On Thursday, a huge step was taken to soon make college sports as we know it changed forever.
The NCAA settled three lawsuits, including House vs. NCAA, and agreed to pay a nearly $2.8 billion settlement to athletes from 2016 to 2021 that covers retroactive damages to athletes who failed to make money off their name, image and likeness.
The five power conferences, including the Big 12 and Pac-12, agreed to terms of the deal on Thursday. Yahoo Sports’ Ross Dellenger reported that if the NCAA had lost the case, the damages would have been $20 billion, which likely would have led to the NCAA filing for bankruptcy, so the conferences felt it was in their best interest to resolve and avoid the catastrophe.
According to a letter from NCAA President Charlie Baker to member schools, obtained by Dellenger, to pay for the $2.776 billion settlement over 10 years, the NCAA will use 42% of its own funds, while 58% will come from of a reduction in distribution to their schools.
The energy conferences will have about $664 million in distributions retained over 10 years, according to Dellenger.
While the loss of this NCAA distribution — which could result in a 0.61% reduction in the average Power Five school’s budget, according to Dellenger — will have some bearing on Utah’s athletic department budget, the real impact will be felt in the new proposed revenue sharing model that is part of the agreement.
Under the agreement, schools can directly pay players up to $22 million per year, starting in the fall of 2025. That number, by Dellengerwas achieved “by using an average of energy conference revenue streams as a sort of formula for determining an annual revenue sharing cap.”
As coaches begin the recruiting process soon to find their next class, questions about direct payments will certainly be at the top of recruits’ minds, but those questions may not have answers at this time.
How does Title IX influence payments? It is not covered in the agreement.
“The deal will allow, say, Ohio State to share up to $20 million with its athletes. Which seems like a lot. But schools won’t be able to give the entire $20 million to the football team, lest they want to be sued by their female sports athletes,” wrote Stewart Mandel of The Athletic.
NIL collectives will likely still be in play, as they operate outside the reach of schools.
“Many within the sport believe that schools will keep their collective for two reasons: (1) to get around the revenue sharing limit by using third-party entities to offer “bonuses,” one person said; and (2) violate Title IX rules, as collectives are not under the umbrella of the university,” Dellenger wrote.
While there is no requirement that Utah spend up to $22 million paying its athletes, the money will certainly be one of the largest, if not O biggest, factor in recruits deciding where to play and whether they will stay once they are at Utah or enter the transfer portal.
Could player payment contracts include multi-year language, like in professional sports, and prevent players from being transferred before a certain period of time?
“Officials are discussing a number of possibilities for athlete contracts, including implementing termination clauses that are often found in coaching contracts,” Dellenger wrote.
There is still a lot to be worked on in the coming months before autumn 2025, when the new system is expected to come into effect.
What is certain is that Utah needs to find a lot more money in its budget if it wants to be competitive in this new world of college athletics.
According to financial fillings, The Utah athletic department had total operating income of $126,256,291 in fiscal year 2023, with total operating expenses of $124,453,484, leaving an excess of $1,802,807.
Utah has done well to turn a profit at a time when some athletic departments across the country are operating at a loss, but the surplus is still well below $22 million.
The first step will be to further increase fundraising. Will fans who currently donate to an NIL collective start donating to the athletics department to allow them to pay the players directly? Will the Utah athletic department absorb a current NIL program like the Crimson Collective, or will it continue to operate outside the university in addition to direct payments?
In addition to a massive increase in donations, athletic directors across the country will have to start making cuts to the athletic department to free up money to start playing football.
What will happen to non-revenue sports? Revenue from football and men’s basketball currently covers the costs of all of Utah’s other sponsor sports.
“There are concerns about the ripple effect these new financial requirements will have on athletic departments as well, including the possibility of schools cutting sports, athletic resources or administrative positions at schools with and without power conferences,” Nicole Auerbach and Justin Williams of The Athletic wrote.
However, cutting sports is not a good start, as NCAA Football Bowl Subdivision rules require each institution to sponsor a minimum of 16 college sports, and Utah currently has 20 college sports. Even if Utah cut four sports, it wouldn’t get them anywhere near $22 million.
Utah declined to comment on the NCAA settlement at this time.
