Revisiting these topics after preliminary approval of the House Settlement
Back in May and June of 2023, O wrote about the NIL , transfer portal , and realignment situations in college sports and those articles seemed to generate a good amount of discussion in the TOC community. I’m not sure if you’ll agree, but I thought it would be interesting to take a look at this again after the House v NCAA case was granted preliminary approval earlier this fall.
Most are probably already familiar, but the House settlement will give NCAA schools the option to share revenue with student-athletes, beginning in the 2025-2026 academic year. Schools may share approximately $20 million and that amount is expected to increase every year. It looks like it will be left up to the schools as far as specific revenue distribution, but roughly 75% is expected to go to football players, 20% to men’s basketball, and the remaining 5% for other athletes.
There are a couple brief and informative articles on the settlement here and here .
Before going further, this is my opinion only and doesn’t represent that of any of the other writers or anyone at SB Nation. There could easily be ideas presented that aren’t realistic or just plain wrong. TOC readers can point that out and say whatever you want to me in the comments. But, per TOC policy, please keep it respectful when disagreeing with each other.
One more thing – figures here should be considered rough estimates and not exact. I did some research, but didn’t pour over trying to find a figure down to the last penny. An explanation of financial estimates is at the end of the article if interested.
Realignment
In his article , O acknowledged that realignment was the new way of life. He went so far as to propose a regional division model for football complete with a European soccer promotion/relegation model before acknowledging its unlikelihood.
I actually think the coast-to-coast conferences may be ok in football, but make little sense for all other sports. Football, of course, plays only one game per week and it seems like the travel demands there are less than in sports that play 2-3 games per week. It’s probably not ideal in football, but a team could fly out Thursday afternoon, acclimate on Friday, play on Saturday, and get home early Sunday morning. When Indiana played at UCLA earlier this year, I think they even left Friday for a late afternoon game on Saturday.
The new coast-to-coast Big Ten has provided some exciting “big brand” matchups this year with Ohio State at Oregon and Penn State at USC so there could be an argument that this is good for football.
Other sports have a two-game swing for long road trips, like MSU men’s and women’s basketball is doing with UCLA and USC this winter. Men’s basketball has a Saturday afternoon game against USC, meaning they would leave Friday at the latest, and then a Tuesday night game at UCLA. So they won’t get home until sometime on Wednesday, probably in a pretty fatigued state, and not in the best shape for any classes they may have on Wednesday. This is going to be even worse for the former Pac 12 schools who must now travel frequently to the Midwest and beyond for conference play.
Ideally, basketball should keep early season events like the Maui Invitational and Champions Classic that generate some exciting matchups but otherwise play a much more regionalized schedule, as should all other NCAA sports.
So, unless football really is going to break off from the other NCAA sports (a topic perhaps for another article) then it seems pretty hard to argue that realignment is an overall good for the college athlete. Cal and Stanford in the Atlantic Coast Conference says all that is needed about the ridiculousness of conference realignment. However, like O, I don’t think anyone in charge of these things is coming to their senses anytime soon, at least as long as the money keeps flowing.
Revenue Distribution and NIL
O argued last year that NIL was causing more problems than it was solving. He stated that players should continue to receive full scholarships, room and board, travel allowances, medical care, nutrition services, etc. but not anything beyond that.
I would argue that, even though a scholarship and all of these benefits are extremely valuable, they probably do not represent a fair share of the revenue generated for the players, at least in college football.
Even amidst a disastrous year on and off the field, MSU football generated $90 million in revenue in 2023, good for 17th nationally and 6th in the Big Ten.
I’m estimating that a football scholarship and all of the benefits that come with it at MSU may average out to $150,000 a year (again, see below for rationale) and this may be a pretty generous estimate. The current scholarship limit for FBS football is 85 but that may rise to 105 next year. One hundred five full package scholarships at $150,000 per year is about $15.8 million in total value to the players, or 17.5% of the total revenue.
Head Coach Jonathan Smith reportedly makes about $7.5 million per year. This alone represents about 8.5% of the total revenue. This is not meant to be an indictment of Smith’s, or any coach’s, value but one person getting 8.5% and 105 getting 17.5% doesn’t seem right to me.
Adding in approximately $15 million (75% of the roughly $20 million per year in revenue sharing) that is expected from the House settlement brings the players’ total, with scholarships and benefits, to $30.8 million, or an average of about $293,000 per player and brings the players’ share to about one-third of revenue. Perhaps this starts to bring things a little more into balance.
Any NIL earned on top of revenue sharing should be legitimately earned, rather than just a bunch of boosters forming “collectives” and funneling money to players. A player signing autographs or doing a commercial for a car or soda company and getting paid market value for it should be allowed. See Texas quarterback Quinn Ewers ’ Dr. Pepper commercial. What shouldn’t be allowed, however, is something like the Michigan-Bryce Underwood situation where some wealthy UM supporters apparently decided to give $12 million or so to a high school kid.
It’s unclear to me what effect House will have on these types of NIL deals. The NCAA wanted more regulation in this area, but it will be interesting to see how this plays out. A positive step, in my view, would be requiring everything – revenue sharing payments to players and income from NIL deals – be public. Get it out in the open so market values can be determined.
Finally, on this topic, revenue sharing with players may benefit from a merit-based system, where players can set themselves to earn more in the second half of their college playing eligibility. This brings us to the last topic of this article:
The Transfer Portal
I would propose that players signing with a college program out of high school sign a capped two-year contract. They would be guaranteed a scholarship and a much smaller share of the revenue distribution for two years but could not transfer from the school they signed with until after those two years.
There could be exceptions such as a change in head coach or legitimate hardship but, with hardship, a player would have to sit out a year before playing. If a player wants to leave before two years, there would be a buyout, similar to what coaches have in their contracts, where they would have to give back their shared revenue.
After two years, players could negotiate a new, possibly much more lucrative, two-year contract with their school or enter the transfer portal and negotiate with other schools. Basically, show what you can do for two years and put yourself in a position to earn a lot after that rather than committing $12 million to someone in high school.
A player could renegotiate again after four years if they still had eligibility.
It just seems like this would allow players to share more equally in revenue, retain some leverage from the transfer portal, and eliminate the absurd amount of influence from these collectives.
Unfortunately, perhaps, a couple huge problems could remain. First, I have no idea how this sort of situation, with payments and contracts, would impact a player’s employment status and what that would mean as far as unions, collective bargaining, and perhaps a bunch of other issues.
Second, if collectives were no longer allowed to funnel money to players, the NCAA would have to go back to enforcing this and I’m not sure if enforcement has been something the NCAA does consistently well. All the people that pay players now, legally under NIL, would probably just go back to doing it illegally and take their chances.
So, if you’ve made it this far, what say you TOC? Is any of this sensible or just more ridiculousness?
Explanation of Financial Estimates
- MSU’s out-of-state tuition is $41,958; in-state is $15,372.
- A quick review of MSU’s roster indicates roughly ⅓ of players are from Michigan while ⅔ are out of state so the average value of a full scholarship would be about $33,200.
- Room & board is about $12,900; added to the average scholarship is $46,102.
- Adding in all of the other benefits players could receive like medical care, monthly stipend, nutrition programs, travel stipends, etc. is pretty hard for me to figure out but let’s just say it’s double the value of a scholarship and room and board, or roughly another $100,000.
- So, I’m just assuming an average scholarship and associated benefits for an MSU player is about $150,000 per year.
- Next year, schools may be permitted up to 105 football scholarships so, at MSU, the total value to players would be about $15,750,000 (105 * $150,000), which represents just 17.5% of the $90 million in football revenue MSU produced in 2023.