When the NCAA lifted its longstanding ban on college athletes earning sponsorship money in 2021, there was no cohort.
Sponsorship-funded organizations are now ubiquitous, and the common way players make money as compensation for their name, image and likeness has quickly evolved, much to the chagrin of many in college sports, into a substitute for a salary.
The future of sports associations remains uncertain, even as they will play an even more important role with revenue sharing with college athletes looming as part of a $2.8 billion antitrust settlement agreed to Thursday by the NCAA and the nation’s major conferences.
“One of the key functions of an organization is to properly manage athletic payroll, and the skill set that has been developed is going to be required by all (powerhouse conference) schools going forward,” said Blake Lawrence, whose company OpenDaws works with dozens of schools and more than 40 organizations on NIL activities.
“Will the school hire key members of the association who will be responsible for managing and moving the funds and negotiating with parents and players and run it internally,” he added. “Or will the school hire the association as its NIL agent, shifting some of the risk from the school to a third party to manage the distribution of NIL payments?”
The revenue-sharing model proposed in the settlement and agreed to by the NCAA, Big Ten, Big 12, Pac-12, Atlantic Coast and Southeastern Conferences (which must be approved by a federal court) would allow schools to share up to 22% of the average powerhouse school’s annual revenue with their players, which amounts to about $21 million per year and would increase as revenues grow over the 10-year life of the agreement.
In a letter to Division I members obtained by The Associated Press on Friday, NCAA President Charlie Baker estimated that the proposed model would generate between $1 billion and $1.5 billion in revenue per year going to athletes.
The 22% cap has already drawn sharp criticism from players’ rights advocates. In major professional sports leagues, the split between players and teams is roughly 50-50.
“Our experts said that without the NCAA rules, players would get 10 percent of the broadcast revenue. We settled for 22 percent, so we’re settling for twice the value of NIL. And you could say that element is pay-for-play,” said Steve Berman, one of the lead lawyers for the plaintiffs in the House v. NCAA lawsuit that is at the center of the settlement.
Berman said that when the new shared revenues, plus scholarships and other current benefits for players are included, schools will be spending about 45 percent of their athletic revenues on athletes.
Pay-for-play remains a tricky term in college sports, especially as it pertains to NIL and organizations.
Instead of a model that paid athletes market value, NIL filled the void: NCAA rule changes aimed at allowing athletes to monetize their fame by endorsing and sponsoring companies and brands allowed famous athletes to make hundreds of thousands of dollars signing with organizations for personal appearances and community service work.
The NCAA is trying to implement new rules to encourage schools to bring NIL activities in-house and allow athletic departments to have more involvement in signing contracts with players. The NCAA also passed the NIL bill in hopes of increasing transparency and accountability, including disclosure rules for contracts over $600 and the creation of a contract database to establish fair market value.
“We’ve had some unions reach out to us and their response has been, ‘Thank you, we’re getting out of the union business,'” Berman said.
If revenue sharing is intended to replace NIL as salary, some college administrators worry that collective payments could become a way to get around the 22% cap. Could the NCAA regulate this? Probably not, without the help of federal law.
Implementation of the NIL is currently on hold after the attorneys general of Tennessee and Virginia sued the NCAA, challenging rules that ban recruiting inducements or payments in exchange for playing.
“Overall, I believe this agreement demonstrates that Congress needs to act quickly to provide more than 500,000 student-athletes across the country with a pathway to gain an education through sports and build life skills for their futures,” Sen. Ted Cruz (R-Texas) said in a statement Friday.
James Clawson of Spire Sports, which runs “The Vol Collective” for Tennessee athletes and has come under intense NCAA scrutiny, said even if revenue-sharing money were distributed to all athletes, top football players would still be underpaid.
“Until we have a model in place where athletes are more fairly compensated based on the revenue they generate, there will always be a need for the community to supplement what the athletic department can do,” Clawson said.
Russell White, who heads the Collective Association, said college sports leaders would do best to work with organizations rather than pushing them out of business.
“If universities are going to work with organizations in any way, I think the universities that do it the fastest from a position of true partnership will have the greatest benefit,” White said.
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Follow Ralph D. Russo https://twitter.com/ralphDrussoAP
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