Anthony Wilson
O House vs. House Agreement NCAA means a line in the sand. Since NCAA v. University of Oklahoma Board of Regents 1984, we did not see a court ruling fundamentally altering the landscape of college athletics in this way.
The agreement not only distributes about $2.8 billion in back payments from NIL, but also establishes a framework for athletes’ future revenue sharing. Details still need to be resolvedbut it is a landmark step for players to participate in the financial windfalls they generate.
While the NCAA is responsible for about 40% of the settlement, much of the burden will fall on member universities. Power conference schools are prepared to contribute about 24% of the bill, leaving the often cash-strapped schools that make up the rest of Division I to cover the remaining 36% of the total settlement.
It’s a historic moment in college sports that will generate multiple layers of consequences over the coming months and years. For now, here’s an initial look at the winners and losers of the House vs. House case. NCAA.
Winner: The Players
Finally, players will get a share of the billions of dollars flooding into the NCAA, conferences and individual schools. While the advent of NIL compensation was a step in this direction, these payments largely come through third-party collectives funded by major financiers and average fans. Now, the sports departments themselves are finally strained financially by the workforce that powers their products and sustains their budgets. While the $2.8 billion owed in back payments is staggering, that number will be dwarfed by the amount paid to athletes in the coming years as part of the revenue sharing framework established by the case.
Loser: The NCAA
For decades, the NCAA has fought on behalf of its member schools to preserve the amateurism model. This officially marks the end of that war. While the House treaty guarantees the NCAA’s survival as an organization, it will be a diminished entity, subject to $1.1 billion in the settlement. That money will come from its reserves and budget cuts, as CBS Sports said Brandon Marcello reported. That means some tough years lie ahead for the NCAA office in Indianapolis as it finds its feet in a new era. Although the alternative to a settlement would have been a potentially fatal decision, this is still a huge loss for the NCAA.
Winner: Boosters and Fan Wallets
Athletic departments will still need reinforcements to make large cash contributions, probably now more than ever as their budgets are squeezed amid a decrease in NCAA distributions and the advent of revenue sharing. But boosters and casual fans won’t be as directly needed to fund talent acquisition. The term “booster fatigue” has become common in the college sports lexicon. Now, the main burden of paying players will fall on athletic departments. This takes the financial pressure off supporters, who are already shelling out for seat licenses, season tickets, travel, merchandise, parking, concessions, cable packages and all the other expenses that come with being a college sports fan.
Loser: Competitive Balance
Power conference schools are preparing to share about 20% of their media rights revenue with athletes. The total could exceed $20 million annually per school, further establishing the big boys as the top destinations for the nation’s most talented players. Even if Group of Five or FCS teams set aside a similar percentage of their broadcast rights deals for player compensation, it will pale in comparison and widen the gap between the haves and have-nots. While big-name schools have always been the preferred landing spots for most high-profile players, the remuneration model in the pre-NIL era was the same: players were not supposed to earn anything. Then came NIL and the abolition of transfer restrictions, which made it more difficult for programs with limited resources to attract and retain talent. This agreement is another setback to the competitive aspirations of those outside the power conference structure.
Winner: the NCAA Tournament
While a larger portion of the House settlement bill is falling on the other 27 Division I conferences than the Power Four, there is a silver lining for the little guys: Preservation of the NCAA Tournament. The deal essentially ties the power leagues to the NCAA for the next decade. This makes a complete breakaway from the Power Four to form their own postseason basketball league even less likely than it was before. Whether the Big Dance will expand is another question, but we should still see the Cinderellas giving the blue bloods a run for their money every March.
Loser: Non-Revenue Sports
The fate of non-revenue sports (which at most schools means everything beyond football and men’s basketball) will hang in the balance as athletic administrators grapple with the financial ramifications of the deal. In addition to potential measures such as staff cuts and delays in modernizing facilities, sport without revenue could be at risk. This is especially true for departments that are already struggling with financial solvency. With hits coming into their NCAA distributions and increasing pressure to pay players in high-level sports, don’t be surprised to see lower-level Division I departments eliminate some of their financially inefficient programs to survive.
Winner: The Lawyers
Billable hours remain undefeated and the gravy train is just beginning for lawyers. Unraveling the minutiae of the House process will take months and perhaps even years for an army of lawyers and paralegals. There’s a lot of legal work ahead to ensure your late payment gets into the right hands. While the Chamber’s case may be one that goes down in history, it will not be the end of the legal issues for the unstable and evolving business model altered by the settlement. The murky implications of Title IX and the ongoing search for an antitrust exemption also provide more work for law firms.
Loser: mid-level department bloat
As of September 30, 2023, the Ohio State Human Resources database lists 139 athletic department employees with salaries greater than $100,000. That’s just one example of the bloat that has crept into programs across the country as they look for a place to park the annual fortune generated by high-level college football. A large portion of Power Four revenue is now expected to be used to pay players, which could spell trouble for the army of associate athletic administrators, executives, assistants, assistants and seniors employed by most power conference schools. This decision will also likely accelerate the push from private equity firms to have a seat at the table and have a say in how the sports departments of the future will be formed. That could mean the end of rising wages and cushy jobs for the mass of mid-level administrators who have claimed a foothold in the fabric of college sports for the past 25 years.
Winner: Big Ten and SEC
Let’s steal a synopsis from my colleague Shehan Jeyarajah, who broke down How the House Deal Will Impact College Athletics over the next few years and highlighted the Big Ten and SEC as two clear winners here.
“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 raised $30 million annually per school in just the last few seasons. The ACC and Big 12 have distributed approximately $44 million per school overall. To effect By comparison, the Big Ten TV contract alone could be worth more than $75 million per school annually.”
