NCAA, Power 5 agree to let schools pay players

jacekpardol said:

SO many during the Weber and Groce era were in complete denial that kids were getting paid before NIL.

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Money under the table and gifts have been occurring forever yes, but nothing like the $2M NIL deals today and likely much more that comes with revenue sharing deals. This revenue sharing among will change college athletics and hurt smaller college programs and non-revenue sports. I would prefer they have pro leagues for youth as in Europe where they can be paid, concentrate on development and keep college sports for amateurs, but we are well past that now as college sports has essentially become a de facto pro development league. Maybe colleges can implement a facsimile of the pro draft to level playing field and constrain salaries.

AutoPoster 3000 said:

It’s time we abandon this defunct conception of “college sports” as some kind of cohesive institution that encompasses every program at every school. Revenue-generating major college football and basketball have morphed their own thing and need to be spun off, restructured, and regulated as such, for better or worse. “College athletics”—e.g, gymnastics or wrestling or a lowly FCS football program that generates no income from broadcast rights—there is no reason these can’t continue. Most universities don’t have even one true revenue generating team and yet they maintain vibrant programs for their “student-athletes” (as historically defined). Now, major college football and basketball as we once knew it—that is dead. What replaces it may or not appeal to a large number of fans. But why continue to link those fortunes to university athletic departments that are not equipped to operate professional sports franchises on this new scale. Little that works for Alabama Crimson Tide Football (TM) is going to make sense for a women’s lacrosse player at the University of Denver. So let’s just separate them completely.

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If you disconnect from the universities, it all disappears. That's why. Go to any minor league game for any sport, guarantee the stadium is more than half empty. The USFL and other minor league football leagues play in front of maybe 200 people. Overtime Elite has what 8 teams and an arena that holds 3,000 people.

Meanwhile, top college football teams will sell 100,000 tickets. P6 basketball teams sell 15,000+ tickets pretty much every game. If you have the Tuscaloosa Elephants or the Ann Arbor Wolves playing, a tiny fraction of the people will show up. So ultimately, the colleges have all the power.

If I were the schools, I would flex that power. I'd say here are the rules, and if you don't like it, please, go start your own league. Build your own facilities, we wish you luck. There are 128 D1 football teams, with 85 scholarships a piece. That's 10,880 players. There are 351 D1 basketball teams with 13 scholarships each. That's 4,563 players. Is there any chance in a million years, even if a new minor league option was made, that many kids would be involved?

Some of the top schools may not like it, but the same argument would apply. Ok, go out on your own then.

Illinifrank67 said:

Maybe we eventually see a franchise system, where the university licenses a private company to use its brand for a fee. So for example the University of Illinois basketball team will be a company owned by a consortium that pays for the right to use the University of Illinois Brand. There might be other operational ties, but the arrangement will be similar to how a McDonald’s franchise relationship works. I think the only role of the NCAA is irrelevant anymore. Hopefully a Tier 1 tournament of some kind emerges to replace the NCAA tourney because I will be very sad if March Madness is a casually of war.

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a basketball tournament will still be held

WAY WAY WAY too much money to walk away from that . it might be a little different as to who gets invited tho

Snoopy said:

If they are smart they provide every athlete with a base stipend that increases for the number of years on the team. Provide bonuses for how the team finishes in the B1G, how far they go in the end of year tournaments, maybe all conference, all American, or other somewhat nonobjective criteria of success that would be difficult for Title IX suits to be filed on. Then let NIL deals create any larger spread between players of different talents and sports.

Otherwise they have to pay mens football players the same as womens gymnastic players, and decreasing the women's pay to make that work would be unfair.

Female Gymnasts Are Proving to be Particularly Successful in NIL

Some of the top-performing female gymnasts in college athletics are also at the top of their game when it comes to NIL.

businessofcollegesports.com

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Ironically, the way NIL evolved for women's gymnastics is a better model than the men's football and basketball model. Non-university linked entities paying athletes for the use of their name, image, and likeness to use for marketing efforts ... not six/seven figure paydays for QB1s paid for by boosters, where the QB1 "earns" that payment by doing 30 mins of charity work, or signing a few footballs.

It seems like the Livvy Dunne NIL model of promoting makeup on her Insta is sticking around, while the Jaden Rashada booster collective funded model of NIL is getting replaced with direct payments from the universities.

Snoopy said:

If they are smart they provide every athlete with a base stipend that increases for the number of years on the team. Provide bonuses for how the team finishes in the B1G, how far they go in the end of year tournaments, maybe all conference, all American, or other somewhat nonobjective criteria of success that would be difficult for Title IX suits to be filed on. Then let NIL deals create any larger spread between players of different talents and sports.

Otherwise they have to pay mens football players the same as womens gymnastic players, and decreasing the women's pay to make that work would be unfair.

Female Gymnasts Are Proving to be Particularly Successful in NIL

Some of the top-performing female gymnasts in college athletics are also at the top of their game when it comes to NIL.

businessofcollegesports.com

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Providing performance kickers will, for IL at least, shift money from the revenue sports to the non-revenue sports. IL football isn't winning the conference this decade, and it makes up 75% of the scholarship athletes in revenue sports. (85FB, 13MBB, 15WBB)

One could shift the money balance further by counting the scholarship money as part of the 20M revenue sharing. If there are ~400 NCAA althetes at UIUC (SWAG - numbers anyone?), that is 50k each. That is between the instate and out of state cost of attending for a year.

About the only positive I see from this new rule is that it will split the real Div I from those who joined Div I to try and get a cut of the NCAA pie. I expect to see Div I either split into Div I and Div 1A, or for a lot of teams (conferences) to move from Div I to Div II.

If this was true profit sharing - which isn't the same as revenue sharing - the athletes would be paying the universities in all but a few cases. It it wasn't clear, I really hate these change. IMO the non-revenue sport players were already getting a fantastic deal, even if they did not get any scholarship money. The university is paying for a coach, travel to games etc., for them to partake in their hobby. For 95%+ of the players, it is a hobby. While there is a benefit from team play, the cost/player is so high that same money could seriously benefit a lot more students if spent in other ways.

illini80 said:

https://twitter.com/i/web/status/1793999190852247634

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I don’t buy those numbers on face value. If a school lost 30 million to have athletics wouldn’t you stop sports. There would be no incentive to keep it. Why would you keep pouring more money in if you were losing money.

My guess there is money that the athletic department is directly responsible for generating but on the accounting side it is not counted as profit for the department but goes to the university

You cannot convince me for one second universities are hurting for money and if they are they have poor leadership

Epsilon said:

... It’s about time the economics of the sport start to reflect who’s really earning money for the schools...

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I largely agree with your post (which I deleted most of, for space) but think it is important to point out that generally speaking NO ONE is earning net profit for the schools because the schools end up losing money on sports as far as we can tell. The money earned by football and basketball is used entirely within the athletics programs with few exeptions and there are in nearly all cases no profitable athletics departments either.

The idea that athletes are being fleeced doesn't hold water IF non-revenue sports are considered worth supporting financially.

On the flip side, the difference between coach salary in the revenue sports and athlete compensation is truly troubling. Somehow addressing this -- I haven't a clue -- is the real ethical challenge. In a sense, the schools are themselves irrelevant to the issue of fairness here other than that the schools must be the ultimate guarantors of fairness.

Navy_illini said:

I don’t buy those numbers on face value. If a school lost 30 million to have athletics wouldn’t you stop sports. There would be no incentive to keep it. Why would you keep pouring more money in if you were losing money.

My guess there is money that the athletic department is directly responsible for generating but on the accounting side it is not counted as profit for the department but goes to the university

You cannot convince me for one second universities are hurting for money and if they are they have poor leadership

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well, most have TERRIBLE leadership in almost all areas

OrangeKrush1981 said:

The idea that athletes are being fleeced doesn't hold water IF non-revenue sports are considered worth supporting financially.

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So some student athletes are carrying non-revenue sports in this argument. That means that they are providing monetary value to the schools above what is being provided by a “free” (earned) education. Is it their responsibility to fund them?

Navy_illini said:

I don’t buy those numbers on face value. If a school lost 30 million to have athletics wouldn’t you stop sports. There would be no incentive to keep it. Why would you keep pouring more money in if you were losing money.

My guess there is money that the athletic department is directly responsible for generating but on the accounting side it is not counted as profit for the department but goes to the university

You cannot convince me for one second universities are hurting for money and if they are they have poor leadership

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I would think it would depend on the school and the number of (what I will call non-revenue) programs that the revenue sports (football & mens basketball) have to support....I mean you're talking a lot of $$$ if a school has 10-12 non revenue programs double that if they have women's programs.....coaching salaries, support staff, equipment, maintaining facilities, travel expenses, etc, etc....it all adds up....but I tend to agree with you, there's probably money that finds it's way to the athletic department that isn't budgeted for that sole purpose.....do you think the Athletic Director's office and staff salaries and expenses as well as other programs related to the Athletic Dept. salaries and expenses are included in those figures???

Epsilon said:

So some student athletes are carrying non-revenue sports in this argument. That means that they are providing monetary value to the schools above what is being provided by a “free” (earned) education. Is it their responsibility to fund them?

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That's definitely a central question. I am not sure how to figure Title IX into this, for example. But leaving aside the 50% of collegiate athletes who are female, is it right that, say, football PLAYERS support men's track and field or golf? Seems like the answer to that is "nope."

When the question was in past decades whether a SCHOOL had such an obligation (or interest), that was a whole 'nother animal.

Kinda silly, but NYT used a stock photo from the Illinois Duquesne game for their article about the settlement.

Navy_illini said:

I don’t buy those numbers on face value. If a school lost 30 million to have athletics wouldn’t you stop sports. There would be no incentive to keep it. Why would you keep pouring more money in if you were losing money.

My guess there is money that the athletic department is directly responsible for generating but on the accounting side it is not counted as profit for the department but goes to the university

You cannot convince me for one second universities are hurting for money and if they are they have poor leadership

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Short answer:
Colleges maintain money losing sports as a recruiting mechanism, and a way to maintain alumni engagement. The theory is that the non-sports donations from the alumni due to the extra engagement exceed the money being lost. Example: Penn State sports, pre-alumni donations, lost 28.5M in 2022. After donations they cleared 10M. They do far better than most due to their football program.

Whether or not this is poor leadership depends on the resulting increase in non-sport alumni donations. I did not find any data on this.

Longer answer:

Most universities are absolutely hurting for money. The Ivies, high end med schools, and law schools are fine. Other than that, its generally grim. The common theme is top end schools with alumni that get rich contribute significantly to the endowment.

Universities are more and more dependent upon alumni donations as the percentage of costs covered by the state drops. At UIUC, the tuition in 2022 was the same as it was 35 years ago after adjusting for inflation. All of the new buildings you see at UIUC are gifts. The financial gap is covered by alumni.

Smaller colleges are closing at the highest rates ever. They are doing whatever they can to survive, including pruning entire departments (almost 100% LAS). The advertising that comes from making the NCAA BB tournament is gold. Getting a first round upset is a goldmine. Attendance jumps significantly. [The closures are a combination of college attendance dropping overall, and people getting smarter about money. New studies confirm that most college degrees never pay back financially. Smaller liberal art colleges mostly offer the degrees that never pay back financially.]

Colleges are being financially reckless wrt sports IMO. For example, Penn State, which does very well compared to most, just decided to build a new 700M stadium. A 700M bond at 5.3% is 46.66M/year for 30 years. This number doesn't include any overrun costs or maintenance costs over those 30 years. Add 50%? 100%? From their 2022 financial statements they cleared 10.7M. It was a 28.5M loss before alumni donations. Where is the money for this stadium coming from? What money is there to share?

A more detailed look at the 2022 Penn St. numbers. The numbers include all revenue including TV deals, conference/bowl/tournament payouts and (donations).
So if all the non-revenue sports were dropped (not possible due to Title IX), and they skipped the new revenue sharing, they would still be significantly short.

Random data: ~900 athletes, ~75 coaches (~40 part time)


Now think about the new $800 NW stadium where they can't fill the seats in the existing stadium.

College athletics lose money.

Que Sera, Sera

Navy_illini said:

I don’t buy those numbers on face value. If a school lost 30 million to have athletics wouldn’t you stop sports. There would be no incentive to keep it. Why would you keep pouring more money in if you were losing money.

My guess there is money that the athletic department is directly responsible for generating but on the accounting side it is not counted as profit for the department but goes to the university

You cannot convince me for one second universities are hurting for money and if they are they have poor leadership

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For the schools that lose money, I would think it’s just considered an expense. There are benefits to a visible athletic program, basically advertising. How much of an expense schools are willing to take on and what tangible benefits they look to get probably vary.

A lot of d3 schools for example technically lose money on sports, but they are non-scholarship and also have a belief that sports help attract quality students and believe that participation in a sport is beneficial in the development of young adults.

Goillinikobd said:

Might delay their promo to the majors by a few years at 500k per year. It’s a gamble, a sure salary or a two year career in the minors for peanuts. I forget the odds of making the Show, but they are slim.

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The best amateurs are getting multi million dollar bonuses.

Also, they cut down to only 20 rounds but a lot of the guys are already going to college unless they're drafted very early and can get a good signing bonus.

Once they get to college they have the stay at least 3 years, so I don't it really having an impact on college baseball.

SoCal Illini said:

For the schools that lose money, I would think it’s just considered an expense. There are benefits to a visible athletic program, basically advertising. How much of an expense schools are willing to take on and what tangible benefits they look to get probably vary.

A lot of d3 schools for example technically lose money on sports, but they are non-scholarship and also have a belief that sports help attract quality students and believe that participation in a sport is beneficial in the development of young adults.

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I'm sure some d3 schools "technically" lose money but they also use sports as a way to boost enrollment.

Bring in a bunch of kids that are paying 40k a year in tuition but only a small fraction of them actually play and a lot of them will quit after a year or two but stay enrolled because their friends go there, transferring is a hassle, and and they want a degree.

grue2 said:

Short answer:
Colleges maintain money losing sports as a recruiting mechanism, and a way to maintain alumni engagement. The theory is that the non-sports donations from the alumni due to the extra engagement exceed the money being lost. Example: Penn State sports, pre-alumni donations, lost 28.5M in 2022. After donations they cleared 10M. They do far better than most due to their football program.

Whether or not this is poor leadership depends on the resulting increase in non-sport alumni donations. I did not find any data on this.

Longer answer:

Most universities are absolutely hurting for money. The Ivies, high end med schools, and law schools are fine. Other than that, its generally grim. The common theme is top end schools with alumni that get rich contribute significantly to the endowment.

Universities are more and more dependent upon alumni donations as the percentage of costs covered by the state drops. At UIUC, the tuition in 2022 was the same as it was 35 years ago after adjusting for inflation. All of the new buildings you see at UIUC are gifts. The financial gap is covered by alumni.

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This is absolutely not true.

FreshlySqueezed said:

This is absolutely not true.

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yea .at UI, it was about 3000 per semester in 1980. it’s 5x that in 2020.
it’s out paced inflation by a lot .

Why do college sports matter? Because they matter to Fitch, Moody's, and Standard and Poors. These ratings agencies determine how much schools have to pay to borrow money (issue debt). And schools issue a lot of debt. So what does that have to with sports? Because these ratings agencies care about the number of student applications - i.e., the demand for that school's education. Dartmouth just had its bond rating upgraded by S&P because of a surge in applications due to the mess at Harvard. Student applications soar when the football and/or basketball team do well. That saves the school a lot of money in interest expense.

Mr. Tibbs said:

yea .at UI, it was about 3000 per semester in 1980. it’s 5x that in 2020.
it’s out paced inflation by a lot .

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I think my first semester in 1969 it was about $250...

Mr. Tibbs said:

yea .at UI, it was about 3000 per semester in 1980. it’s 5x that in 2020.
it’s out paced inflation by a lot .

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I paid $120 a semester from 1965-1969. Came back for fall senester '69 and they raised it to $200! That was a 67%increase. I was incensed!

I could literally work a construction job during summer and pay for my whole college year, about $1500 total, at the best accounting school in the country.

My three kids all went to private colleges in the '90s and we paid 25k+ per school year. They barely earned enough for spending money and books....

Those same schools are now about $45k per year.

grue2 said:

At UIUC, the tuition in 2022 was the same as it was 35 years ago after adjusting for inflation.

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Not going to dispute your sports numbers because I'm not up to speed there. But your tuition statement is emphatically not true. Tuition today is approx 2.5x what straight inflation would produce alone vs 35 years ago.

FreshlySqueezed said:

This is absolutely not true.

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Numbers are from the UIUC registrar site:
1987: $2700/sem. There were about $250/sem in fees on top of that
2022: tuition and fees are $6350 base rate or $8800 tuition+fees for eng. (I used the base rate + fees in my initial calculations that said ~even)
(Between 1983 and 1987 tuition went from $850/sem + ~$100 fees to $2700 + ~$250 fees.)

An inflation calculator says 1 dollar in 1987 is the equivalent 2.58 in 2022. ($2700+$250) * 2.58 = $7611

So I guess apples to apples would be $8800/$7611, which is a 15% increase.

If others have different numbers, or see an error in the calculations, please let me know.

This whole thing, coupled with NIL money is going to be one complete headache. And in the meantime, teams like Illinois State can only watch and wonder.