NCAA Agrees to Pay Student Athletes $2.8 Billion in Backpay and Share Future Revenue
NCAA Agrees to Backpay and Revenue Sharing Scheme with Student Athletes
Big Big news coming to college sports. Not only is the NCAA reportedly agreeing to pay $2.8 Billion in damages to former student athletes as a settlement offer of antitrust claims, but the NCAA has also agreed to a revenue sharing scheme with current and future student athletes. While this proposal has yet to be accepted by the plaintiffs in the antitrust suit, let’s break down what we do know, and what student athletes can expect.
TL;DR are four things we can peel from the settlement proposal:
The NCAA agrees to pay student athletes $2.8 billion in backpay damages to athletes from 2016-20, the four 4 years prior to when NIL was enacted
Power 5 Schools can now share revenue with athletes if they want to
There’s a cap - about 21/22m - (unclear if it’s split down the line for women and men bc of title XI)
The money that goes to athletes via collectives may not be implicated so universities will want to bring them in-house to circumvent the cap and Title XI
Now, let’s break that down.
Backpay damages
The headline here is that somewhere around 14,000 student-athletes will be paid by the NCAA (40%) itself as well as the power five conferences (60%), to the tune of $2.77 billion over 10 years. Athletes eligible are those who played in a Power 5 conference between 2016 - 2020. It is unclear at this point how the NCAA will calculate each player’s payout, or if they will pay each player equally.
To this employment attorney, it seems safer, cheaper (sorry outside consultants), and easier to just pay everyone equally based on years of play. This offer still needs to be accepted by plaintiffs, and then approved by the federal judge presiding over the case. Either way, Power 5 NCAA athletes are due some long overdue compensation to the tune of about $2.8 billion. It’s important to note that this is only for athletes who participated between 2016 - 2020, because the class had to be capped to a certain set. This means that there could be more similar cases with athletes who participated prior to 2016 in the coming years. Stay tuned on that.
Future Revenue Sharing Basics
Now, for the really good stuff. You read the headline right, the NCAA and its member colleges will be sharing up to $22 million in revenue with student-athletes as soon as 2025. Where usually boring, the details are where this really gets interesting. Just how are colleges going to divvy up all that money?
First off, the cap. The NCAA agreed to share 22% of the average athletic department’s revenue, which is approximately $22 million annually (meaning the average revenue is ~$100 million for these schools!) But the details on how they will get it all done is still unclear. Is this a hard cap, can schools choose to go over? And is this cap moving with the annualized revenue or is it fixed in time? All good questions, and even greater reasons for student athletes to form a players union so they can all collectively bargain in their best interests, not simply on a one-time court ruling.
And now, for the biggest question of them all: how will the athletes’ compensation work?
Again, this hasn’t been laid out yet, and there are a lot of things to keep in mind for the schools when it comes to making the determinations. In a worst case but somehow likely scenario, the NCAA will leave it up to each school, and it will be the wild wild west where each school has a different scheme that a 17/18 year old perspective student-athlete must navigate when considering schools. The way the NCAA has been slow, if not downright reluctant to create a universal structure for Name, Image, and Likeness (NIL), it wouldn’t shock this writer that they do the same in this revenue sharing scenario.
Another compensation scheme could be to determine the athlete’s value to their sport, then the sport’s overall value to their school. Coincidentally, I published an article with this very formula, so all they would need to do is copy/paste accordingly. Should they choose this route, I would also encourage the member schools to publish their methods (and evaluative equations) for full transparency and to defend themselves from future lawsuits.
A more simple method for the NCAA may be to simply pay a sliding scale to all athletes, irrespective of athlete production on the track, court, or pitch, based upon seniority. This way, schools incentivize athletes to stay. Furthermore, they could pay each athlete at the end of the school year (or at graduation for seniors), partially mitigating the transfer portal as, if the student transfers out before the end of the season, then they could forgo their compensation.
The next point of interest is: how does this all interact with Title IX? As a broad stroke, Title IX has been interpreted to mean that schools must spend an equal amount on women’s as they do men’s sports, and create equal opportunities for all genders. Now, in this context, does that mean schools should share an equal amount of revenue for each gender? The simplest would be to do so, but will schools do that? Again, in this employment lawyer’s opinion, that would be the best course of action. We’ll have to wait and see on this one.
What’s Next?
So, while they might have to wait for their schools to share revenue with them, student athletes can take matters into their own hands by monetizing their own NIL opportunities. A great way to do this is to hop on Couro, offer personalized athletic feedback, and share keys to success with those who want to learn from elite, accomplished athletes. Help yourself, by helping others. All ships rise.
Check back here for more updates on NIL, NCAA revenue sharing, and other sports topics!
Author: Cam Van
