Big changes are coming to college sports.
With the arrival of the transfer portal along with endorsement deals (and other player payments) in recent years, that’s something most fans have grown accustomed to with varying degrees of reluctance.
But what’s coming next is even more revolutionary.
The more than 100-year-old attempt by the NCAA to operate college sports under an amateurism model is dead.
The NCAA, along with the Big Ten, SEC, Pac-12, Big 12 and ACC conferences announced a landmark antitrust class-action settlement poised to radically change the economic model of college sports and provide billions of dollars in backpay damages and tens of billions of dollars in future revenue-sharing to college athletes.
You read that right. Former, current and future college athletes are set to get paid directly by schools a meaningful share of the revenue generated from athletics.
The settlement resolves three pending antitrust lawsuits, House v. NCAA, Hubbard v. NCAA and Carter v. NCAA, which challenge NCAA limits on compensation and benefits that college athletes can receive for their athletic services, and their names, images and likenesses (NIL).
In addition to paying back more than $2.75 billion in damages to college athletes (from 2016 to present) over a 10-year period, the settlement eliminates certain rules from the NCAA and conferences that prohibit direct payments from schools to athletes. The settlement also allows schools to share revenues directly with college athletes through new payments and benefits.
In the first year of the settlement, each school can share 22% of the average Power 5 school’s revenues, which is currently projected to be significantly more than $20 million per school, per year. These new payments and benefits come in addition to scholarships, third-party NIL payments, health care and other benefits that college athletes already receive, and schools can choose to make the new payments and benefits to athletes playing any Division I sport.
Payments to players under the settlement are expected to start as soon as 2025.
The settlement also eliminates NCAA scholarship caps to open the door to more opportunities for Division I athletes across every sport.
The hit to individual schools should not be ignored here. According to documents obtained by Yahoo Sports, power-conference schools are expected to pay as much as $30 million per year over the next 10 years to cover revenue-sharing distribution, back damages and expanded scholarship costs.
While that won’t be an easy pill to swallow for Indiana, they are very fortunate to be in the Big Ten Conference, and part of the league’s massive new media rights deal announced in 2022. That deal provides its member schools incremental payouts of at least $20 million more per year than the previous arrangement.
With the benefit of hindsight, it now seems more clear why schools like UCLA, USC, Washington and Oregon fled the Pac-12 to find higher ground amid a looming litigation tsunami. It also now seems more clear why Indiana hasn’t rushed to construct new facilities with its promise of the new flood of television cash.
But there are many things that remain uncertain in what is undeniably a new era of college sports. Here are some of the unknowns that come to mind. There are no doubt many more:
- How will the schools opt to allocate their future revenue to individual athletes?
- How will money due to former athletes (from 2016 to present) be allocated?
- What role does Title IX, a federal law that mandates equality in men’s and women’s college sports, play in those allocation decisions?
- Will there be any enforcement arm to monitor the nature of the payouts to athletes, whether related to revenue sharing or NIL?
- Of course players can still monetize their NIL, but will there still be third-party “NIL” collectives, which have been the source of much of the sham component of NIL to this point?
- If collectives continue, will they be brought in-house and be operated by the schools?
- What effect will a lack of scholarship limits have on walk-ons?
- Will schools cut non-revenue sports to help with budget deficits?
- The agreement was reached to mitigate the risk of future lawsuits, but just how much protection will it provide?
- And perhaps the biggest question — is this really just a step towards college athletes becoming employees, with collective-bargaining and a labor union?
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