Breaking Down the Revenue Sharing Proposals for College Sports

Last Updated on April 16, 2024

Amid increasing legal pressure on the NCAA, there is a growing consensus within the college sports community that Division I athletes will soon be able to share in the revenue generated by the NCAA and its member conferences and universities. But what would a revenue sharing model look like?

Below are some of the revenue sharing proposals and ideas that have been discussed by leaders in the industry. 

Direct NIL Compensation and Subdivision Proposal

  • On December 5, NCAA President Charlie Baker released a proposal that describes a new subdivision of Division I, that would allow the highest revenue generating universities to share revenue with its athletes. 
  • First, the letter proposes that all Division I colleges and universities could enter into NIL agreements directly with their athletes. Second, all Division I schools could provide unlimited educational benefits to their athletes. Third, a subdivision of Division I would be created to allow the highest-resourced schools to directly compensate their athletes through a “trust fund.” 
  • Here’s a high level overview of how the subdivision would work:
    • Each school that opts into the subdivision would be required to “invest at least $30,000 per year into an enhanced educational trust fund for at least half of the institution’s eligible student-athletes” while remaining in compliance with Title IX. 
    • The subdivision would operate under a different set of rules and policies than the rest of Division I. 
  • The full letter detailing the proposal can be viewed here

Sharing Intellectual Property Rights With College Athletes

  • During congressional testimony before a House Energy and Commerce Sub-Committee hearing on NIL in January, UCLA QB Chase Griffin highlighted universities’ intellectual property policies that allow royalties to be distributed to student researchers for their contributions to commercialized IP. Griffin argues that college athletes should have the same opportunity as student researchers to earn money through IP rights:
    • “Congress invests nearly $100 billion a year in university research, and when intellectual property is created and commercialized, those student researchers share in the royalties. No one would ever say they were lured by ‘Pay for Research.’ In every other aspect of American life, the expectation is that if you work hard, play by the rules, and create value, you DESERVE to share in that value. Why shouldn’t this core American principle be true for college athletes?” 
  • In a March NIL Roundtable hosted by Senator Ted Cruz, Alabama Athletic Director Greg Byrne also proposed leveraging university intellectual property policies as a framework for distributing revenue to college athletes:
    • “Every school has some type of intellectual property policy where schools share in the value created with their employees and their students.” In the same vein, Byrne suggests that college athletes can share in the “revenue driven by each individual sport.” 

Increasing Revenues Through Private Equity

  • If Division I schools are ordered to share a portion of their revenue with college athletes, there will be a significant burden on universities to cut costs and increase revenues. 
  • Private equity has been broadly discussed as a potential revenue stream for universities to help fund some of the unanticipated costs of NIL and the transfer portal, as well as college athletes’ salaries if that becomes a reality.  
  • However, the specifics of how private equity would work remains uncertain. In a recent interview on the Sporticast Podcast, Texas Athletic Director Chris Del Conte expressed skepticism on the potential of private equity in college sports, especially since the PE firms would be seeking a return on their investment:
    • “In my mind I don’t really grasp how private equity will work…I’m not trying to pay anyone else. I’m trying to give our student athletes all the money they need.”

Sharing Media Revenue With Athletes Via Collectives

  • In July of 2023, members of The Collective Association proposed a revenue sharing model to officials in the SEC and NCAA.  The proposal recommends that a portion of the TV revenue generated by each conference should be funneled into designated collectives at every member school. 
  • Each conference would allocate an equal portion of the revenue to the collective of each member school. The collectives would then serve as intermediaries, disbursing funds to the athletes at their respective schools. 
  • However, there are several issues surrounding the proposal, such as potential Title IX concerns, breaches of the TV contracts, antitrust concerns regarding the distribution amounts, and the possibility that Division I athletes will be classified as employees. 

Creating a Separate College Football “Super League” 

  • Several college presidents and top sports executives proposed a new football “super league,” separate from the NCAA and any of its conferences, that would consist of 130-plus FBS universities, with only the top 70 programs earning permanent spots in the league. The league would have seven 10-team divisions, with the remaining 50-plus FBS teams in an eighth division. 
  • The new model would also establish a single entity that would negotiate with a potential union which would aim to advocate for players’ interests regarding NIL, transfer portal regulations, and salary structures, thus opening the door for direct athlete compensation. 
  • Moreover, member universities would own a percentage of the league, and revenue distribution would not be evenly split among the schools. Therefore, prominent brands like Alabama and Notre Dame would receive a greater percentage of the league’s generated revenue.

While the revenue sharing ideas above are good conversation starters, developing a more detailed framework for all of Division I college sports largely depends on the legal designation of college athletes and whether Congress grants the NCAA an antitrust protection. 

College Athlete Employment and Collective Bargaining 

  • If all Division I college athletes receive employment status (just as the NLRB regional office in Boston ruled that Dartmouth basketball players are employees of their university), the athletes would have the right to collectively bargain for fair wages, working conditions, benefits, etc. 

Revenue Sharing With Antitrust Protection From Congress 

  • If Congress grants the NCAA a conditional antitrust protection, the NCAA and conferences would be able to carry out policies that could lower coaches salaries and limit the facilities arms race at schools. This would likely increase the funds that are available to share with college athletes in both revenue and non-revenue generating sports. 

An overview of the major lawsuits in college sports with implications on revenue sharing, Title IX, NIL, conference realignment, antitrust violations, and athlete employment can be viewed here.

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