College Players can start earning money directly from their schools beginning in the 2025-26 school year
A couple months back, TOC attempted to begin a “Mailbag” series of articles. Apparently, y’all were not as excited about that idea as we were, and after two editions we ran out of questions in our inbox. But from time to time, we see a question in a comment section that we feel deserves a lengthy reply. This article will be one of those cases, as I attempt to shed some light on where the $20.5 Million that schools can now start legally paying their student athletes comes from, as Izzo4Potus recently inquired.
The House Settlement will go into effect on July 1, so basically it starts in the 2025-26 school year. Any NCAA school that opted into the settlement can pay their student-athletes. While my research did not yield a complete list of which schools opted in and which did not, I can tell you that all the schools in the Big Ten, Big 12, and SEC did opt in. Conversely, the Ivy League unanimously opted out. The total amount of $20.5 Million was derived by taking the average athletic department revenue of all power conference schools and then taking 22% of that figure. I am not sure what the significance of 22% is.
While $20.5M is a hard cap, this does not mean that a school must use all of it. Nor is there a minimum required to be paid out, though it is worth pointing out that the American Athletic Conference is requiring its schools to share $10M with their athletes. So, for example, while Ohio State, who has the Big Ten’s highest athletic department revenue, will have no problem coming up with the money (20.5M would be less than 11% of their projected revenue for 2025-26), a program such as Rutgers may choose not to share the full amount (20.5M would be close to 27% of their projected revenue).
By the way, this revenue sharing does not even include the amount the athletic departments shell out on the scholarships (including room & board, etc.) and other benefits to their student-athletes. All included, the NCAA has said that some programs could be using upwards of 50% of their revenues on their athletes.
Now let’s bring this back to Michigan State. As has been pointed out by many of you, MSU’s athletic department has been running at a deficit lately. For the 2023-24 academic year, the most recent year that data is available, Spartan athletics had a deficit of $16.7 Million. A year earlier, that deficit was $11.2M. In fact, in four of the past five fiscal years, there has been a deficit. It is worth noting that some of the expenses in 23-24 included payouts to members of Mel Tucker’s football staff after he was fired and members of Suzy Merchant’s women’s hoops staff after she retired. And MSU also had to pay toward the buyouts of Coach Jonathan Smith and members of his new staff. These payouts and buyouts accounted for over half of the $16.7M deficit. That is something that does not come up every year.
Another thing that MSU has going for it is that this past year was the first time our home venues were allowed to sell alcohol, and we will see that reflected in the numbers when the 2024-25 reports come out. Yes, this is me saying that you can contribute to the MSU Athletic Department by buying beers at Spartan Stadium.
While the new House Settlement will also create regulations for student-athletes ability to make money from outside sources (any payment over $600 must be declared and its permissiveness will be ruled on), this does not mean that alumni and fans cannot help their schools out through donations. In fact, this writer believes one of the biggest side effects of House will be the number and sizes of direct contributions to schools’ athletic departments from supporters. For MSU, we have been seeing this trend downward; for the last three years of data, direct contributions have gone from $53.7M to $45.1M to $34.3M. Maybe we see the members of our alumni base with the deepest pockets help those numbers tick back upward with the new rules. I’ve heard that new AD J Batt is good at getting those donations.
Basically, having stability amongst the various teams’ coaching staffs and getting more donations will help get MSU out of the red. Another thing that will be a benefit to all schools, despite the fact that we fans despise it, is the increased number of streaming services that are getting involved in sports broadcasting. More TV deals will yield more money for all the athletic departments around the country. So think about that when we find out in a couple years that we will also need Apple TV, MAX, and Shudder to watch some of our games.
Now of course there is the downside to this new reality of schools paying their players. Adding $20.5 Million to the budget, a figure that will rise each year moving forward, is going to force some decisions to be made. Michigan State has a total of 21 Varsity teams, 10 for men and 11 for women. Of those 21, at best there are four that provide any sort of significant revenue for the university. Will the money being paid to the athletes on those four teams mean than some of the other 17 teams face the axe? What is the future of the so-called “Olympic Sports” such as tennis and track & field at American Universities? Do those sports cease to be varsity sports, thus saving the schools the scholarships paid to those athletes? I do not predict all those other 17 teams get dropped from the Varsity level, but I do think we see some of them get chopped down to club sports.
This is just another change in the ever-evolving world of college sports. We all have some things to get used to – fans, athletes, coaches, and admins. I am sure our old coach Duffy Daugherty (that’s him on the left in the cover picture) would not even recognize the new landscape if he were alive today. But I do think MSU can make some changes and improvements to fit the new revenue-sharing payments into the budget and even turn a profit.
What do you guys think? How will the House Settlement impact the future of all NCAA Sports? How long will it take new AD J Batt to get Sparta to start making money? Do you think this new system will create a bigger divide between the top programs and everyone else or will this help create more parity?