Anthony Wilson
A major turning point in college athletics is about to come to fruition. The historic case House v. NCAA is just a few steps from a settlementwhich will fundamentally put an end to amateurism as we know it.
For the first time, schools will directly share a portion of revenue with athletes. Scholarship and roster rules are expected to change. Major athletic departments will help do a massive back damage check. More significantly, the case could help provide some legal protection for college athletics as it heads into the future of the NIL era.
Once all Power Five conferences and the NCAA Board of Governors approve the settlement, it will return to the plaintiffs for approval. Then, the entire group will go to a judge to formalize the agreement and institute it. This process can take several weeks.
Here’s how the inevitable deal will impact athletic departments and the on-field product in the coming years.
The Big Ten, SEC wins again
The financial impact to athletic departments, especially among power conferences, will be exorbitant. The NCAA will bear most of the costs through reserves, insurance and budget cuts, but the schools themselves are still at risk. According to documents obtained by Yahoo SportsPower conference schools are expected to shell out up to $30 million a year for the next 10 years to cover revenue-sharing distribution, retroactive damages and expanded scholarship costs.
If you wonder why Texas and Oklahoma went to the SEC while USC and UCLA defected to the Big Ten, the potential cost of litigation played a significant role. A massive new Big Ten television contract could essentially fully cover the cost of the new reality for the Trojans and Bruins.
For other schools, it won’t be so simple. The ACC’s total ESPN television contract has grossed $30 million annually per school in just the last few seasons. The ACC and Big 12 distributed approximately $44 million per school overall. For comparison, the Big Ten TV contract alone could be worth more than $75 million per school annually. New money from the College Football Playoff expansion could also provide some protection as Power Four schools jump from $5 million per school to at least $12 million per school under the new system.
How much will your school owe in back injuries?
The NCAA settlement is projected to be worth nearly $2.8 billion over the next 10 years. The NCAA will assume 40% of the total cost, with 60% coming from withholding distributions to Division I institutions. Of that last number, 40% will be paid by the legacy Power Five, 17% by the Group of Five and 22% by the Championship Subdivision of Football, with other remunerations coming from conferences not related to football. The cost to former Power Five schools will be between $1 and $2 million over the next 10 years, based on a memo obtained by Yahoo Sports. Group of Five schools will lose approximately $400,000 annually, with FCS programs losing close to $280,000. However, the settlement price is only a small part of the much larger cost.
Where will the money come from?
The entire college athletics system was built on the idea of an unpaid workforce. By eliminating the higher cost of sports, universities were free to spend almost unlimited money on coaching and administrative salaries, facility upgrades and more. According to a USA today analysis, programs wasted nearly $200 million on coaching acquisitions alone during the 2023 season, an incomprehensible and frankly offensive amount of waste.
Considering that the majority of coaches’ salaries come from booster fundraising, it remains unlikely that high salaries will disappear completely. However, programs will have to be much smarter in using limited resources. The focus on facilities has diminished as name, image and likeness (NIL) payments have gained prominence, and this is only expected to increase now.
Of course, some sports departments may have to make difficult decisions to deal with budget shortfalls. Especially for those on the periphery of the Power Four, cutting sports or scholarships could be on the horizon. Stanford, which has the largest athletic department in the country, is expected to receive roughly a 30% revenue share from the ACC to begin with when it switches conferences this fall.
List Sizes and Scholarships Can Change Dramatically
As part of legal negotiations, the NCAA is considering removing the limit on guaranteed scholarships in all sports. Instead of limiting compensation, the NCAA would try to protect competition by focusing on roster sizes.
Currently, football teams can field 120 players but are limited to 85 scholarships. In a future system, the squad could be reduced to 100 players, but all of them could be on scholarship. Not to mention the additional income from revenue sharing. There are already examples of programs using NIL direct payment to get around scholarship rules, such as former five-star quarterback Cormani McClain’s transfer from Colorado to Florida.
But while football is the big fish, other sports can really reap the benefits. Baseball teams are limited to 11.7 scholarships on a 39-player roster. That could change, but the implications of Title IX could also be significant, as schools would then have to fund 27 additional scholarships for women’s sports.
Increased scholarship obligations will be another important cost for universities. Not all programs will be able to handle them, which will create yet another gap.
Revenue sharing is coming
The NCAA and college football have fought hard against universities’ direct payments to players over the years, but that effort likely ends in this case. As a condition of the agreement, athletic departments can begin directly sharing revenue from television contracts and ticket sales with athletes.
At the program level, the agreement would create a system in which approximately $20 million would be distributed to players. This amount represents about 22% of the annual revenue of Power Four schools, but it will reach many programs in different ways. UCLA’s 2022-23 operating income, for example, was approximately $105 million, per Sportico. Ohio State’s, on the other hand, was nearly $280 million.
The cost could also be crushing for the Group of Five. For example, Louisiana-Monroe reported a total athletic budget of just $19.4 million. While ULM and similar programs are not required to pay athletes, this will only increase the divide between the haves and have-nots.
But how revenue sharing will work is undecided.
While the agreement opens the door to revenue sharing, it does not establish any terms for the practice. These details will be resolved in the coming months. The details can radically impact the effectiveness of the practice in the years to come.
Now, the vast majority of NIL collectives pay money to football and men’s basketball players. For example, Washington basketball transfer Great Osobor reportedly scored a $2 million NIL settlement, which would represent nearly 10% of a university’s entire revenue-sharing budget. Taking into account factors like Title IX, the NCAA will have to establish ground rules for how the money is divided.
Potentially, the NCAA could decide that all athletes from a school or a specific sport should receive the same pay, rather than negotiating and offering individualized contracts within the cap. This would apparently keep the door ajar for collectives as a supplementary form of income.
In some ways, NCAA President Charlie Baker has tried to prepare for this moment. Last year, he proposed a revenue-sharing model in which schools could opt into a new legal classification of college football, similar to how the Power Five was given “autonomy status” to make rules. The Football Bowl Subdivision competition would be exactly the same, but behind the scenes, certain schools could have status to set rules for themselves.
Under Baker’s proposal, programs that accept would directly pay a certain amount of their players through a trust fund, with a minimum of $30,000 per year for half of their athletes. Membership in the first division would require accepting these payments and playing a certain number of sports. Baker’s proposal could establish guidelines for how the NCAA hopes to approach revenue sharing in the future.
The role of collectives remains up in the air
The early years of the NIL era were strange and placed exorbitant pressure on fans to essentially crowdsource major football programs through collectives. By participating in revenue sharing, the pressure on collectives to provide a primary income to sports athletes on campus will decrease, which represents a huge win for fans.
The NCAA is optimistic that the settlement will reinforce the NIL’s guardrails, which have been gutted after numerous legal losses. This could lead to shifting collective operations internally. Several schools have already hired specific staff and contacts to handle NIL in anticipation of the change.
However, colectivos could fight the change and claim they exist for legitimate endorsement purposes, which could soon lead to more lawsuits. The NCAA has lost almost every lawsuit it has fought on NIL grounds.
Surprisingly, other sports slowly began to take the lead in college athletics. The Las Vegas Convention and Visitors Authority has signed all players on the WNBA’s Las Vegas Aces to a $100,000-a-year sponsorship, which could potentially double their salaries. The biggest complication? The WNBA can collectively bargain to create rules against payments like this, while college athletics cannot. Essentially, there is still no legal recourse for external payments.
More questions to be answered
Unfortunately, the deal is unlikely to solve everything. The employment situation remains open, along with collective bargaining. The NCAA is still seeking an antitrust exemption from Congress, as professional sports have done, which would allow it to set rules for players more easily without legal recourse. Even the reestablishment of the NCAA’s enforcement power in NIL matters would not signal the end of the NCAA’s complications; working through collectives and transfer rules are among the countless other questions that remain.
However, House v. NCAA will still be a historic agreement that addresses some of college football’s biggest underlying issues. Most significantly, it permanently alters the relationship between athletes and universities by ending direct payment for athletic participation. College sports will never be the same.
