Alexander Brown
A new era of college athletics is upon us, and leaders don’t have much time to prepare for the era of transformation.
College sports is on the verge of changing forever, as leaders of the NCAA and several levels of power conferences have agreed to destroy the amateurism model and share revenue with players, reaching a settlement over a multibillion-dollar lawsuit that threatened to lead to the collegiate bankrupt. athletics company.
The NCAA Board of Governors’ vote on Wednesday to accept the antitrust lawsuit settlements and move forward was a key rubber stamp. The SEC and Pac-12 are expected to vote on Thursday before it reaches the plaintiffs’ lawyers; Each of them is expected to approve the progress of the agreement in separate meetings.
The $2.8 billion settlement in House v. NCAA, a historic legal battle, has far-reaching implications anchored in revenue sharing and expanding roster sizes, which could also trigger more legal battles with Title IX implications. In the immediate future, the legal settlement is transformative for players: not only will past athletes be compensated for past restrictions on earnings from their name, image and likeness through the $2.8 billion settlement, but the settlement sets the stage for a future revenue-sharing model, the first in the NCAA’s long history, benefiting thousands of college athletes starting in fall 2025.
The NCAA and its conferences will hammer out the details of new revenue-sharing and governance models in the coming months, but a framework was revealed in internal documents uncovered by ESPN and Yahoo! Sports in recent weeks. Athletic departments must now prepare for new line items that could reach $30 million annually as the wealthiest schools prepare to share more than $22 million in revenue with players while expand roster size with unlimited scholarships, according to those documents.
The NCAA has agreed to pay past damages over the next 10 years ($277 million annually) and will finance the payments by cutting its revenue shares with Division I schools. If the case had gone to trial in January 2025, the The NCAA and its power conferences would risk being on the hook for more than $4.2 billion due to a triple multiplier tied to antitrust law. Worse still, had a settlement not been reached, the parties risked $20 billion in delayed damages linked to multiple antitrust lawsuits that could have forced them into bankruptcy, according to documents circulated last week among the presidents. of conferences.
“The most important part about the agreement – and let’s face it, there’s still a lot of work to be done – is that it creates some clarity and some visibility on a lot of issues that have been troubling everyone for some time,” said the president. of the NCAA, Charlie Baker, last week. “The other thing it does is create predictability and stability for schools. It creates a tremendous opportunity for student-athletes.”
Discussions over a settlement structure have been ongoing for nearly a year. The NCAA is responsible for 40% of the $2.8 billion settlement, and the remaining 60% will come from reducing its revenue distributions to the 32 Division I conferences over the next 10 years ($1.6 billion). The NCAA is using a formula based on revenue distribution presented to each league over a nine-year period beginning in 2016 that relies heavily on basketball units tied to NCAA tournament participation, according to Yahoo! Sports. The Power Five conferences – ACC, Big Ten, Big 12, Pac-12 and SEC – will pay 24% of the total damages, followed by the Group of Five at 10%. The FCS is at risk for 14% and non-football conferences Division I players will pay 12% of the overall settlement, according to documents reviewed by CBS Sports.
The commissioners of the 22 non-FBS conferences made a belated effort Monday to flip the financial structure so that the Power Five conferences would be responsible for 60% of the NCAA’s withheld distributions over the next 10 years, but that effort failed to 11th hour. when the NCAA Board of Directors approved the terms of the agreement mentioned that night. The 27 conferences outside the current Power Four leagues will account for 60% of the NCAA’s retained distributions.
Beyond monetary values and future revenue sharing, the deal also further widens the gap between the four power conferences fueled by football revenues and the Group of Five conferences in the Football Bowl Subdivision. The power conferences are also expected to devise a new governance structure to impose rules that will be separate from their compatriots. The legislation is expected to provide unlimited scholarships while restructuring roster limits, which could reduce the number of active football players but also allow programs to award more scholarships for sports like baseball that have long been time is tied to 11.7 bags to share with a team. of almost 40 players.
Further complicating relations between the conferences is the financial gap exacerbated by a recently approved revenue structure with the College Football Playoff, which shares most of its revenue with the Big Ten and SEC.
Simply put, just because the biggest lawsuit in NCAA history has been resolved and players will soon be paid after years of carrying a multibillion-dollar industry on their shoulders, it doesn’t mean the future will be free from monumental challenges that could lead to the elimination of sports and greater separation between the haves and have-nots among FBS athletic departments.
How much will current and future players be paid?
Schools among the Power Four conferences are expected to pay current players about $20 million annually as part of a new revenue-sharing program. The amount will vary from school to school, reflecting an estimated 22% share of the annual revenue generated by Power Four schools.
The deal is expected to include a cap on revenue sharing, which could reach $22 million annually per school, according to Yahoo! Sports.
“I think local decisions are good at times when schools that have more resources can do more,” ACC Commissioner Jim Phillips said last week. “…Therefore, some flexibility in the final decision and in a final agreement will be helpful to our schools.”
Former Pac-12 schools are included in the lawsuit as part of the payout for past harms. According to multiple reports, the five power conferences are responsible for about 40% of the NCAA’s school damage reductions (between $597.6 million and $730.4 million). These schools are expected to see an average drop of between $1 million and $2 million in annual NCAA revenue to fund the deal.
Group of Five schools are responsible for 17% ($255.6 million to $312.4 million) and Football Championship Subdivision conferences will share 22% of the reductions ($327.6 million to US$400.4 million).
Meanwhile, the NCAA is expected to reduce operating costs by $18 million per year by tapping reserves and insurance to help finance its portion of the legal settlement ($1.1 billion), according to Yahoo! Sports.
Will math work in Group of Five?
Many industry leaders, especially those from the Group of Five conferences, are concerned that revenue sharing could send more sports department budgets into the red, leading to the elimination of sports programs altogether. Many athletic departments are subsidized by university student fees and state funds, and some are already operating at a deficit.
More than 50% of Group of Five schools earn less than $40 million annually in revenue. The Power Five conferences (then including the Pac-12) combined generated more than $3.3 billion in revenue for the 2022 fiscal year, according to federal tax filings. Ohio State had $251.6 million in revenue last year to lead all Power Five schools.
“You really have to think about [Power Four] so different,” House counsel Jeffrey Kessler said during a panel at Howard University in April, according to Yahoo! Sports. “The reason we get tied up is because we confuse schools that have developed these gigantic independent commercial businesses with schools that are still just educational institutions with extracurricular activities. When you try to create one rule for everyone, you go crazy. You have to look at schools differently. For those who have money, there is plenty of money to compensate the athletes and share with women’s sports.”
Title IX and antitrust issues remain
Plaintiffs in the House lawsuit are expected to waive their right to file antitrust lawsuits against NCAA rules for 10 years, and plaintiffs’ attorneys are expected to drop two additional pending antitrust cases against the NCAA. This agreement could be strengthened if the NCAA were finally able to lobby Congress, which could codify the agreement with legislation that protects the NCAA and its members with an antitrust exemption. Congress, however, has been slow to act after receiving more than a dozen proposals regarding NIL guardrails in recent years.
Title IX also complicates things and future court battles may arise. The unspoken truth among administrators is that they seem unlikely to advocate equal pay for athletes whose sports earn less than football and men’s basketball.
“It is very likely that we will see non-profit sports get slaughtered,” said Jason Belzer, president of Student Athlete NIL. “Title IX is going to be a huge battle. How are you going to stop it? It’s going to be difficult.”
Many details still need to be finalized. Lawyers will soon draft the terms of the settlement, which they will then present to Senior District Judge Claudia Wilken in the Northern District of California at a yet-to-be-scheduled preliminary hearing.
List sizes and scholarship limits will change
The new model will likely increase scholarship limits, but will also limit list sizes. These details are expected to be finalized in the coming months at the conference level and may vary within Division I.
Theoretically, football roster sizes could be reduced from 120 to 100 players, but scholarships could be provided to all players instead of the currently mandated 85. the roster, rather than the oft-criticized 11.7 scholarship equivalencies that are shared among 27 players on a 39-player roster.
Once again, there is much to consider and discuss before numbers are finalized at the conference level over the next year.
What happens to NIL collectives?
The NCAA has also proposed a new enforcement infrastructure to target pay-for-play and booster-led NIL collectives, though details remain vague, according to documents obtained last week by Yahoo! Sports.
The documents state that the court will reaffirm the rules around compensation, “including prohibiting booster payments if they are not true NIL.” Schools will also receive “economic incentives” to house NIL collectives within the university.
“Collectives will not disappear if there is a salary cap,” said Russell White, president of The Collective Association. “Universities will continue to want to compete above and beyond (basic revenue shares).”
Ten-Year NCAA Revenue Reduction Projections
- FBS Power Five: $597.6 million to $730.4 million
- Group of Five FBS: $255.6 million to $312.4 million
- FCS: US$327.6 million to US$400.4 million
- Big Ten: $149 million to $182.6 million
- ACC: $141.3 million to $172.7 million
- SEC: $111.6 million to $136.4 million
- Big 12: $99 million to $121 million
- Pac-12: $96.3 million to $117.7 million
