The next evolution in compensation for college athletes is on the horizon.
University leaders and plaintiffs' lawyers have been negotiating for months, inching closer to an agreement that would resolve the House antitrust lawsuit and introduce a new model for the sport of revenue sharing with athletes. ing.
But that hasn't happened yet, and there are many hurdles ahead.
The negotiations were no secret in the college sports world. In fact, the discussions got quite serious, with administrators discussing the possibility of a revenue-sharing model (as Yahoo Sports reported earlier this month).
On Monday, an ESPN report shed more light on the negotiations, which are heating up.
But what exactly is included in the House of Representatives v. NCAA lawsuit settlement? What does it mean for your school? What impact does that have on the future of college sports? And are all school principals on board?
Let me explain what a very complex and fluid situation is.
What is reconciliation?
The settlement in this case consists of two parts. (1) Restitution payable by a college athlete to a university that uses his or her name, image, or likeness in a broadcast. (2) Future compensation models featuring revenue sharing with athletes.
First, is it the same as the back pay (liquidated damages) that had to be paid to athletes during the four years before the NCAA allowed them to receive compensation from the NIL (2017-2020)? , and potentially even more money for college sports. This amount may be paid over a period of time.
The second is one that will have a greater impact on the future of the industry. Specifically, it is an agreement with power conference schools to share revenue directly with athletes and purchase exclusive rights to NIL.
As Yahoo Sports reported earlier this month, administrators briefed on the proposed new revenue-sharing model said it would be $15 million to $2,000 per school, with spending limits similar to salary caps for professional sports teams. He expects to receive a distribution of up to $10,000.
The per-school numbers are determined from the average of Power League athletic department revenues (ticket sales, sponsorships, etc.) and are expected to be the same for all schools despite wide variation in resources. . For example, Ohio State's athletic department led all programs in revenue last year with his $250 million, more than the nation's 20th-ranked program (Arkansas had about $150 million). is $100 million more.
The $20 million price tag for Ohio State represents 8 percent of its budget. Arkansas' $20 million price tag represents 13 percent of its budget.
This payments-related revenue model is not a new concept.
In fact, it bears similarities to a proposal NCAA President Charlie Baker announced in December that would allow schools to directly compensate athletes for the use of their name, image and likeness (NIL). In recent months, schools have been preparing to provide direct compensation to athletes, and some are encouraging lawmakers to change state laws. In Virginia, a law will take effect July 1 that will allow state schools to pay college athletes directly for NIL rights.
Why settle?
Not everyone involved in the university athletics association believes that the settlement is the right thing to do.
In fact, this topic sparked a number of lively discussions last year at meetings among conference presidents and athletic directors. Approval of the settlement could require a majority or supermajority vote of the league's College Presidents Committee, which could lead to an impasse.
Over the past several months, a majority of college athletics officials have believed that a settlement is the only way forward, which is why the SEC and Big Ten have formed a joint advisory committee whose primary purpose is to explore new models. was established. Why is reconciliation necessary?
(1) The settlement protects the NCAA and Power League from further litigation for a period of time, likely in the range of eight to 10 years, according to people briefed on the matter. The NCAA has lost virtually every antitrust case brought against it, including the Supreme Court's 2021 9-0 decision in Alston over education-related benefits to athletes. , this is essential.
(2) The settlement will also include other ongoing litigation, including the Hubbard and Carter lawsuits filed against the NCAA and Power League by Jeffrey Kessler, the same attorney who leads the House Plaintiffs' team. In other words, the Hubbard lawsuit seeks to recover compensation based on the Alston Supreme Court decision, and Carter is seeking to repeal all NCAA rules prohibiting player compensation. Will this settlement kill three birds with one stone? perhaps.
(3) Any settlement would avoid a much higher price tag. If the NCAA and Power League challenge the case in court and lose, the amount of damages owed to the athletes will be tripled. A price tag of $1 billion to $2 billion could quickly rise to $4 billion to $6 billion.
Why do some people object?
There are several main arguments made by opponents of reconciliation.
(1) Settlements provide only short-term protection from further litigation, meaning that they must be codified by Congress to be a long-term or permanent solution. The NCAA and Power League have spent five years lobbying lawmakers to pass federal legislation governing athlete compensation. Since 2020, more than 10 Congressional hearings have been held and multiple bills have been introduced. Not a single bill has even advanced to full committee debate in the House or Senate. Will reconciliation change Congressional action? That's the goal.
(2) The settlement may not completely end the NIL-fueled arms race in college sports. In college sports, booster-led organizations contribute millions of dollars to team funds because schools are not allowed to pay players directly. For some competitive programs with significant resources, the NIL Collective may provide additional cash on top of the amount allowed by the school to continue operating in its current manner. If a school purchases an athlete's NIL rights, an external NIL may be eliminated (what is often referred to as an “internal NIL”). But how many athletes would agree to something like that? It remains an unanswered question.
Complicating matters is a separate lawsuit filed by the attorneys general of Virginia and Tennessee against the NCAA, which currently seeks to legalize NIL-related solicitations from third parties such as collectives. successful.
(3) This settlement alone may not be enough to disrupt the current rate of athlete movement in college sports. The NCAA recently changed its transfer policy to allow players to move freely without penalty, bringing it in line with the court's own rules, which granted a similar injunction in December. This is another case and complicates matters.
(4) There remain several ongoing cases in which courts may ultimately consider athletes to be employees. It is unclear how the settlement will affect these lawsuits. This creates anxiety for managers who want to avoid hiring at all costs.
What will happen to the group of five?
The House lawsuit and its potential settlement focus on power conference programs, the most revenue-generating athletic departments within the NCAA. Kessler, the House's chief counsel, made a similar point earlier this month in a speech in Washington, D.C., noting that schools that can't afford to share revenue don't necessarily have to.
The settlement would be described by several administrators as “forgiving.” Schools are not required to share the $20 million with the players, but the agreement opens the door for schools to have the freedom to do so. In a highly competitive market for high school and college transfers, schools will naturally try to offer their athletes the best they can.
Most Group of Five and FCS football programs do not generate profits, and athletic departments are often subsidized by university and student tuition. At the G5 level, we have a program where the $20 million revenue share is almost more than the entire division's revenue for the year.
“(Power Four schools) need to be thought of differently,” Kessler said earlier this month. “The reason we get confused is because we confuse schools that have developed these huge independent commercial enterprises with schools that are still just educational institutions with extracurricular activities. One rule that applies to everyone. It drives me crazy trying to figure it out. We need to look at schools differently. Those with money have a lot of money to compensate athletes and distribute it to women's sports. ”
Many G5 athletic directors are so concerned that this new revenue-sharing model will leave them so far behind that they are at least considering the idea of hosting their own postseason event.
In the new world of revenue sharing, competition between Power League players and G5 players won't necessarily end. However, the gap between the top and bottom FBS players, which had already worsened during the NIL era, will widen further.
How does the school decide who gets paid and how much?
This is not entirely clear. But common sense suggests that athletes who participate in sports that generate the most revenue will receive a larger share of that revenue than athletes who participate in sports that generate less revenue (or no revenue at all). It can be said that there is a high possibility of obtaining.
In many power conference athletic departments, the only sports that generate significant revenue are football and, to a lesser extent, men's basketball. The money those sports generate typically goes into those sports themselves and the dozens of Olympic sports that lose millions of dollars each year.
But schools are bound by Title IX, a 52-year-old federal law that prohibits sexual discrimination in schools. Athletic departments are required to provide female athletes with the same opportunities as men. This law has been heralded as a key driver for a strong and successful women's athletics movement in the United States and on the world stage at the Olympics. Millions of young women have passed through the college sports pipeline in sports specifically sanctioned to comply with Title IX.
But how does Title IX apply to revenue sharing models?
That question remains unclear, and an ongoing lawsuit in Oregon may finally provide an answer.
In a January interview, Baker said he believed the Title IX term meant “equal participation” and not “equal amounts.” That would open the door for schools to share more of their total revenue with male athletes, as long as they provide income to the same number of female athletes.
Kessler said during an appearance in Washington, D.C., that he “hopes” that Title IX will apply to future athlete compensation models.
What's next?
Over the next month, we expect to see further details of the new revenue sharing model announced across the four major conferences (many of which have already taken place). A meeting will be held and a discussion will take place. Many people have circled the end of May as the deadline for a settlement agreement approaches.
Ultimately, a vote from each league's board of presidents is expected to be a historic move that will see the last piece of NCAA amateurism come to an end.
Or perhaps not.
“Change is here. It won't stay the same. It's already different,” Kessler said earlier this month. “The best thing for everyone to think about is, 'Okay, how can we make this change the most positive change for everyone involved?'”
“Stop living a vision that doesn't exist. Face the reality here, because it happens. The question is, will you be part of that change or not?”
