A federal judge in California announced on Thursday that she will not give initial approval to the current structure of a proposed settlement involving multi-billion-dollar antitrust cases concerning athlete compensation against the NCAA and the Power Five conferences.

After a remote hearing lasting 2½ hours, U.S. District Judge Claudia Wilken and the attorneys for both parties decided to return to her in three weeks with what she described as a “prognosis” regarding the proposal.

While Wilken noted that “it seems likely enough there will be a settlement,” she also suggested that the lawyers might come back and request a date for a trial instead.

Rakesh Kilaru, the NCAA’s lead attorney during the hearing, acknowledged the judge’s concerns, prompting him and the plaintiffs’ lawyers to reconsider if they have a viable deal at hand.

The proposed agreement includes nearly $2.8 billion in damages for current and former athletes over a ten-year period, and it would permit Division I schools to start paying athletes directly for the use of their name, image, and likeness (NIL), with a gradual increase in a set cap for each school.

However, the agreement also aims to regulate NIL payments under certain enforceable guidelines. Wilken expressed her concerns regarding those regulations, labeling them as “quite strict” and questioned if they might ultimately result in athletes losing access to payments they currently receive from collectives.

“Taking things away from people doesn’t work well,” she commented.

Additionally, Wilken questioned the legality of a settlement that could impact athletes who are still many years from college age – referring to a “6-year-old playing kickball on the asphalt.” She was concerned about representation for future classes of athletes who would be affected by the proposed settlement, and whether it was appropriate for the current plaintiffs’ attorneys to represent them given potential conflicts of interest tied to this deal.

The NCAA issued a statement on Thursday evening, highlighting that the settlement proposal emerged from “hard-fought negotiations” aimed at bringing stability and sustainability to college sports. They stated their commitment to carefully considering the court’s inquiries, which are typical in class action settlements.

The recent developments have caused unease among those involved in major college sports, particularly regarding Wilken’s concerns over the proposed regulatory framework, which the NCAA considers essential for a settlement. Kilaru emphasized that the NCAA maintains that pay for play remains against its rules, a stance supported by various court rulings.

Under the settlement terms, athletes would be required to report any NIL payments exceeding $600 to an established clearinghouse, with their agreements subject to review to prevent pay-for-play situations and ensure no contracts exceed market value.

Athletes seeking guidance on the legitimacy of their agreements would have the option to consult an enforcement group. Should the enforcement body try to impose sanctions on an athlete due to their deal, the athlete can take the matter to arbitration.

A source familiar with the situation remarked that Wilken’s concerns regarding this aspect could pose significant risks to the settlement’s viability: “I haven’t seen all of it yet, but it doesn’t sound good, that’s for sure.”

Wilken also expressed anxiety about how “booster” contributions for pay for play would be defined under the proposed framework.

“Today’s third-party donor” could easily become “tomorrow’s booster,” she wondered. She questioned whether significant gifts, such as a million-dollar donation or free vehicles, would classify as booster contributions. “Is that a collective? I don’t know. Is having a winning team a valid business purpose?”

Throughout the hearing, she directly challenged Kilaru on several occasions. When discussing the idea of schools directly compensating athletes for NIL within the specified cap, she queried Kilaru: “That wouldn’t be pay for play?”

Kilaru responded, “No, Your Honor.”

In closing, Wilken directed all attorneys involved to find an arrangement that is “workable, consistent, enforceable, and fair.”

Steve Berman, a key attorney representing the plaintiffs, commented to YSL News Sports later that Wilken’s apprehensions were “not totally unexpected.” He expressed optimism about negotiating a suitable arrangement, stating it wouldn’t be overly challenging and emphasized that it’s in the NCAA’s interest to avoid prolonged litigation.

Contributing: Matt Hayes, YSL News Network