By James Sutherland on SwimSwam
Earlier this week, the NCAA agreed to pay $303 million to settle a class-action lawsuit with volunteer coaches, who allege the organization engaged in illegal wage fixing under a rule that prohibited schools from paying them.
The lawsuit represents 7,700 volunteer coaches who worked for a Division I sport (other than baseball) at any point from March 17, 2019, until June 20, 2023.
That means, on average, each coach will receive $39,350 (before expenses and taxes), though the actual amount earned by each coach will be determined by a specific formula, as can be found in the joint declaration by the plaintiffs here (page 41).
PAYOUT PROCESS
The NCAA will put $303 million into a “Qualified Settlement Fund,” and three payments of $101 million will be made to coaches. Payouts to coaches will be made based on their “Recognized Loss,” which aims to calculate how much a coach was underpaid during their time working as a volunteer. Princeton economist Dr. Orley Ashenfelter will calculate a Recognized Loss for every six-month period that a class member served as a volunteer coach. (Each six-month block is a “Class Member Half-Year.”) To estimate what the volunteer coach should have been paid, they use the salary of the team’s lowest-paid non-volunteer coach during that same six-month period (reference coach). Dr. Ashenfelter then applies a “stepdown factor,” accounting for the fact that the volunteer coach would’ve likely been paid less than the lowest-paid regular coach. The size of the stepdown comes from a regression analysis using post-conspiracy salary data, comparing the lowest-paid coach and the second-lowest-paid coach after the Volunteer Coach Rule was removed. Once each class member’s Recognized Loss is calculated for each Half-Year they coached, they are matched to their corresponding periods and receive their share of the settlement fund based on those totals. Using this methodology, the total will come out to less than $303 million, according to the document, so Dr. Ashenfelter will “scale up” all Recognized Loss amounts until the total comes to $303 million. If the methodology results in any Class Member Half-Year with a scaled Recognized Loss below $2,500, they’ll be given $2,500. “In no event will any Claimant be allocated less than $5,000.”Example Used In Document:
For example, assume a Class Member who coached a Division I softball team for the 2021 calendar year. If the data show that the Reference Coach on that team was paid $65,000 in the 2021 calendar year, the two Class Member Half-Years for that calendar year will have reference wages of $32,500. If the stepdown for softball is 45%, the Recognized Loss associated with those Class Member Half-Years would be $17,550 [$32,500 – ($32,500 x 0.45)], making the Class Member’s total Recognized Loss for the year $35,100 [$17,550 + $17,550]. That Recognized Loss will then be scaled into a final Scaled Recognized Loss, which will be distributed to the Class Member in three equal payments.
In 2023, the NCAA removed its policy that allowed volunteer coaching positions, which opened up room for more paid coaches on rosters if schools were willing to pay.
The lawsuit represents volunteer coaches in every Division I sport other than baseball because, in November 2022, baseball coaches filed a similar lawsuit and reached a settlement with the NCAA earlier this year for $49.25 million.
“We are incredibly proud of this settlement which, if approved, will provide significant and meaningful compensation to thousands of hard-working coaches,” the lawyers for the coaches said in a statement, according to Front Office Sports. “We look forward to the approval process and are committed to ensuring that these funds are distributed to coaches in a fair and efficient manner.”
The settlement is still awaiting approval from Judge William B. Shubb in the U.S. District Court for the Eastern District of California.
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