Iowa State has already backed away from plans for a new wrestling facility, and Texas A&M has laid off about a dozen athletic staff members. This may just be the tip of the iceberg as university revenues go directly to athletes rather than to higher coaching salaries and increased facilities and athletic staff.
The revenue-sharing model outlined in a $2.8 billion antitrust settlement filed last week by the NCAA and the top five college conferences would allow universities to pay their players up to $21 million a year, or up to 22% of the average powerhouse's annual revenue. That means budget battles and countless tough decisions loom for athletic departments across the country.
“Ultimately, this is an economic shockwave in the system,” said Andrew Zimbalist, professor emeritus of economics at Smith College, “and the system is currently in a state of great uncertainty, risk and instability.”
Realignment, the transfer portal and the proliferation of name, image and likeness (NIL) compensation have already changed nearly everything in college sports. Resolving antitrust lawsuits over the next decade could lead to further turmoil and signal the end of the amateur sports model that has been in place since the NCAA was founded in 1906.
The best football and basketball teams will still rake in huge annual revenues, but how that revenue will be distributed will change — with details on who will get it and how it will be distributed decided in the coming months.
“A 22% shift in revenue doesn't change things,” SEC Commissioner Greg Sankey said at the league's spring meetings in Destin, Fla. “It suggests that people are going to have to make decisions, and they may be broader issues that I haven't even begun to think about yet, but I can imagine some of them, and there are some issues that will be on the table this week and in the weeks that follow.”
Mississippi State athletic director Keith Carter said some of the money paid to endowment-funded NIL organizations “would theoretically shift to the athletic department,” boosting revenue. Carter also said schools will have to find cost-cutting measures, such as putting facilities projects on hold, even with new money coming in this year from the SEC's latest ESPN deal and a new $7.8 billion contract between ESPN and the College Football Playoff.
“It's going to be a mix of finding new revenue streams and cutting costs,” Carter said. “Each institution will certainly do it differently.”
Make changes
Universities such as Iowa State University and Texas A&M University are already actively pursuing reforms.
Iowa State University athletic director Jamie Pollard has scrapped plans for a new wrestling facility that was scheduled to open in the fall of 2025. He cited a “$20 million problem” over how to account for direct compensation to athletes.
“This is a dramatic change and it's not going to happen overnight,” Pollard told reporters in early May. “We have a $100 million budget. We don't have a $120 million budget.”
Texas A&M University's new athletic director, Trev Alberts, has already laid off about a dozen staff members. Alberts clarified at the time that the layoffs were not related to the $76.8 million buyout for fired football coach Jimbo Fisher, calling it an “organizational restructuring related to existing and emerging threats to our business model.”
Big buyouts and big coaching contracts (such as the $13 million annual salary recently paid to two-time national championship coach Kirby Smart at Georgia) mean there will be no pity parties, given the players' lengthy battle for financial return.
“I think it's easy to justify paying a top-tier coach $10 million if you're not paying the players, but paying the coach a few million more dollars is money that maybe you're not paying the players,” said University of Michigan sports economist Richard Paulsen. “In the NFL and NBA, players get paid a lot more than coaches.”
Times were already beginning to change after athletes were allowed to earn revenue from endorsement deals in July 2021. Big-name coaches like Alabama's now-retired Nick Saban and impressive facilities were no longer necessarily the biggest draw for recruits and therefore the most important investment for sports programs.
“Right now, if it's about whether you get X amount of dollars from one school and Y amount of dollars from another school, those things might not matter as much,” said Paulsen, whose school saw coach Jim Harbaugh leave for the NFL after winning a national championship.
Cutbacks underway?
Zimbalist said the athletic department could face further cuts and changes in how much money it can spend on facilities.
“Some of the larger programs have 250 to 300 staff members, very modern facilities, and they're building new facilities,” Zimbalist said. “There's no way they could raise that kind of funding now.”
And those are the relatively wealthy college athletic departments. The impact of the more modest budgets on programs remains to be seen, but Charlotte athletic director Mike Hill and Montana's Kent Haslam have serious concerns. After all, the Group of Five league in which Charlotte plays football and the FCS league in which the Grizzlies play will foot the bill for nearly a quarter of the settlement.
“Having worked in the SEC, Conference USA and The American, I understand this is a complex issue for our organization to resolve,” Hill said, “but I am not convinced that Charlotte and similarly deep-pocketed programs would give up millions of dollars in revenue that should be used to support current student-athletes in order to compensate former student-athletes – 90% of whom come from Power Five leagues whose revenues far exceed those of other leagues.”
“There is a reason why the autonomous conferences were specifically named in the lawsuit and the other 27 Division I leagues were not. As NCAA members named in the lawsuit, we knew there could be implications for us, but the impact is disproportionate and disappointing.”
Haslam agreed.
“Early numbers show we're down about $200,000 in distribution money from the NCAA, which is a big deal for us,” Haslam told MTN Sports last week. “We're having to make up for it with ticket sales, donations and cost cuts. It's a reality and it's hurting everybody and it's certainly frustrating.”
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AP Sports Writer Steve Reed in Charlotte, North Carolina, and AP College Football Writer Ralph D. Russo in Destin, Florida, contributed to this report.
