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Yahoo
07-04-2025
- Business
- Yahoo
What's at stake with the House v. NCAA settlement? Goodbye amateurism, hello revenue sharing
What's at stake with the House v. NCAA settlement? Goodbye amateurism, hello revenue sharing By Lauren Merola, Ralph D. Russo and Justin Williams College athletes are about to get paid — directly, by their universities. That's a California judge approves a landmark, multi-billion-dollar settlement of three separate antitrust cases against the NCAA and college sports' power conferences. Judge Claudia Wilken of the Northern District of California gave preliminary approval to the settlement in October and will hold a hearing Monday — the day of the men's NCAA Tournament championship game — before issuing a final decision. Advertisement Whether that decision comes as soon as Monday remains to be seen. But if approved, schools will be permitted to directly pay athletes through about $20.5 million in revenue sharing during the 2025-26 athletic year, and the amateurism model that has ruled college sports for more than a century will nearly cease to exist at the Division I level. In addition, nearly $2.8 billion will be set aside as back-pay damages for athletes dating back to 2016 who did not have the opportunity to be compensated for their name, image and likeness (NIL). At a time when collegiate athletics faces more questions than answers, here's what we know about the settlement and how it will reshape the landscape if it is approved. What does the settlement do? The settlement would resolve three separate antitrusts: House v. NCAA, Hubbard v. NCAA and Carter v. NCAA. 'House' refers to former Arizona State swimmer Grant House, who brought a federal lawsuit in 2020 seeking damages for athletes who could not earn NIL money. The three lawsuits were among a flurry filed against the NCAA and its power conferences in recent years related to college athletes' earnings. Advertisement The NCAA had an incentive to settle because it could have owed as much as $20 billion in damages had it lost the House case. The settlement's wide-ranging effects would benefit former athletes while setting up a new revenue-sharing era for current athletes. NIL compensation for current and former athletes A major component of the settlement is nearly $2.8 billion in back-pay damages the NCAA will owe to current and former Division I athletes who competed since 2016, which the association plans on paying in installments over 10 years. (The statute of limitations went back to 2016 when the suit was filed.) Advertisement Most of that money will go to power-conference football and men's basketball players, given those media rights generate the most revenue among college sports. Revenue sharing with current athletes The settlement allows for a revenue-sharing plan that lets schools start directly paying players. It is expected to start at roughly $20.5 million and increase on an annual basis. (The annual number will be calculated as 22 percent of Power 5 schools' average athletic revenue.) Revenue-sharing payments are not a cap on how much money athletes can make under the settlement. They will still be permitted to sign independent sponsorship deals and receive NIL payments from approved third parties. Advertisement Changes to scholarship limits In another new development from the settlement, scholarship limits will be replaced by roster limits. Schools can allocate scholarship funds — partial or full — as they see fit, potentially allowing more athletes to fund more scholarships than before, but also eliminating potential roster spots for walk-ons or partial-scholarship athletes. How could this change the current NIL system? Two previous court cases — Alston v. NCAA and O'Bannon v. NCAA — set the table for the NCAA to remove restrictions on NIL payments in July 2021. Quite predictably, NIL became a recruiting tool and a de facto pay-for-play device, but with fans and donors, rather than the universities themselves, footing the bill for players to represent their schools through NIL collectives, organizations that fundraised with the intent to direct that money to a school's athletes through NIL deals. Advertisement NIL deals have been mostly private transactions that don't live in the public record. That could change as the settlement knocks out the last semblance of amateurism. The settlement would put national NIL guidelines in place, mandating the recording of any third-party NIL payments over $600 to a clearinghouse run by the accounting firm Deloitte (more on that later). NIL collectives will be impacted by the settlement as well. Some schools intend to absorb collectives (and any existing funds and resources) into the athletic department, or shutter them all together. Others are keeping the collective separate as another means to facilitate those outside, over-the-cap NIL deals. What are schools doing to prepare for the settlement? The short answer? Trying to find the $20.5 million a year for revenue sharing. Advertisement The vast majority of schools are having to figure out where those revenue share funds will come from. Some schools are raising ticket and concession prices — what Tennessee is billing as a 'talent fee.' Others are pushing fundraising campaigns. All are adjusting budgets in some fashion, trying to find any cuts or pockets of inefficiency that can be redirected toward the near-$20.5 million cap. This will be easier for some schools than others — particularly those with the biggest budgets atop the Big Ten and SEC — but even the most well-resourced programs are having to adapt. And there are plenty of schools that won't hit the top of that cap, at least not in Year 1. Once those funds are earmarked, the next step is determining how to distribute those dollars. Most FBS schools that opt in plan to follow the formula used for the back-pay damages: 75 percent to football, 15-20 percent to men's basketball, 5-10 percent to women's basketball and whatever is left to Olympic and non-revenue sports. However, there are no stipulations for how the funds are allocated, as long as they stay under the cap. Which is already creating internal jockeying over which teams get how much. Scholarships are a similar deal. Under the new roster limits, some schools are increasing the number of overall scholarships — Ohio State announced it will add 91 across all programs — while others are reducing or redistributing the number of available scholarships per sport, which is already impacting high school recruiting for non-revenue sports in particular. Will this widen the gap between power and non-power conferences? Yup! It's simple: The richest programs will have the easiest time allocating revenue share and additional scholarships, along with finding ways to generate those over-the-cap NIL deals. It's much more accessible for Power 4 schools, bringing in tens of millions of dollars a year in television revenue, to max out revenue sharing compared to the Group of 6, in the same way it's much easier for schools like Ohio State or Texas to earmark that $20.5 million a year and orchestrate outside marketing deals for their star players. Advertisement None of this guarantees success — we've already seen plenty of instances of programs investing NIL poorly, or without positive results. But the more money you have in college sports, the larger your margin for error. On a more micro level, it will be interesting to see how different approaches and philosophies play out. Will the Big East have an advantage in basketball without needing to fund football? Will differences in distribution allotments between schools be reflected on the field and court? But big-picture, the power conferences are best positioned to succeed in the House settlement era. Same as it ever was. What's next for the NCAA? As college sports become more professionalized, at least at the highest levels of competition, the NCAA's role as a governing body is diminishing. Advertisement But it's not going away. The power conferences that were named defendants in the massive antitrust lawsuits covered by the settlement are in the process of creating a new enforcement and regulatory structure outside the NCAA. The new governing body will be responsible for overseeing NIL deals between athletes and third parties that don't fall under the revenue-sharing agreements between schools and athletes. Deloitte has been contracted to assess fair-market value of those deals. The new governing body will also be tasked with monitoring how much schools are spending in revenue sharing to ensure they stay under the agreed-upon cap. The new body will also handle enforcement of the financial rules related to the so-called cap, investigations into possible violations and handing down penalties — essentially taking over an area of college athletics the NCAA has struggled to for decades to police: the influx of improper benefits. Advertisement So what does that leave for the NCAA to do? Well, mostly run national championships in 91 sports sponsored by the association in three different divisions, including March Madness basketball. The NCAA will also still be charged with the standardization of playing and administrative rules for sports and overseeing the academic eligibility of athletes. This article originally appeared in The Athletic. College Football, Men's College Basketball, Sports Business, Women's College Basketball 2025 The Athletic Media Company
New York Times
17-02-2025
- Business
- New York Times
Big Ten, SEC leaders resume search for compromise with future of CFP, college sports in focus
By Ralph D. Russo, Scott Dochterman and Seth Emerson NEW ORLEANS — Every year around this time, SEC athletic directors meet to go over conference business. This year they have company: Big Ten athletic directors, who moved their annual winter meetings south to join them, along with the commissioners and staff of both conferences. Advertisement It is the second such in-person gathering of the leaders of the two wealthiest and most powerful conferences in college sports. They met last October in Nashville and will renew talks Wednesday in an effort to find common ground on some key issues: The future format of the College Football Playoff. Football scheduling. How college sports will be governed and regulated after a settlement in the House v. NCAA lawsuit is approved, allowing schools to pay athletes directly as part of a revenue sharing plan. The expectation going in is that no major agreements will be finalized this week — unless, with all league leaders in the same room, they realize their interests are aligned enough to do so. The Athletic spoke to a dozen people briefed on the upcoming proceedings about what topics will be discussed. The people spoke on condition of anonymity because they were not authorized to speak publicly about the agenda. Here's a look at the topics of discussion. While no major changes are likely to be made for the upcoming season to the 12-team format — a tweak to the seeding is possible — just about everything is open to potential change from 2026 onward. That might seem drastic after just one year of major college football's first true championship tournament, but that's not how administrators see it. 'This format was not built for the current conference alignment,' one AD told The Athletic. The original expanded CFP structure included spots for the six highest-ranked conference champions, four of which received first-round byes, and six at-large squads. But that was decided before the Pac-12 crumbled as 10 member schools left for the Big Ten, Big 12 and ACC. A last-minute agreement among the CFP's board of managers allowed for five conference champs to pick up automatic bids, with the top four securing byes. But this year, that led to teams ranked ninth (Boise State) and 12th (Arizona State) overall taking the No. 3 and No. 4 seeds, respectively. Ultimately, all four teams with byes lost their quarterfinal games. Advertisement The quirky seeding could be addressed for next season's CFP, but it can't be done without eight other conferences and Notre Dame on board — which means it's no lock to change. Last season, No. 1 Oregon faced sixth-ranked Ohio State (bumped back to the No. 8 seed by Boise State's and Arizona State's byes) in a quarterfinal. It seemed like a penalty for the unbeaten Ducks to play the Buckeyes in that round, and Ohio State won that matchup on its way to the national title. It's likely both the Big Ten and SEC will push for seeding changes, but there is urgency required to form a consensus on a range of larger issues. The postseason's new television contract kicks in after this season. Unlike the current CFP arrangement, any changes to the Playoff structure beginning in 2026 do not require unanimous approval from the FBS conferences and Notre Dame. According to a memo of understanding completed last March when the Playoff's new contract with ESPN was finalized, the Big Ten and SEC have the most impactful voices. Collectively, they can push through format changes without consensus from the CFP board of managers. 'We do have a defined role where we have to be clear participants at the end of that conversation,' SEC commissioner Greg Sankey said after the last SEC-Big Ten summit. What could change? Just about everything. Expect a larger field. How big? 'If you're going to go to 14,' another athletic director said, referencing the tweak reportedly floated by Big Ten commissioner Tony Petitti during the discussions last spring, 'why not just go to 16? Along with adding more participants, establishing a guaranteed number of Playoff spots per conference will once again be up for discussion. According to school officials, the Big Ten is more locked in on guaranteed spots (perhaps as many as four) than the SEC, but there is plenty of interest within the SEC. Coincidentally, the Big Ten earned more CFP spots (four) in the first year of the 12-team format than the SEC (three), which would have benefited from more dedicated qualifiers per conference. Advertisement Any move toward guaranteed spots for the leagues' top teams, however, also would need to come with a reimagination of how conference championship games work. One possibility is using championship weekend as a CFP play-in weekend. In addition to the Big Ten and SEC championships, there would be play-in games between the third and sixth seeds and fourth and fifth seeds and perhaps throughout the leagues' entire lineup. The sorting of matchups by record is a similar concept to what the Big Ten tried to institute at the end of the COVID-19-altered 2020 season. The idea was floated late last year, each school has had a chance to think about it, and the New Orleans meeting will offer a chance for everyone to exchange notes and thoughts. Other iterations of this concept are likely to come up. How about four play-in games matching the top eight teams in the conference, essentially turning championship weekend into the first weekend of the CFP, with a bunch of win-or-go-home games instead of title games between teams only playing for seeding? The conferences don't necessarily need to agree on how their auto-bids are determined, but there is a growing recognition that uniformity between Big Ten and SEC is necessary to create equitable paths to a national championship. The football programs that make up the SEC and Big Ten have outpaced their conference rivals on the field and in the bank. But the greatest disparity lies in the television ratings. Of the highest-rated 20 games in each of the last two seasons, 65 of the 80 teams involved belong currently to either the Big Ten (34) or SEC (31). All but two of those 40 games (Colorado-Colorado State in 2023, Army-Navy in 2024) involved at least one of the leagues. With the sport's greatest brands and visibility, it makes sense for the leagues to explore a ratings-friendly annual football series, like the former SEC-Big 12 challenge and Big Ten-ACC challenge in basketball. Schools and league officials discussed the possibility last fall, but there are hurdles. Advertisement One potential deal-breaker: SEC schools play eight league contests and one other power-conference opponent, while the Big Ten has played nine conference games since 2016. In addition, 13 of the Big Ten's 18 schools play at least 10 power-conference games this fall. In the SEC, 13 of the 16 schools face only nine power-conference teams. 'We obviously can't force them to play nine (conference) games. They have to do what's best for them,' Ohio State athletic director Ross Bjork told The Athletic during football season. 'But now that I'm in the Big Ten, I like it. I think it does draw value. I think it provides your fans with marquee matchups. That's what fans want. There's a noticeable difference in terms of just overall revenue around a Big Ten game versus a nonconference game against the Group of 5.' Bjork was a strong proponent of a nine-game SEC schedule during his previous stints as AD at Ole Miss and Texas A&M. He added, 'I do believe there is a desire to get to nine games within the SEC.' Another hurdle: Both leagues have teams that play treasured rivalry games against teams in other conferences. Florida, Georgia, Kentucky and South Carolina all play in-state ACC foes, while Iowa, Oregon and Washington also have in-state rivalries. So a Big Ten-SEC crossover series would lock in an 11th power-conference game for each of the Big Ten schools, and never mind any other scheduled future series. Each conference's media partners would benefit from that arrangement, and perhaps a group of SEC-Big Ten games could be packaged and sold to advertisers. Still, one athletic director indicated those discussions are on the backburner now. 'We can't make decisions on regular-season scheduling until we know what the Playoff will be,' that AD said. The SEC's future schedule, meanwhile, will be discussed when its athletic directors meet on Tuesday. It's unlikely a decision will be announced then, unless ESPN shows up with financial assurances that would push enough schools into the nine-game camp. Barring that, it's likely a decision will be made later this spring to do another temporary eight-game rotation that covers the 2026 and '27 seasons. Advertisement But there is still hope among nine-game advocates that television money will come through and move the reluctant to agree to expand. The goal is to have some sort of decision by SEC spring meetings in late May. There are limits to how much two conferences can collaborate when it comes to how they will approach revenue sharing because collaboration can slip into collusion and open them up to more antitrust lawsuits. 'Our legal counsel is very skilled at this point in defining the boundaries, what we can talk about and we cannot talk about,' Sankey said after the first summit. Still, there is work being done among the Power 4 leagues — including the Big 12 and the ACC — which agreed as part of the settlement to set up an outside entity that will handle enforcement of its new rules: a cap on revenue sharing, roster limits and a system to evaluate the fair market value of name, image and likeness compensation deals between athletes and third parties. The NCAA will still oversee and enforce rules related to academic eligibility. The settlement terms still must be approved by Judge Claudia Wilken, who scheduled a final hearing on April 7. Wilken granted preliminary approval on Oct. 7, 2024. SEC and Big Ten athletic directors are likely to hear an update from their colleagues who are working on setting up a limited liability corporation (LLC) to provide enforcement and oversight. Exactly what that entity will enforce needs clarification. The settlement terms set up parameters, but details still need to be hashed out. For example, a roster limit for football has been set at 105 for competition and practice during the season. What about during the offseason? Can teams have more players training with the team throughout the spring and summer? If those players are not on scholarship or receiving rev-share payments, can they receive other benefits through the school? Advertisement NCAA governance is also in the process of being reformed. Six proposals have been presented to the association, including one from the Power 4 and another from the 22 Division I conferences that don't sponsor football at the highest level. The P4's proposal includes those conferences taking over the operation of championship events, a prospect that has been met with some skepticism by the rest of Division I, which is most protective of access to those events and the revenue they produce. An NCAA subcommittee composed of representatives from the groups that presented proposals is scheduled later this month to begin digging into the various pitches with the hope of reaching a compromise. Once the new rules are set by the House settlement and new NCAA governance is in place, many officials say, everyone needs to agree to work together, even if it's to their own school's detriment. With college athletics changing so rapidly, and the NCAA taking a reduced role in oversight and enforcement, it makes sense for the industry's most powerful leagues to fill that leadership vacuum and provide a new way forward. What league officials discuss and decide at this week's summit will have a direct bearing on what the future holds in all facets of college athletics. (Photo of Tony Petitti and Greg Sankey: Kirby Lee / USA Today)
