With settlement, schools can soon pay NCAA athletes directly. How will that work? :: WRALSportsFan.com

With settlement, schools can soon pay NCAA athletes directly. How will that work? :: WRALSportsFan.com

The proposed $2.8 billion settlement — between the NCAA, top revenue-generating conferences such as the ACC and the plaintiffs in three antitrust lawsuits — will allow universities, for the first time, to directly pay athletes, upending decades of NCAA devotion to its definition of amateurism.

The settlement allows athletes to receive up to 22% of the average Division I Power 5 athletics revenue, or about $22 million based on current revenue averages. Taken together with tuition and other benefits, NCAA president Charlie Baker said in a statement, many top athletic programs would be giving about 50% of athletics revenue to athletes.

It’s a long time coming for some who have advocated for athlete compensation for years, such as ESPN analyst and former Duke basketball star Jay Bilas.

“I don’t know in what industry you would say, ‘Jeez. I don’t think the revenue drivers need to be paid. They’re OK just playing for the love of the game,'” Bilas told WRAL. “We’ve used this nonsensical rhetoric for over 100 years now. It’s never been true.”

How precisely athletic departments divide the money among their athletes is one of the biggest questions moving forward. The settlement must still be approved by a judge, and revenue-sharing is not expected to begin until at least the fall of 2025, affording athletic departments time to wrestle with those types of decisions.

Decisions, that Bilas points out, universities and other business routinely make when it comes to salaries and other benefits.

“They can do it however they want,” Bilas said. “It strains the mind how the schools can say this is difficult. … It’s remarkable how some of these institutions have 30,000 different employees, and they can come to terms with each one of these employees and assess their value and pay them appropriately.”

Title IX, federal law that requires colleges to provide equal opportunities and benefits to men and women, is not addressed in the settlement. With football and men’s basketball delivering the majority of revenue, do schools have to compensate those athletes at a higher level to stave off further litigation? And how will universities handle their federal obligations under Title IX?

“I see that as what will be the biggest issue on this revenue-sharing portion,” said Landis Barber, a Raleigh attorney at Safran Law Offices and hosts a sports law podcast.


The settlement doesn’t require schools to share revenue or mandate that they spend to the same level as the high revenue-generating schools. But the need to compete with schools in their own conference may not leave much of a choice.

“Are they going to compete at the same level if they don’t opt in?” Barber said. “If everybody else is doing it, then do you really have the option? You kind of got to do it as well. That’s what’s going to become important for schools in the future.”

But at every level of Division I, including at the very top, there are massive differences in revenue. Five schools, all among the best football programs in the nation, reported revenue of more than $200 million in 2022-23.

UNC, for example, has a $140 million athletics budget. East Carolina’s is $63.2 million. North Carolina A&T’s athletics budget is $16.2 million. UNC-Asheville, which does not sponsor football, has a budget of $8.7 million.

“You’re not going to see schools that are mid-major or low-major in Division I all of a sudden fold up their programs because they’re not as competitive for top-level talent,” Bilas said.

“Some of these schools don’t compete with the top, top level institutions for talent anyway. So the fact that they can’t pay as much, they can’t pay their coach as much as Georgia can or Alabama can, but they still have a coach and they still have a program. I don’t see this being a hindrance.”

But revenue sharing could create additional issues for a league such as the ACC, which distributed $44.8 million to its football-playing members in the 2022-23 fiscal year. That’s behind the SEC and Big Ten, and that gap is expected to grow into the future.

“It’s going to possibly start a new wave realignment as schools try to navigate: Here’s where we are, here’s where Big Ten and SEC are. How do we get to where can compete on the field with those schools at the current revenue?” Barber said. “And it might lead to realignment in that they want to be in those same revenue models because those are the schools that are going to benefit the most as they have the largest distribution among the conferences.”

Already Clemson and Florida State are suing to get out of the ACC for a lower exit fee. Some North Carolina trustees have expressed their desire to get into a higher-revenue league.

“If we can do it within the ACC, let’s do it. But when I say do it, we got to stay competitive,” UNC trustee Ralph Meekins said. “Can we stay competitive in the ACC with the structure and the way it is now with a significant gap in the revenue that other schools are getting? For whatever reason, that’s where we are. What can we do about it?”

Impacting smaller conferences

The Big South Conference has three North Carolina schools as members: High Point University, Gardner-Webb and UNC-Asheville. Like all other NCAA Division I conferences, the Big South will have to continue toward the settlement. The NCAA will withhold revenue, largely driven from the men’s basketball tournament, from all conferences.

“Individual conferences will need to manage these contributions based on their members’ budgets,” Baker said in his letter. “I understand this change will not be easy to manage, but given the challenges facing college sports over the last few decades, change is inevitable.”

Conferences in the Football Bowl Subdivision will pay $95 million annually (33%), conferences in the Football Championship Subdivision will pay $37 million annually (12%) and teams in non-football Division I conferences will pay $34 million annually (12%), according to the NCAA. That makes up 58% of the settlement’s total cost.

The ACC’s contribution, over 10 years, could be as much as $170 million. The Big South’s contribution could be more than $21 million. The smaller conferences, including the Big South, have argued for changes to the funding model to have larger conferences pay more.

“It’s definitely not catastrophic,” said Sherika Montgomery, the commissioner of the Big South. “We’re going to be here, we’re going to be able to find ways. We’ve begun to model what those decreases can look like, some things we’re going to have to do differently. And that’s only on the conference level.”

Montgomery said institutions may have to make tough decisions about which sports to sponsor, how many scholarships to give out and coaching salaries.

“Those are some of the things that we’re really concerned about at this point,” she said. “It’s not only on the conference level. But it’s also on the institutional level and some of those hard decisions that could have to be made to really weather the current storm.”

Baker said the settlement binds Division I together, as all members will contribute to the damages. That’s good news for the Big South and other smaller leagues, which need access to NCAA championships, revenue and governance, Montgomery said.

The NCAA is paying $1.2 billion over 10 years through expense management, new revenue and the use of reserves, Baker said. But the NCAA also funds championships at Division II and Division III.

“So all members of the NCAA are going to be affected by this lawsuit,” said UNC professor Barbara Osborne. “And it’s also going to require all members of the NCAA to approve rule changes so that Division I can actually do or the Power Five conferences can actually do what they’ve agreed to do.”

Source: wralsportsfan.com