Why The NCAA’s Decision To Keep Roster Limits Could Hurt In The Long Run

The NCAA and Power Conferences have doubled down on roster limits, refusing to budge by even allowing for gradual implementation despite feedback from Federal District Judge Claudia Wilken strongly suggesting they at least “grandfather in” athletes currently on rosters. Directly defying a request from a federal judge is a risky maneuver, particularly when the NCAA and Power Conferences have structured their entire future operations around the assumption that Judge Wilken will approve this settlement. If the NCAA has a coherent, good-faith argument for refusing to phase in roster limits over time, they have not been forthcoming with it. The NCAA and Power 4 are playing a game of chicken with Judge Wilken with no discernible upside.

The feedback from Judge Wilken came as part of the final fairness hearing for the House settlement last Monday in a Federal courtroom in California. The bustle surrounding the hearing ultimately came to a relatively anti-climactic ending. Judge Wilken asked the two sides that crafted the settlement agreement (a class of athlete plaintiffs and the NCAA and Power Conferences as defendants) to consider the feedback they received in the 7-hour hearing and come back with any necessary changes in a week. That shouldn’t be interpreted to mean that Judge Wilken thinks the settlement is severely flawed, as she conceded that she thought it was a “good settlement,” before requesting that she not be quoted on that (she has been, several times).

The hearing was an opportunity for the parties who crafted the settlement to give their final arguments regarding the settlement being “fair, adequate, and reasonable,” which is the standard on which Judge Wilken must make her decision. It was also an opportunity for those who filed formal objections to the settlement to be heard. According to Sam Ehrlich’s College Sports Litigation tracker, 16 formal objections were filed, most of which were filed on behalf of several parties, some of whom prefer to remain anonymous.

The objections raise issues with nearly every major aspect of the settlement, including the revenue-sharing limit, gender equity and Title IX concerns, roster limits, and the calculation of damages paid to former athletes. Unfortunately for many objectors, Judge Wilken made very clear at the beginning of the hearing which issues she was most interested in: third-party NIL limitations and roster limits. She emphasized that this was not a Title IX or an employment law case, but an antitrust case. This does not mean Judge Wilken thinks the settlement aligns with gender equity standards or that Title IX does not apply to revenue sharing. On the contrary, she (and plaintiff’s counsel, Jeffrey Kessler) emphasized that a Title IX case can still be brought separately. This meant that the several objectors who were in the room to discuss their problems with gender equity/Title concerns or the calculation of back damages were mostly speaking just to be heard, as their arguments were not going to sway the judge. (For more on the gender equity concerns surrounding the settlement, read Forbes contributor Allison Smith’s article.)

There was also a surprising amount of time discussing issues surrounding the injunctive relief class (i.e. current and future athletes). Judge Wilken frequently brought up the hypothetical “10-year-old playing on the asphalt” that is bound by this settlement despite having no real opportunity to object and not having their interests represented in settlement negotiations. The parties made some minor changes to the language of the release in the settlement.

Third-Party NIL Restrictions

Third-party NIL restrictions were a major reason Judge Wilken initially declined to give the settlement preliminary approval in September. The terms of the settlement require athletes to report any third-party (i.e. not from the school) NIL deal worth over $600 to a clearinghouse. That clearinghouse would first determine whether the deal was with an “associated entity” (NCAA code for booster). If the clearinghouse determines that the payor is an associated entity, then they will determine “if they are within a reasonable range of compensation and made with the purpose of using a student-athlete’s NIL to advance a valid business purpose.” Despite this being one of the few issues that Wilken directly expressed an interest in, it got surprisingly little airtime in the hearing and was not addressed in the Defendants’ reply brief filed Monday night.

Roster Limits

Roster limits have been the most contentious issue before, during, and after Monday’s hearing. Two of the most notable objectors to speak at the hearing were among the few who didn’t work for fancy three or four-name law firms. Gracelyn Laudermilch, a high school senior track and cross–country athlete, and Ganon Flynn, a current Division-I swimmer, both spoke about how the roster limits and their immediate implementation have already impacted current and future athletes. Loudermilch, in particular, gave compelling testimony about how she was offered a spot on a Division-I roster, only to have that offer later rescinded when the school announced it was opting in to the terms of the settlement. Flynn made the case that there would have been far more objectors to the settlement, but current athletes believed that coming forward would result in their schools cutting them from the roster.

Judge Wilken also had strong comments regarding the roster limits. Near the beginning of the hearing, when plaintiffs’ lead attorney Jeffrey Kessler was extolling the benefit of removing scholarship limits in favor of roster limits, Judge Wilken called it “small comfort” to those who do not get the roster spot or scholarship. Wilken also seemed persuaded by the several objectors who argued for a phasing-in period for roster limits (or grandfathering in players already on rosters). She encouraged the defendants to consider amending the agreement, saying, “It’s not that many people. It’s not that much money… It would save a lot of goodwill and angst and unhappiness from a lot of students and their parents.”

Even with that input and feedback, the NCAA and Power Conferences were unwilling to budge on their roster limits, potentially putting the whole settlement at risk.

Why Do the NCAA and Power Conferences Want Roster Limits?

In their reply brief and in the hearing, counsel for the NCAA, Rakesh Kilaru, emphasized that the roster limits represent a fair compromise and that the agreement would not have happened without them. They have further argued that limiting roster sizes is a part of all organized sports. They’ve said that the roster limits also represent a tradeoff for scholarship limits (as one objector astutely pointed out, roster limits are still scholarship limits). While these may all be justifications for why the NCAA should be able to implement roster limits, they still haven’t made any good arguments for why they want to do it.

Some may point to competitive balance as an issue. While it’s true that all professional sports have roster limits to help prevent talent hoarding and promote competitive balance, those do not work out the same in college athletics (it’s also worth reiterating that professional roster limits are collectively bargained for). There is no draft system in college sports. Athletes are free to go play for whatever school wants them. Schools cannot just draft and hoard young talent. Further, professional players are frequently locked into team control for 4+ years by the team that drafted them. College athletes have a much easier time changing schools if they are unhappy with their playing time or compensation via the transfer portal. College athletes have shown a propensity to go somewhere that they can play right away rather than “wait their turn” at more prestigious programs. This has created more distribution of talent across the Power Conference level to the extent that SMU and Indiana, who have not historically been relevant in the national football space, made the College Football Playoff last season over traditional powerhouses like LSU and Alabama. The hypothetical 106th player on Alabama’s football roster would not be an All-American at Vanderbilt.

Cost-control for schools has been another frequently cited reason for roster limits. Much like the competitive balance argument, this falls apart pretty quickly. There is no requirement under the settlement terms or under the current rules that every player gets a scholarship. Having several tuition-paying players (walk-ons) on the team is economically beneficial to schools, not detrimental. If it becomes a budgetary issue to outfit and practice with additional players, schools and coaches could easily limit rosters as their needs dictate.

The Myth of Increased Scholarships

Jeffrey Kessler extolls the great benefit that the settlement agreement brings to college athletes in the form of vastly increased scholarship opportunities. During the hearing he specifically brought up the increase in track and field scholarship limits (up to 45 from 12.6). While Kessler is technically correct (often the best kind of correct for a lawyer), the practical application of the settlement is going to look a lot different. While the settlement allows for schools to provide more scholarships, they are not required to. Combine that with the fact that any additional scholarships would count against the proposed revenue sharing cap under the settlement, and the likelihood that schools will actually offer additional scholarships is all but zero. Schools have already indicated that they will spend as much of their cap space on football and men’s basketball as they can get away with. They will funnel that money to top-end talent instead. Kessler should know better (and almost certainly does).

Judge Wilken Likely to Approve

The consensus among legal experts remains that the NCAA’s unwillingness to budge on roster limits will not be enough to torpedo the settlement. However, it greatly increases the likelihood that she will decline approval. Again, implementing roster limits as an unnecessary competitive balance measure would be an odd hill to die on. The future the NCAA has hoped to create currently lies in Judge Wilken’s hands, and despite the fact that she made reasonable and clear requests regarding roster limits, they have essentially dared her to decline approval.