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Justin Williams
By Justin Williams
The Athletic
(Fourth in a series)
The House v. NCAA settlement, granted final approval Friday, has been
touted as a means of restoring order to this Big Money Era of college
sports. Starting this summer, Power 4 and other Division I schools can
begin directly paying their athletes via an annual revenue sharing
pool capped at roughly $20.5 million per school in year one.
But because schools have been preparing to navigate this new world
order — and how to gain a competitive edge under it — many in the
industry expect the budding NIL arms race to continue at the top of
the sport, and at a price point much higher than the cap.
“The top (football) teams are going to cost $40-50 million a year,”
said one power conference personnel director. “That’s where this is
going. Anyone who thinks different is nuts.”
That projected “budget” includes additional NIL (name, image and
likeness) payments from collectives and outside organizations to
athletes on top of the capped revenue sharing from the school. It
would be a steep increase from the market-setting $20 million in NIL
money Ohio State funded its roster with last season on the way to a
national championship. But most significantly, a number of industry
sources believe that $40 million-$50 million rate will continue beyond
this upcoming season, where a number of top-end rosters have been
uniquely built with front-loaded, pre-settlement NIL deals.
This cuts directly against the intent of the settlement, which is
designed to stamp out the unspoken pay-for-play deals that have
hijacked the NIL marketplace and keep ballooning roster budgets in
check.
“No chance,” the personnel director said.
It’s one of the many changes, intended and unintended, coming to
college sports under the House settlement.
Schools opting in have spent the past year bracing for the financial
reckoning this settlement will bring, including where the revenue
share money will come from and how it will be distributed. College
athletics have been trending in this direction, and to the benefit of
most athletes, particularly those in revenue sports who will receive a
bigger cut of the billions in television, sponsorship and ticket
revenues that pour into power conference athletic departments.
Many of those same departments, however, are already struggling with
the challenges of this transition.
“We’re all just trying to figure it out as we go through it,” said one
power conference head football coach. “The whole deal is to make it a
level playing field, but I don’t think that will ever be realistic.”
The Athletic spoke with more than a dozen sources across each of the
Power 4 conferences about how they plan to approach this new revenue
sharing model and all that will come with it — including in-fighting
between coaches at the same school, why “tanking” could factor into
college sports and how programs will continue to bend rules and find
competitive advantages in a post-settlement era.
The sources include athletic directors and administrators; coaches,
general managers and personnel staffers in football and men’s
basketball; and others involved in NIL and collectives. All were
granted anonymity in exchange for their candor.
The $20.5 million revenue sharing cap goes into effect July 1 and
covers every sport under a school’s athletic department. The most
prominent football programs expect to have about $15 million of that
pool at their disposal, with top programs supplementing that budget
with third-party, “over-the-cap” NIL deals.
But not so fast, my friends. The settlement includes a new oversight
and enforcement arm — named the College Sports Commission — that
requires outside deals from collectives and other associated companies
and organizations to reflect a valid business purpose and fall within
an approved range of compensation. The settlement establishes a
clearinghouse, dubbed NIL Go and managed by the accounting firm
Deloitte, which instructs athletes to self-report any third-party NIL
deals worth $600 or more for review. The idea is that any of those
deals that fail to meet a valid business purpose and/or fall within an
approved range will be flagged, and must be adjusted or taken to
arbitration.
From the perspective of the NCAA and power conference leadership, this
new enforcement is meant to bring competitive balance and transparency
to a lawless, untenable NIL marketplace. But among those who have
witnessed the NCAA’s inability to police that marketplace in the past,
there’s a lot of skepticism that the settlement will change things.
“It all sounds great in theory, but how will it actually work?” asked
one power conference athletic director.
Industry sources familiar with the clearinghouse and enforcement plan
insist it will have more (and swifter) latitude and punitive power
than the NCAA wielded in the NIL era. Until it actually drops that
hammer, it’s done little to scare off coaches and recruiting staffs
with passionate, deep-pocketed donors.
A number of sources questioned whether athletes will even report their
third-party deals, or do so accurately. Others suggested that deals
getting challenged by the clearinghouse — or the fact that they have
to be disclosed at all — could spark more antitrust legal action from
collectives. Other sources were outright dismissive.
“If you tell a booster or business owner they can’t give a star player
$2 million, there will be lawsuits,” said the personnel director.
“There’s no enforcing this. Fair market value? F— Deloitte. This is
going to get even crazier.”
A legit enforcement arm with some teeth — perhaps in the form of
suspensions or ineligibility — might change that sentiment, and
multiple athletic directors suggest that if the clearinghouse merely
serves as a minor deterrent to egregious pay-for-play payments, it
will be better than pre-settlement circumstances. But others think the
undertow of NIL and collectives is too strong to turn back now.
“There are a lot of rich people that can’t buy a professional sports
franchise, but they can give a ton of money to their alma mater,” said
a power conference administrator. “And if you’re telling millionaires
and billionaires what they can and can’t do with their money, you’re
probably going to lose that battle.”
Finding the money
The over-the-cap arms race is for high rollers only. It will attract
the premier programs that expect to win national championships, but
for most schools, even in the power conferences, their focus is on how
they will fund a new $20 million budget item.
Power conference athletic departments operate as self-sustaining
organizations with $100 million budgets, where expenses more or less
line up with revenues. Operating this way, even as millions upon
millions in annual television revenue flowed in, is how the
conferences and NCAA became ensnared in so much legal trouble to begin
with. Untangling those norms is an admittedly first-class problem, but
will require significant budgetary adjustments, including new revenue
growth and cost cutting.
Most schools are leaning on fundraising and seeking new or increased
assistance from campus subsidies or student fees. Virginia Tech, for
example, recently announced it will increase student fees and direct a
larger portion to athletics to help fund revenue sharing, a path
plenty of other schools are considering. Iowa State athletic director
Jaime Pollard referenced as much in a recent interview, while noting
that Cyclones athletics receive no financial subsidies from the
university.
“Iowa State does not have that (additional) $20 million, but if we
don’t pay it for this coming year, we have big problems, right? So
we’re going to pay it,” said Pollard. “Would you pay a bigger fee (as
a student) … to go to school here so that a member of our men’s
basketball team could get paid $1.5 million in addition to their
scholarship, their room and board, and all the services they get for
being a student on campus? That’s the fundamental question we’re going
to have to ask ourselves. Because if we don’t do that, then what we’re
saying is that we’re not going to have the athletics program that
we’re having.”
Even with increased fees and fundraising, there will also be
widespread belt-tightening on things like administrative staffing and
athlete benefits within athletic departments, such as eliminating
Alston payments and reevaluating meal offerings in the facility.
“If a player is making $500,000 a year, why am I still paying for
three meals a day?” said another power conference administrator.
There could be new revenue streams from things like on-field logos or
naming rights. Long term, departments might get creative, whether
that’s an in-stadium restaurant that’s open year-round, purchasing its
own housing complexes for athletes or inviting private equity. Last
December, Oklahoma State coach Mike Gundy and Florida State coach Mike
Norvell each restructured lucrative contracts, returning a portion of
their salary to the school after disappointing seasons. Kentucky
recently announced it is transitioning its athletic department to a
nonprofit LLC.
Fans will feel it too. Schools such as Tennessee and Arkansas have
already increased ticket or concession prices to fund revenue sharing.
Some may pass processing fees onto customers, or explore local
restaurant and hotel taxes. And the fundraising calls won’t stop.
Fully eliminating non-revenue varsity sports is another last-resort
option for most athletic directors, but it’s already begun, at least
outside the power conferences. UTEP discontinued women’s tennis. Cal
Poly did the same with men’s and women’s swimming and diving. Saint
Francis (Pa.) announced plans to reclassify all athletics from
Division I to Division III, just one week after its men’s basketball
team played in the NCAA Tournament. Utah shuttered its women’s beach
volleyball program, though it did not mention the House settlement and
rather cited conference realignment.
“I know for a fact schools are definitely talking about it,” said an
administrator.
By any route, the ability for schools to spend the full amount of that
annual revenue sharing cap — which will be essential to staying
competitive, particularly at the highest levels — is a significant
financial undertaking, and one few athletic departments can cobble
together without upending their standard operating procedure.
“Right now it feels like Monopoly. We’re planning to spend to the cap,
but we have to figure out how we’re getting there,” said the power
conference athletic director. “If you cut a million somewhere, sure
that helps, but if you cut $5 (million) or $10 million, you’re really
hurting your department.”
Everyone wants their share
Generating the money is the first hurdle. Then schools have to decide
how to distribute it among their sports. Most FBS athletic departments
plan to use the settlement’s backpay formula as a blueprint, with
roughly 75 percent earmarked to football ($15 million), 15-20 percent
to men’s basketball, 5-10 percent to women’s basketball and whatever
is left to the non-revenue sports.
Certain universities, like Texas Tech, have been transparent with the
percentage of funds going to each sport and how those are calculated.
But because there are no stipulations for how the pool must be
allocated, it will vary between schools. And could create some dicey
internal dynamics.
“There is absolutely in-fighting (between coaches),” said an administrator.
Head coaches at the same school are essentially vying with one another
for a bigger chunk of revenue share. One power conference
administrator said their school plans to direct as much as 25 percent
to men’s basketball, which means less for football. There have also
been rumblings about how this could benefit the best-resourced
basketball programs in the Big East or WCC that don’t have to share
with football.
“There are going to be some challenging and difficult conversations,”
said another power conference AD. “Coaches will be paying more
attention to the revenue figures of their program than ever before.
Everybody wants to make a case why their rev share should increase.”
AGREEMENTS AND INNOVATIVE APPROACHES
Once a school allocates its revenue share dollars, it’s up to teams to
build out the roster accordingly. “Rev cap management,” as one AD
phrased it.
Many schools have already signed athletes to preliminary revenue share
agreements — whether through collectives or the actual university —
specifying that payments will transfer to the athletic department on
July 1. In addition to the wave of frontloaded NIL deals in recent
months, as collectives emptied the coffers ahead of the settlement,
schools are inserting notable caveats into these agreements. Some have
buyout clauses, where athletes would have to pay money back to a
school if they leave before the end of the agreement, similar to
coaching contracts. Some suggest that because compensation is based on
NIL, it can be adjusted up or down based on performance and/or playing
time. Others have strict injury clauses.
“With some negotiations, we were very direct that if you’re not
healthy, you’re not getting the money,” said another power conference
personnel director.
Whether any of these stipulations hold up in a legal sense remains to
be seen, but it’s clear that after years of schools and coaches
feeling they were on the short end of the NIL power dynamic, they are
attempting to wrest back that control. Still, numerous people
consulted for this story said the vast majority of initial revenue
share agreements will be for one season until there’s clarity on how
legally binding these agreements truly are. Repeats of the Nico
Iamaleava holdout saga might be less likely for the time being, but
there could be standoffs over payment disputes.
Unlike in the NFL, where there is a rookie salary scale and fairly
transparent free agency, college football teams are still navigating
best roster-building practices. How much money do you set aside for
high school recruits? For transfers? Which positions do you value most
in your particular system? How should you structure a player’s
payments? This could lead to more GM hires in the mold of Andrew Luck
or pro-style executives who have administrative power over head
coaches and can maintain philosophies across coaching changes.
Further complicating matters is the fact that the settlement and
revenue share calendars operate on the academic fiscal calendar, which
runs July to June. This means each football season is split across two
separate rev share budgets.
“If you spend all $15 million on players for the 2025 season, then you
aren’t going to be able to pay anyone for the 2026 season until July
1, 2026,” explained the personnel director.
This will require thoughtful budgeting, and could spark some
innovative approaches — some more palatable than others. “Tanking” has
been an issue unique to professional sports, but revenue sharing could
usher it into the college ranks. If a team has glaring roster holes at
quarterback or other key positions, it could elect to save its revenue
share money and go all-in on the transfer portal when the season ends,
with a bigger war chest than most of its competitors.
“I do think you will see teams try to manipulate the cap in different
ways,” said another power conference personnel director.
Ongoing Issues
From a legal perspective, the lawsuits and court battles won’t stop in
the wake of the House settlement. A number of states already have NIL
laws that contradict the settlement, and the Johnson v. NCAA case
regarding athlete employment is still ongoing.
From a competitive perspective, the dollars going up means the
competitive imbalance will too. This isn’t a new problem in college
sports, but a settlement negotiated with heavy input from the power
conferences isn’t going to change that, regardless of how well the
clearinghouse works.
“It’s going to separate, even more, the haves and the have-nots,” said
an administrator.
Big picture, athletic departments will be forced to adapt, financially
and operationally, as college sports lean further away from amateurism
and toward a more professional model.
“For the longest time, these athletic departments acted like
nonprofits,” said another administrator. “Now they have to act like
businesses.”
In the meantime, power and non-power programs alike are hoping for
some degree of stability in an industry that has had very little in
recent years.
“At some point,” said a personnel director, “maybe we’ll get two years
in a row where we know what’s going on.”
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