House v. NCAA settlement approved: Landmark decision opens door for revenue sharing in college athletics

[nelsonmuntz]

Me too, just because Seton Hall can spend up to $20 million doesn’t mean it has that much available. Or UConn for that matter.

The same goes for all the SEC and Big 10 schools. There isn't $20 million just lying around at any school.

 

[AZHuskiePop]

I've not been convinced that the Big East will top to bottom have an advantage - UConn, St John's seem "in" to spend. Marquette doesn't seem in. There are several others that are definitely not in, including Seton Hall. Time will tell.

First of all UConn doesn’t count as a Big East School for obvious reasons
Second of all,;
The assumption that a school like Villanova
With the Big East’s second largest entire athletic budget at less than $40,000,000 is going to come up with an extra amount of money approaching $20,000,000 is being a tad optimistic.
These numbers get thrown around of millions of $$ but the reality only the top schools can realistically approach additions to their athletic budgets in those amounts as most are already losing money
These things tend to have a life of their own it’s too soon to predict how this decisions will shake out.but other than a small % of scholar athletes it looks like everyone else loses unless you think eliminating competition is a good thing .
As for financials ,
I think initially the NCAA is coming up with a % of the money for past players out of a contingency fund . Stealing money from men’s basketball to pay football players is typical. . My understanding is that is a one time thing . After that it up to the schools . For a school like Ct that means the taxpayers who subsidize the annual shortfall . At least NIL was voluntary.
However a possible extremely negative outcome is large loss of total athletic scholarships, That would be a loss to society.

 

[CL82]

A few questions.
I thought the 20.5 million was a cap that each School was limited by. Where do the schools get the 20.5 million to give to the student athlete? Does it have to come from revenue that the sports return to the school? Who exactly decides which students get how much?

Theoretically, this settlement involved a sharing of athletic department revenue with athletes. I believe the $20.5 million figure was an agreed-upon "average athletic department revenue" figure. So the dollar amount is a figure of convenience and schools can pay up to that amount to student athletes. But all that is based upon briefly, glancing at articles and participating in this thread, so take it with a grain of salt.

@huskymedic is usually pretty up-to-date on this stuff. I'm tagging him so he can fill in the blanks and correct any statements.

 

[auror]

I think way too much of the thinking about all this is ignoring that NIL is still a thing. This $20.5M now becomes the floor for most competitive schools, not the ceiling. As far as I know, there is no limit on NIL, so all that gets added on top.

This means, for example, that UConn could decide to use the entire amount on sports other than Basketball because we know we can generate lots of NIL for those programs but not for things like Football. As another example. the Big10 and SEC schools could allocate the vast majority to basketball because they know they can raise tons of $ in NIL for football, meaning its not as much of a win for the Big East as people may seem to think. Who knows how it plays out, ideally there should be a cap on NIL to level the playing field.

As part of the agreement, the NCAA is trying to limit 3rd party/booster/collective NIL deals with athletes that are purely pay to play payments disguised as NIL. They agreed to a mechanism where NIL deals must be for legitimate business purposes and within a range of compensation that reflects fair market value for similarly situated athletes without considering recruiting and the player's roster value.

So yes, schools can still work to get players NIL on top of the revenue sharing. But it is likely to be trickier to do than it used to be in recent years. At least legally. There is a lot of speculation that these new rules will cause a lot of the money to go back underground, but that does limit some of the contributions that were able to happen because it was mostly above board.

A lot of the booster money that was going to players as pay to play through collectives for NIL is going to get donated directly to universities again in part to fund the $20.5 million in revenue sharing (as a tax deduction). Schools that can fully fund that 20.5 million themselves with revenue will probably be able to find more money to give to players from boosters underground or through legitimate NIL deals that will be approved by the new enforcement.

 

[champs99and04]

Isn't that exactly what many articles recently have been saying, including one I posted above?

Here are a few articles on the subject that I found with a Google search. I don't know if this is what will happen but it seems it's a lot more than nobody suggesting this.

Could impending rev-share changes help Cinderellas in the future? 'Everybody will be in the game'

As the college sports industry sits on the brink of historic change, an unexpected spending disparity looms — and some mid-majors will be able to take advantage of it in basketball.

sports.yahoo.com

I think there's a bit of gamesmanship going on with the P4 in the same way an experienced coach might try to work the officials for a few more calls. You're right in that it'd be very easy to interpret some of the headlines that way, but reading between the lines it seems like a lot of it is just sour grapes from p4 coaches lamenting the fact that they won't be able to maintain the same advantage they've had the last few years. Perhaps I'm wrong though and that the Big East really will be at a huge advantage.

 

[champs99and04]

So yes, schools can still work to get players NIL on top of the revenue sharing. But it is likely to be trickier to do than it used to be in recent years. At least legally. There is a lot of speculation that these new rules will cause a lot of the money to go back underground, but that does limit some of the contributions that were able to happen because it was mostly above board.

The thing about the old way of paying players is that they were actually getting far closer to market value than what they've been getting legally the past few years. Deandre Ayton was offered, what, $200k? Now we have kids that were second team all-SWAC commanding close to $1 million. The market was wildly, wildly inflated by the absence of guardrails, and that was never going to continue.

The question moving forward isn't whether boosters will be able to continue paying players. That's always going to happen, whether it's legal or not. The question is whether the money boosters can offer will even be financially significant compared to what they're getting from the schools (and in some cases, real NIL), particularly if we return to a system where players can't be free agents every year.

The reality is that most of these college players - even the good ones - simply aren't worth that much. The people that shelled out $2 million for a Rutgers transfer to average 8 & 7 were either flatly duped or way too attached to the program. That's never going to happen again, and for good reason.

 

[HooperScooper]

I think there's a bit of gamesmanship going on with the P4 in the same way an experienced coach might try to work the officials for a few more calls. You're right in that it'd be very easy to interpret some of the headlines that way, but reading between the lines it seems like a lot of it is just sour grapes from p4 coaches lamenting the fact that they won't be able to maintain the same advantage they've had the last few years. Perhaps I'm wrong though and that the Big East really will be at a huge advantage.

I'm also skeptical that the SEC and B1G, with all of their resources, are going to let the Big East teams gain an advantage. We'll see what happens.

 

[TRest]

The same goes for all the SEC and Big 10 schools. There isn't $20 million just lying around at any school.

Those schools have a massive advantage from media contracts, they all make over $20 million in conference payouts now. They will get creative in how it’s allocated in the future.

 

[auror]

Those schools have a massive advantage from media contracts, they all make over $20 million in conference payouts now. They will get creative in how it’s allocated in the future.

It's a lot easier to cut out 20% of fat from the budget then generate $20 million in extra revenue.

 

[UCann]

As part of the agreement, the NCAA is trying to limit 3rd party/booster/collective NIL deals with athletes that are purely pay to play payments disguised as NIL. They agreed to a mechanism where NIL deals must be for legitimate business purposes and within a range of compensation that reflects fair market value for similarly situated athletes without considering recruiting and the player's roster value.

So yes, schools can still work to get players NIL on top of the revenue sharing. But it is likely to be trickier to do than it used to be in recent years. At least legally. There is a lot of speculation that these new rules will cause a lot of the money to go back underground, but that does limit some of the contributions that were able to happen because it was mostly above board.

A lot of the booster money that was going to players as pay to play through collectives for NIL is going to get donated directly to universities again in part to fund the $20.5 million in revenue sharing (as a tax deduction). Schools that can fully fund that 20.5 million themselves with revenue will probably be able to find more money to give to players from boosters underground or through legitimate NIL deals that will be approved by the new enforcement.

This is helpful, thanks. Agree it becomes "trickier" but let's be real, there's no way to really argue what is "market value" and what is not. Market value or roster value is whatever someone is willing to pay for something. I don't think schools will have trouble defending whatever they want to pay. I think the key would be a cap on NIL budget. I don't see that happening anytime soon.

We should be at an advantage as a state school, and being the only game in town. I mean a tax of $5-10 per person in the state per year would more than fund the $20.5M. Would people really push back against that for teams that mean so much to the state? Private schools have more of a challenge and larger states would have to deal with multiple schools with large programs.

 

[huskymedic]

It's a lot easier to cut out 20% of fat from the budget then generate $20 million in extra revenue.

 

[HooperScooper]

Now they're trying to determine the penalties for not adhering to the new rules. SEC Commissioner Greg Sankey has proposed no penalties. I kid. Kind of.

Hours after the House v. NCAA settlement was approved on Friday, former MLB executive Bryan Seeley was named CEO of a new enforcement organization called the College Sports Commission. His job will be to lead the team responsible for enforcement of the new rules around revenue sharing, third-party payments to players for NIL deals, and roster limits.

One of the biggest questions, though, is what happens when those rules are broken?

ACC commissioner Jim Phillips, who spoke Monday on a Zoom news conference with fellow commissioners Greg Sankey (SEC), Tony Petitti (Big Ten), Brett Yormark (Big 12) and Teresa Gould (Pac-12), said they've all had ideas, but nothing they're "ready to come forward with." Ultimately, Phillips said, the rules and boundaries will be under Seeley's purview.

Conference bosses bullish on NIL enforcement

College conference commissioners are bullish on their ability to enforce NIL rules in a new system days after a multibillion-dollar legal settlement changed college athletics by allowing schools to directly pay their athletes.

www.espn.com

 

[Rashadsmask]

Excerpt from AD in his latest letter regarding the settlement:

As I have conveyed previously, we need to double our overall donor participation in terms of Husky Athletic Fund members and contributions, in order to continue competing at the highest level.

 

[huskymedic]

Excerpt from AD in his latest letter regarding the settlement:

As I have conveyed previously, we need to double our overall donor participation in terms of Husky Athletic Fund members and contributions, in order to continue competing at the highest level.

 

[JohnFSilver]

Now they're trying to determine the penalties for not adhering to the new rules. SEC Commissioner Greg Sankey has proposed no penalties. I kid. Kind of.

Hours after the House v. NCAA settlement was approved on Friday, former MLB executive Bryan Seeley was named CEO of a new enforcement organization called the College Sports Commission. His job will be to lead the team responsible for enforcement of the new rules around revenue sharing, third-party payments to players for NIL deals, and roster limits.

One of the biggest questions, though, is what happens when those rules are broken?

ACC commissioner Jim Phillips, who spoke Monday on a Zoom news conference with fellow commissioners Greg Sankey (SEC), Tony Petitti (Big Ten), Brett Yormark (Big 12) and Teresa Gould (Pac-12), said they've all had ideas, but nothing they're "ready to come forward with." Ultimately, Phillips said, the rules and boundaries will be under Seeley's purview.

Conference bosses bullish on NIL enforcement

College conference commissioners are bullish on their ability to enforce NIL rules in a new system days after a multibillion-dollar legal settlement changed college athletics by allowing schools to directly pay their athletes.

www.espn.com

I don't get how the athletes can be bound like this unless it is part of their scholarship agreement. I would think athletes should collectively bargain for more

 

[auror]

I don't get how the athletes can be bound like this unless it is part of their scholarship agreement. I would think athletes should collectively bargain for more

They're not employees, so they can't collectively bargain. They'd have to sue to be employees first, which, well, there's an ongoing case (Johnson vs. NCAA) that the NCAA has been so far unable to keep from progressing that might do that soon. Especially now with revenue sharing compensation adding fuel to the fire and ending the NCAAs amateurism claims. (And then after that you have to solve how some NCAA student athletes would then be public state employees who can't collectively bargain by state law).

But the House judge was a bit concerned with future athletes as well, discussing the potential of each subsequent yearly class of student athletes becoming a new "class" for class action purposes in one of the hearings. But I think in the end she basically just punted on it and said this is about payments to previous athletes and in satisfying those plaintiffs in the settlement the NCAA changed rules. But the agreement does not make a legal consideration as to whether those changes would prevent an anti-trust challenge from future athletes.

And I don't think the NCAA will win a challenge by the booster 3rd parties contesting the NCAA limiting non-employee athletes earning potential. They had to get rid of the transfer sit out year because you can't limit a non-employee's ability to earn compensation, and I see this as similar.

 

[nelsonmuntz]

Those schools have a massive advantage from media contracts, they all make over $20 million in conference payouts now. They will get creative in how it’s allocated in the future.

They had spent every nickel of that money before the House settlement. It isn't like there is a new revenue stream, just new expenses.

 

[auror]

They had spent every nickel of that money before the House settlement. It isn't like there is a new revenue stream, just new expenses.

Well some schools did, but plenty of athletic departments with those huge media rights distributions and CFB playoff payouts actually turned a profit on the books more than $20 million, even after removing student fees and state support from the revenue.

But either way, a lot of the spending by the P5 was extravagant, superfluous, and ostentatiously used as a recruiting tool. Or didn't actually generate a competitive advantage and can be reduced now that money is the primary recruiting tool.

Also, in a way the ADs have opened up a new revenue stream. The NCAA allowing the schools to do what the collectives were previously doing now allows those collective donors to donate that money directly to the school to have the same effect in directly supporting roster construction.

 

[nelsonmuntz]

Well some schools did, but plenty of athletic departments with those huge media rights distributions and CFB playoff payouts actually turned a profit on the books more than $20 million, even after removing student fees and state support from the revenue.

But either way, a lot of the spending by the P5 was extravagant, superfluous, and ostentatiously used as a recruiting tool. Or didn't actually generate a competitive advantage and can be reduced now that money is the primary recruiting tool.

Also, in a way the ADs have opened up a new revenue stream. The NCAA allowing the schools to do what the collectives were previously doing now allows those collective donors to donate that money directly to the school to have the same effect in directly supporting roster construction.

The money was going somewhere. Now there are $20 million of new expenses.

If a business is living off a revenue stream and suddenly $20 million of new expenses show up, it will have an impact.

 

[Lafayette]

This all depends on how much net revenue is left - a lot of athletic departments spend nearly everything and more already.

But if UConn athletics has $20M to distribute, it has to be applied across all teams. Basketball is an 'equivalency' sport now.

 

[auror]

The money was going somewhere. Now there are $20 million of new expenses.

Yes, the money will be going somewhere else now. In a lot of cases, the point was that it wasn't really needed where it was going before. The SEC and Big Ten have plenty of money to run an athletic department and share 20 million of their revenue. The Big 12 and ACC can do it, but have to be a bit more tight with their expenses.

 

[huskymedic]

This all depends on how much net revenue is left - a lot of athletic departments spend nearly everything and more already.

But if UConn athletics has $20M to distribute, it has to be applied across all teams. Basketball is an 'equivalency' sport now.

I’m not sure that is true… do you have a link to where it mandates the revenue be shared across all sports in the AD portfolio?

 

[nelsonmuntz]

Yes, the money will be going somewhere else now. In a lot of cases, the point was that it wasn't really needed where it was going before. The SEC and Big Ten have plenty of money to run an athletic department and share 20 million of their revenue. The Big 12 and ACC can do it, but have to be a bit more tight with their expenses.

It wasn't needed where it was going before unless you were the one getting it. Do you know a lot of universities that are flush and have $20 million lying around every year that they can spend on things they were not spending it on before? Which universities are those?

 

[auror]

It wasn't needed where it was going before unless you were the one getting it. Do you know a lot of universities that are flush and have $20 million lying around every year that they can spend on things they were not spending it on before? Which universities are those?

Considering basically every high major is going to spend the $20 mil on revenue sharing seemingly without drastic changes, it does appear many did have it lying around, or at least within arm's reach.

 

[HuskyHawk]

Well it was nice enjoying college athletics for the last 30+ years. This is the beginning of the end. It's all based on an utterly flawed assumption that the athletic contributions of these players, without the marketing power of these schools is worth something. It's really not, or at least, very little.