Stanford, Cal eye ‘the end of amateurism' in new revenue-sharing era

San Francisco Chronicle​

2 days ago

Nearly three months before the start of college football season, on May 31 and June 1, two sellout crowds totaling about 90,000 people flooded into Stanford Stadium. They came to see Coldplay, the first live concert ever held at the on-campus facility.
The timing was hardly coincidental.
One week later, last Friday, U.S. District Judge Claudia Wilken formally approved the long-anticipated House settlement. That $2.8 billion agreement, to settle three antitrust lawsuits against the NCAA and Power Five conferences, officially ushered in a new era of major-college sports, with schools now permitted to directly share revenue with student-athletes.
And sharing revenue for the first time means finding new revenue. That helps explain how Coldplay landed on stage at Stanford, bringing its 'Music of the Spheres' world tour to the same venue where John Elway, Andrew Luck and Christian McCaffrey once performed.
'It was an inspiring example of what our campus can pull off,' Stanford interim athletic director Alden Mitchell said in a Chronicle interview Wednesday. 'And it's a great positive from a financial perspective.'
Cal and other Bay Area athletic programs no doubt will also try to tap fresh revenue streams, in one form or another. Donor fundraising, rising the past four years with the proliferation of name, image and likeness (NIL) deals for college athletes, can stretch only so far.
The new expenses are significant: Friday's landmark approval allows schools to share up to an estimated $20.5 million in revenue in the 2025-26 fiscal year, starting July 1. That limit initially will rise by 4% annually, to $21.3 million the next year and $22.2 million the year after that.
Cal and Stanford are not required to spend the maximum amount, essentially a salary cap. But they realistically must hit the cap to compete with their Atlantic Coast Conference opponents.
This leaves athletic department leaders expanding already-strapped budgets, with a full menu of sports (36 for Stanford and 30 for Cal). Mitchell, who joined Stanford last year as chief operating officer, hopes to implement a new structure in ways 'that keep college sports special for student-athletes, and distinct from pro sports.'
That's a challenging quest on a landscape now dominated by chatter about money, money and more money.
'It is fair to say we're living through the end of amateurism as we know it,' Mitchell said.
The transformation creates more questions than answers on the Bay Area scene. Will revenue-sharing make it even more difficult for Cal and Stanford to keep pace with their ACC rivals in football and basketball? How much will San Jose State spend at a time when one CSU campus (Sacramento State) is ramping up and another (Sonoma State) is eliminating athletics entirely?
And how will St. Mary's, USF and Santa Clara — schools without football programs but Division I in basketball and other sports — compete with deeper-pocketed foes from larger conferences?
The Gaels offer an interesting case, given their perpetual and uncommon success in men's hoops. They made the NCAA Tournament again this past season, beating Vanderbilt in the first round before falling to Alabama, another SEC team, in the round of 32.
Mike Matoso, vice president of intercollegiate athletics at St. Mary's, acknowledged his school is prepared to participate in the revenue-sharing era — but not with the resources of bigger schools, which figure to quickly reach $20.5 million.
Matoso described St. Mary's as more of a 'Moneyball' operation, trying to find undervalued assets the way former Oakland Athletics general manager Billy Beane once did.
'I don't want to go into numbers, but we're not knocking on the door,' Matoso said of the $20.5 million ceiling. 'Nobody at our level (size) is coming close to numbers like that.'
One question the Power Five commissioners addressed this week, in a video news conference with reporters, was the expected distribution of revenue sharing. They suggested each school will decide how to allocate revenue to its various sports programs.
Most are expected to devote approximately 75% of their spending to football (pending any Title IX challenges), given the outsized money it generates in media contracts. About 20% would go to men's and women's basketball, and 5% to other sports.
Neither Cal deputy athletic director Jay Larson nor Stanford's Mitchell specified how they plan to divide revenue-sharing among their various teams. Mitchell called the information 'proprietary' and Larson said Cal has a framework 'within the national norm.'
Make no mistake: The norm revolves around football, the economic engine fueling this whole revolution.
'I think everyone realizes how critical it is for there to be investment in football and basketball programs,' Larson said. 'But many schools around the country have a proud tradition of Olympic sports programs, and Cal is one of them. We want and need those programs to succeed.'
Stanford also boasts a long history of success in Olympic sports. That means school officials must balance the need to resuscitate their sagging football program — see Luck's appointment as general manager — with the desire to support swimming, water polo and other 'non-revenue' sports.
As Mitchell put it, 'Ensuring we're not depriving those sports of oxygen is incredibly important.'
Larson and other Cal athletic department leaders met with their head coaches several times over the past two months, in anticipation of Friday's news. They learned most coaches of Olympic sports desire new scholarships more than NIL funding or revenue to share.
That's another notable element of the new world order: NCAA scholarship limits vanish July 1. Baseball, for example, could offer only 11.7 scholarships in the old system, divided among all players. Now the scholarship cap will increase to 34.
This doesn't mean Cal, Stanford or St. Mary's — fresh off its first NCAA Tournament baseball victory in school history — will immediately offer 34 full scholarships in baseball. But they need to 'strategically' add scholarships in sports other than football and basketball, to borrow Mitchell's word, to stay competitive in recruiting.
There are a lot of mouths to feed, so to speak, with more than 850 athletes at Stanford and an estimated 820 at Cal.
Larson and Mitchell both welcomed the establishment of the new College Sports Commission, led by former MLB executive Bryan Seeley. That independent group will oversee enforcement of the reshaped rules governing college sports, to make sure schools aren't circumventing the salary cap by arranging outside deals for athletes.
At least it's an effort to monitor the marketplace, after a chaotic stretch while those antitrust cases worked their way through the legal system.
'An unregulated market tends to favor those with the most resources, and I think we saw that play out the last couple of years,' Larson said. 'A regulated market allows for more competitive balance, and many people in our enterprise want to see it get there. …
'We'd like to see games decided on the field, by players and coaches, and not necessarily by who's writing the biggest checks. That's why the enforcement part of this is so critical.'
Friday's approval of the House settlement not only marginalizes the NCAA on enforcement, it also shifts the NIL burden from 'collectives' to the schools themselves. Kevin Kennedy, president of the California Legends Collective — which raised money to benefit Cal athletes — announced his group will suspend operations at the end of June.
So now it falls on Cal officials to find and spend more than $20 million to keep pace. That will include exploring new avenues to generate revenue, one source said, including potentially trying to better monetize Memorial Stadium.
Worth noting: The school is still paying off its massive debt on the seismic retrofit and renovation of the stadium in 2010-12. That plunged the athletic department more than $440 million into debt, though the campus took over about $238 million in 2018.
Cal's rival down the road monetized its stadium with Coldplay, and Mitchell said Stanford officials are working on booking more concerts. They're not alone: Last month, the University of Toledo's football stadium hosted its first major concert in 31 years.
Clearly, the new reality in college sports is forcing campus leaders to think in a new way.
'Concerts are the most extreme example, but our competitive venues are often empty,' Mitchell said. 'That's something we're thinking about a lot.'