Key questions abound as college sports eyes a two-pronged reform solution

Talk with college sports stakeholders far and wide – from inside power conferences to Football Championship Subdivision outposts – and they’ll tell you the same thing:

A coming revenue-sharing model is inevitable. We’re on the precipice of schools for the first time being allowed to share dollars with athletes. 

Universities are adjusting budget forecasts in advance of college sports’ new world order. A growing number of industry leaders, everyone from those in the administrative class to old-school football coaches, are now proponents of athletes receiving a slice of the revenue pie.

A new reality is crystal clear: A revenue-sharing paradigm is the only viable solution for the NCAA. Courts are increasingly, if not universally, now viewing the NCAA’s long-antiquated amateur model on the wrong side of antitrust law.

What awaits the college sports enterprise is a two-pronged solution: 

The first part is likely to be achieved in the coming months with a settlement in the landmark House antitrust case. Attorneys for the plaintiffs and the NCAA have for months engaged in settlement talks, with ESPN’s Monday night report depicting “deep discussions” between both sides underscoring the state of play and what’s at stake.

If the NCAA chooses to take the case to trial next January, it could owe $4.2 billion to thousands of athletes in retroactive NIL pay and broadcast revenue, a bill that could financially cripple the organization. In short, if the NCAA went to trial and lost a $4 billion judgment, ESPN’s Jay Bilas told On3, “They’re done.”

If a settlement is reached beforehand, sources said, defendants – the NCAA and power conferences – could still owe athletes more than $1 billion and, more significantly, would almost certainly usher in a future model that includes revenue-sharing.

Multiple industry sources familiar with the discussions told On3 in recent weeks that talks have entailed schools potentially being permitted to share between $15 and $20 million with athletes, confirming figures also reported by ESPN and Yahoo Sports.

Revenue-sharing only solves few concerns

But introducing a revenue-sharing model represents only half of the solution for college sports’ ills, several stakeholders and legal experts told On3.

Without opening the door to an era of collective bargaining specifically – and, more broadly, enabling athletes to negotiate an array of benefits – the NCAA will simply wind up making repeated visits to an unfriendly locale: The courtroom, as it tries to fend off even more antitrust lawsuits.

“The only way to have protection from further litigation and more House cases is to do the new deal with the athletes,” Jim Cavale of the players’ association Athletes.org told On3 on Tuesday. “If athletes are not sitting at the table as an executive committee – representing their teammates with their respective school or conference that’s going to be sharing the money with them – and voting and agreeing to it, we’re going to be right back in the same boat again.

“You cannot do what you’ve been doing for the last century-plus, and that is creating rules without athletes sitting at the table and voting and agreeing to those rules. You’re going to have to do it a new way.”

To visualize this period of seismic change, imagine all the consequential issues in college sports – revenue-sharing, litigation, state NIL legislation, an employee model, escalating media rights revenue, conference realignment, etc. – entwined in one giant, messy knot.

Once untangled – with the help of the courts – we’ll have a new, sustainable model for college sports. As that process to reach that destination continues, here are the most significant questions hovering over an industry shaken by unprecedented disruption:

Can NCAA legally establish a salary cap?

That is akin to unilaterally establishing a salary cap without negotiating the figure with athletes. Good luck attempting to do that without prompting more antitrust lawsuits.

“Right now, the cap on NIL payment from schools/conferences to athletes is zero,” Mit Winter, a college sports attorney with Kennyhertz Perry, told On3 on Tuesday.

“If House settles and there is now a cap of $20 million on payments from schools to athletes, it’s no different from an antitrust perspective. There’s still a cap, it’s just a different one. So a future college athlete that is not a member of the House class – a high school athlete, for example – could still sue the NCAA and conferences at some point in the future for violating antitrust law.” 

Looking at it another way: In MLB, for instance, owners cannot unilaterally institute a salary cap, which has long been a point of contention and a non-starter for the players’ union. Such a change to the financial model needs to be collectively bargained.

How strong is trend toward organizing athletes?

Several companies are attempting to organize athletes, in hopes of best positioning them for when they do have a seat at the table.

Athletes.org has seen more than 3,000 athletes sign up since its inception in August. It recently met with and signed the entire UAB football team, marking the first time a Division I football team signed with a players’ association.

The company is also discussing similar meetings with power conference teams. Absent an employee model, which is required for formal unionization, the belief is that joining a membership organization like Athletes.org would still position athletes to negotiate benefits in a revenue-sharing era.

That said, it’s important to remember that the push toward a revenue-sharing model is occurring at the same time the National Labor Relations Board is weighing multiple cases that could usher in a collective bargaining era for athletes.

The NLRB is considering whether to review a regional director’s Feb. 5 ruling that Dartmouth’s men’s basketball players are employees of their college. The players voted last month to unionize.

Additionally, a Los Angeles-based NLRB administrative law judge is weighing whether USC’s football and men’s and women’s basketball players are employees of the school and potentially of the Pac-12 Conference and the NCAA, as well.

Many stakeholders, including NCAA President Charlie Baker, have bemoaned a potential employee model because they said, among other concerns, it could lead to schools cutting sports or dropping them to club level. 

Pending a lengthy appeals process, one that could ultimately land in the U.S. Supreme Court, the revenue-sharing issue will be addressed before the employee question is answered in full.

Is collective bargaining a must for NCAA?

The NCAA will continue to look to Congress for a lifeline – otherwise known as an antitrust exemption.

There have been more than 10 college sports reform-related Congressional hearings. There’s been a flurry of federal reform bills unveiled – not one has gone to a vote.

Two sources in recent weeks told On3 that the NCAA was seeking a settlement in the House case that would either include or coincide with at least some antitrust protection from Congress. 

“I think the hope from the NCAA/conference side is that by agreeing to a revenue-sharing model, it makes it more likely that Congress will provide that antitrust exemption,” Winter said. “But I still view that as unlikely. Which makes collective bargaining still likely.”

There have also been hybrid solutions pitched.

“We don’t have a mechanism to [collectively bargain] without them becoming employees,” then-Notre Dame Athletic Director Jack Swarbrick told Yahoo Sports in October. “It would require a new mechanism that would recognize the rights of student-athletes to negotiate for the terms and conditions of their participation as athletes without being employees. I think it’s worth considering.”

What happens to NIL in revenue-sharing world?

Plenty of movement is afoot to move NIL in-house, which would largely achieve what revenue-sharing aims to achieve. 

The state of Virginia recently passed a new state NIL law that will enable in-state schools (effective July 1) to compensate athletes for their NIL rights, which is currently against NCAA rules. Other states have passed or are considering similar laws, albeit explicitly stipulating that dollars need to be funneled through a third-party entity before landing in athletes’ pockets.

Baker himself also unveiled in December a progressive reform proposal, called Project D-I, which, among other things, would enable schools to strike NIL deals with their athletes.

In recent weeks, plaintiffs’ attorneys in the House case have used Baker’s proposal – asserting that the NCAA believes schools should directly compensate athletes – to bolster its own arguments that, well, schools should directly compensate athletes.

A prime nemesis of the NCAA, Jeffrey Kessler, is the lead attorney for the three plaintiffs in the House case. Kessler said in an interview on Tulane sports law program director Gabe Feldman’s podcast that the NCAA’s December proposal was tantamount to a surrender.

“It is a wonderful admission by the president of the NCAA that these bans on paying for NIL rights directly are antitrust violations,” Kessler said, “since he now believes he can get rid of those bans without doing damage to college sports – which is what we’ve argued all along. That is going to be fatal under the rule of reason. 

“In some ways, I view this proposal as throwing in the towel on antitrust liability, but what they offered is not what we would settle for. It moves the ball in the right direction but it certainly does not resolve this.”

Baker’s proposal is essentially stuck in neutral now, sources told On3, as settlement talks continue and escalate regarding a potential House settlement.

But under a revenue-sharing model, anyone who believes that NIL deals from third-party entities like donor-funded collectives will simply immediately vanish hasn’t been paying attention.

“The opportunity for ‘NIL’ deals will remain,” Shannon Terry, CEO and founder of On3, posted on X on Tuesday. “This will be so difficult to govern. How do you discern if a sports marketing opportunity from XYZ brand isn’t really affiliated with or loosely affiliated with a school/booster or collective? This will take years to work out through real-life situations.”

Are schools willing, able to pay athletes $20 million?

There is plenty to watch here on all levels of college sports, including at the power conference level.

Consider the contract for new Missouri Athletic Director Laird Veatch, which includes a force majeure provision related to “potential changes to the financial model for collegiate athletics given pending litigation and legislation,” according to the Columbia Tribune.

The provision states that if “litigation/legislative changes have a material adverse effect and create a serious financial exigency for the university’s athletic department, [the] university and director will negotiate and agree to appropriate changes to the director’s compensation.”

One source familiar with coaches’ contracts expects similar provisions to be included in some coaches’ contracts as well.

“This is all about schools wanting to know the future from a budgeting standpoint,” the source said. “Everybody is worried about what they have to budget for for the future.”

Meantime, at other levels of the industry’s hierarchy, namely the FCS/Division I-AAA level, there simply is not revenue to share. Ryan Ivey, co-chair of that level’s working group to formulate a path forward for like-minded schools, said a revenue-sharing model would not work for those schools. 

“You can come and try to get some money out of us, but I don’t know where it’s coming from,” Ivey said. “I say that very lightheartedly. I would argue that institutions at the FCS level – we’re not the institutions causing the major issues. This is not meant to be pointing fingers and saying, ‘They’re to blame.’ But we are fundamentally different than Texas A&M.”

To be clear, adopting a revenue-sharing model is not expected to be a requisite for existence in college sports.

It is an option for those with the means to do so. But know this: Opt in and choose to compete with the big boys who possess $200 million-plus annual budgets. Opt out and fall even further behind the well-heeled schools that choose to pay athletes. 

“We’re not dealing with one shoe fits all,” Chicago-based attorney LaKeisha Marsh, chair of the collegiate athletic practice at Akerman LLP, told On3. “I think you need multiple models.”

If House is settled, what happens to other lawsuits?

While the House case has attracted bold headlines, it is far from the only significant legal threat confronting the NCAA.

Others include Carter v. NCAA, which alleges that rules that prohibit schools from paying athletes violate antitrust laws, and Hubbard v. NCAA, which relates to retroactive Alston payments to athletes.

Expect the NCAA to at least attempt to reach a settlement in the House case that could essentially be a catch-all deal to stave off other unfavorable outcomes in ongoing court proceedings elsewhere. 

“This long battle to bring down the NCAA cartel is coming to a head,” Kessler has said. “One way or another, whether it is through us taking all these cases through trial and verdict or settling them in advance, I foresee increasingly likely a day when a fair system can be put in place for the athletes.”

How does Title IX fit into everything?

Make no mistake, a Title IX reckoning is coming.

The 52-year-old federal law protects students from sex-based discrimination at any school that receives federal funding. Some contend that revenue-generating football players at major universities deserve more dollars from schools than athletes – male or female – who compete in Olympic sports.

In a revenue-sharing world, that will need to be addressed. 

In the meantime, some NCAA and conference stakeholders have used Title IX as an argument as to why they believe college sports should not incorporate a revenue-sharing or employee model: Because it would be impossible to adhere to Title IX requirements, they argue.

Some legal experts note that the Title IX argument is a convenient one for stakeholders who have long turned a blind eye to Title IX compliance.

What exactly are SEC, Big Ten doing?

The two super conferences – the SEC and Big Ten – have formed a joint advisory group to begin to shape a future model of college sports.

The impetus, sources said, is that Baker’s proposal didn’t go far enough to stave off further litigation. One source said that the Big Ten has been particularly forward-thinking on the need for revenue-sharing. 

The super conference’s push for reform is operating on parallel tracks as the NCAA’s settlement talks move the enterprise ever-closer toward consequential reform.

“But instead of them [SEC, Big Ten] having to react to Baker’s proposal, they can come up with their own,” Cavale said. “But it’s the same philosophy: It’s creating parameters that fit the desires and agenda of the college athletic departments and the higher education system but also allow athletes to start sharing in revenue.”

What’s next?

Settlement talks between plaintiffs in the House case and the NCAA will escalate. Plaintiffs have all the leverage as the Jan. 27 trial date draws ever closer.

Efforts will continue to organize athletes in subgroups to position them for when a new model takes hold. Schools will continue to assess and adjust budget forecasts.

And everyone tethered to college sports will remain in limbo as we await the inevitable coming of a new day: A revenue-sharing model and – equally important – a negotiating mechanism for athletes. 

“It’s happening, and eventually we will have a league/association that will set up more competitive parameters around transfers, recruiting, roster management, etc.” Terry said. “This is all part of the free market system in the USA and is a necessary step toward effective resolution. 

“College sports will always be the greatest, even with athletes being compensated.”