentious, putting the clearinghouse front and center in a power struggle over player pay.