At the end of January, the Ivy League, a National Collegiate Athletic Association (NCAA) Division I conference, announced that it is opting out of the settlement reached in House v. NCAA. The settlement, which was reached as a result of negotiations among current and former student-athletes, the Autonomous Five conferences (the Atlantic Coast Conference, Big Ten, Big 12, Pac-12, and Southeastern Conference), and the NCAA, proposes a $2.8 billion resolution of claims against the conferences and NCAA that they unlawfully prevented student-athletes from receiving a share of various revenue streams associated with their athletic participation.

As discussed at length on several episodes of our Highway to NIL podcast, the settlement would, among other things, eliminate the NCAA’s current policy against direct institution-to-student-athlete payments while imposing an annual cap and other restrictions on those payments. The projected limit on direct institution-to-student-athlete payments for schools that opt into the settlement for the 2025 academic year is $20.5 million per institution. Those institutions that opt into the settlement are also subject to various reporting and recordkeeping requirements to ensure strict compliance with this limit.

The Ivy League’s decision to opt out may signal its intention to retain the revenue derived from the broadcasting of its collegiate sporting events. In other words, the Ivy League is choosing not to share that revenue with the participating student-athletes. This would also mean that the Ivy League would avoid similar restrictions established by the settlement, such as the settlement’s reporting and recordkeeping requirements.

Opting out, however, also presents some risk. First, part of the $2.8 billion settlement is to be funded via reduced distributions to NCAA conferences. Indeed, despite the Ivy League’s decision to opt out, the NCAA will nonetheless look to the Ivy League to pay its fair share of the settlement through reduced annual distributions, meaning the Ivy League would still bear the financial impact of the settlement without the attendant benefits. Second, opting out may have a negative impact on future recruiting efforts by Ivy League institutions. Whereas institutions that opt into the settlement can promise their student-athletes direct payments in the form of a share of broadcast revenues, greater scholarship opportunities, and other related benefits, Ivy League institutions will not be able to make those same promises. Of course, Ivy League institutions have historically not offered athletic scholarships. Therefore, its decision to opt out may be less disadvantageous compared to other schools that compete in the more traditional market for student athletes.

While the true impact of the opt-out remains to be seen, it will be important to closely monitor any additional “opt-outs” and their relative strength in the collegiate sporting realm in the months and years to come should the House settlement be fully approved.