Big Pending NIL/Portal Reform

[Eagleton96]

Since we’ve been discussing Rutgers’ sad NIL situation and how messed up the current NIL/portal situation is, I thought it would be worth diving into the massive changes on the horizon. The pending $2.8 billion NCAA NIL settlement could reshape college sports. My take is that we will be big beneficiaries, although it's not 100% clear that it will shake out this way.

This settlement includes:

- direct revenue-sharing of up to $20 million of athletics revenue per school to the athletes. Increasing by 4% per year. The goal is to level the competitive playing field.
- each school gets to decide how they want to distribute those funds. The NCAA has developed voluntary guidance that suggests 77% to football and 16.5% to mens basketball.
- allows for the possibility of multi-year NIL contracts which would bring much needed consistency. Could those contracts be back loaded or have penalties or buyouts for players that try to leave early?
- also addresses Title IX compliance and the potential classification of athletes as employees (seems to successfully avoid those issues but will likely end in court so TBD).
- The NCAA would be allowed to generate rules that require athletes to report their NIL deals, and would scrutinize those deals to ensure that they are truly NIL and not just disguised booster payments.

The collectives would not go away, but they'd add to the funds generated by the revenue share. But the impact of the collectives would go way down if only because of the dollars involved. The largest Big Ten collective (OSU) generates an estimated 20million, PSU at 14mil, a midrange is Wisconsin at 9million, and the smallest (RU) generates an estimated 4 million. Add in the $20 mil revenue share and now the totals are OSU 44mil, PSU 34mil, Wisc 29mil, and RU 24mil. Much more balanced and competitive. Basically we go from 5 to 1 vs OSU to 2-1. Vs. PSU we go from 3.5-1 to 3-2.

Key article to check out: Yahoo Sports: How will schools distribute revenue? What’s the future of NIL collectives?

The settlement has received preliminary approval (looks good) and the schools have all starting making their plans for implementation. Congress may also act to strengthen the NCAA's hand and grant it an anti-trust exemption so that it can regulate NIL and athletes and the portal.

Discuss.

 

[NickRU714]

How are schools who don't even get $20m a year in revenue expected to compete against schools who can easily allocate up $20m to players?

That's not a level playing field.
It just further separates the haves (P2/Rutgers) from the have nots.

 

[Greene Rice FIG]

Not sure how this changes anything. So schools can now legally pay players in addition to boosters wrapping themselves in NIL.

This would allow RU to charge an extra $1000 per seat (in 100s) plus the fee it already has as a way to pay players. That would generate $2,000,000 if there are 2,000 100 level seats.

 

[Greene Rice FIG]

I said that NIL would ultimately kill non revenue sports.......I think, unfortunately I will be right. It will end up being the final nail in the coffin, not the primary reason for the demise.

Non revenue sports had zero issues surviving before the conference expansions and coaching salaries went crazy.

 

[Eagleton96]

I said that NIL would ultimately kill non revenue sports.......I think, unfortunately I will be right. It will end up being the final nail in the coffin, not the primary reason for the demise.

Non revenue sports had zero issues surviving before the conference expansions and coaching salaries went crazy.

Not sure how this changes anything. So schools can now legally pay players in addition to boosters wrapping themselves in NIL.

This would allow RU to charge an extra $1000 per seat (in 100s) plus the fee it already has as a way to pay players. That would generate $2,000,000 if there are 2,000 100 level seats.

Could you elaborate on your two points above? How will it kill non-revenue sports? Also, I showed analysis that explained that if every team hits the $20 mil revenue share (which they almost certainly all will), the team salary gap for players between the ceiling and floor is shrunk dramatically, and the importance of booster NIL goes way down relative to the revenue share.

The revenue share includes value of TV contracts distributions, ticket sales, among other things.

 

[Greene Rice FIG]

Could you elaborate on your two points above? How will it kill non-revenue sports? Also, I showed analysis that explained that if every team hits the $20 mil revenue share (which they almost certainly all will), the team salary gap for players between the ceiling and floor is shrunk dramatically, and the importance of booster NIL goes way down relative to the revenue share.

The revenue share includes value of TV contracts distributions, ticket sales, among other things.

Right now schools can't pay players......this would allow them to pay players. So a portion of the above will go to players (as opposed to fund non revenue sports) and ultimately all non revenue sports will be gone.

 

[Greene Rice FIG]

If RU lost $28 million in 2023 it now will probably have $20,000,00 more in necessary expenses to compete.

Some of that comes from season ticket holders but I can't think the entire $20million gets financed that way.

Most schools in the B1G either have small losses or have surpluses.

 

[PaKnight]

Not sure how this changes anything. So schools can now legally pay players in addition to boosters wrapping themselves in NIL.

This would allow RU to charge an extra $1000 per seat (in 100s) plus the fee it already has as a way to pay players. That would generate $2,000,000 if there are 2,000 100 level seats.

As I read his post, collectives can help support the revenue sharing funds, but can no longer pay players, and that NIL income must be at market value. That would be an improvement to leveling the playing field.

 

[Greene Rice FIG]

As I read his post, collectives can help support the revenue sharing funds, but can no longer pay players, and that NIL income must be at market value. That would be an improvement to leveling the playing field.

in theory yes,,,,in application????

NIL income at market value? Mastercard commercial had things at priceless!

What is the market value of Dylan Harper and Ace Bailey and the entire RU roster showing up at a birthday party? How do you define that? Ohtani's HR ball went $4,300,000 and it doesn't talk or smile

 

[pmvon]

I said that NIL would ultimately kill non revenue sports.......I think, unfortunately I will be right. It will end up being the final nail in the coffin, not the primary reason for the demise.

Non revenue sports had zero issues surviving before the conference expansions and coaching salaries went crazy.

Not sure if shared

NCAA Revenue Sharing & NIL Estimates 2025

nil-ncaa.com

But yes, death of non revenue sports. Schools will need to increase tuition or student fees if they want to compete. Only way to plug the gap. And for what so some kids who aren’t academically qualified can make 200k a year because they were born bigger or taller.

It’s possible that non P5 schools shut down football and reallocate scholarships to other less expensive sports given the increase in limits.

 

[pmvon]

Page 8 a good source of RU AD

https://finance.rutgers.edu/sites/default/files/2024-09/FY25%20Rutgers%20University%20Annual%20Budget.pdf

 

[Eagleton96]

Not sure if shared

NCAA Revenue Sharing & NIL Estimates 2025

nil-ncaa.com

But yes, death of non revenue sports. Schools will need to increase tuition or student fees if they want to compete. Only way to plug the gap. And for what so some kids who aren’t academically qualified can make 200k a year because they were born bigger or taller.

It’s possible that non P5 schools shut down football and reallocate scholarships to other less expensive sports given the increase in limits.

I guess that’s one way to look at it. Another way to look at it is that the people that are actually generating the revenue and the fan interest and all the value and benefits should be the ones that receive the money. Why should athletes that play in a sport that generates no revenue receive a cut of revenue generated by the football and basketball players? Maybe there’s an altruistic case for it, but from the perspective of the players, no one would expect them to choose a school that’s gonna say: hey come here, generate a lot of revenue for us, so that we can give it to the women’s volleyball team.

Also, if schools follow the NCAA guidelines for distribution of the revenue share, the non-revenue sports will get a huge windfall. Even the scraps of the revenue generated by football and basketball would be a huge bump compared to where they are.

 

[pmvon]

I guess that’s one way to look at it. Another way to look at it is that the people that are actually generating the revenue and the fan interest and all the value and benefits should be the ones that receive the money. Why should athletes that play in a sport that generates no revenue receive a cut of revenue generated by the football and basketball players? Maybe there’s an altruistic case for it, but from the perspective of the players, no one would expect them to choose a school that’s gonna say: hey come here, generate a lot of revenue for us, so that we can give it to the women’s volleyball team.

Revenue is not profit. You share in profit not revenue. There is no profit.

But no need to go down this road anymore. The train has left the station.

 

[fluoxetine]

Revenue is not profit. You share in profit not revenue. There is no profit.

But no need to go down this road anymore. The train has left the station.

Is it your position that the football program on its own is not profitable? I doubt that.

 

[Eagleton96]

Revenue is not profit. You share in profit not revenue. There is no profit.

But no need to go down this road anymore. The train has left the station.

If you are an employee hired to do do a job you get paid based on your labor market value, regardless of how the shareholders do. I know these aren’t legally employees, but for the point of this analogy they are more like employees than owners that get a profit share.

 

[NickRU714]

I guess that’s one way to look at it. Another way to look at it is that the people that are actually generating the revenue and the fan interest and all the value and benefits should be the ones that receive the money. Why should athletes that play in a sport that generates no revenue receive a cut of revenue generated by the football and basketball players? Maybe there’s an altruistic case for it, but from the perspective of the players, no one would expect them to choose a school that’s gonna say: hey come here, generate a lot of revenue for us, so that we can give it to the women’s volleyball team.

Also, if schools follow the NCAA guidelines for distribution of the revenue share, the non-revenue sports will get a huge windfall. Even the scraps of the revenue generated by football and basketball would be a huge bump compared to where they are.

100%

Football, basketball and NIL have zero impact on the “death of non-revenue sports”.

If they die it’s because Schools (and Taxpayers and Students) don’t want to pay for them.
There is nothing stopping a school from funding 1,000 non-revenue sports. The university just has to actually pay for it.

Like every other expense for the University incurs.
They just don’t want to. So they “blame” football and basketball.

 

[fluoxetine]

If you are an employee hired to do do a job you get paid based on your labor market value, regardless of how the shareholders do. I know these aren’t legally employees, but for the point of this analogy they are more like employees than owners that get a profit share.

Ehh, sure, but then if there are no profits the endeavor eventually goes away and you stop having a job.

 

[pmvon]

If you are an employee hired to do do a job you get paid based on your labor market value, regardless of how the shareholders do. I know these aren’t legally employees, but for the point of this analogy they are more like employees than owners that get a profit share.

They aren’t employees, they are student athletes. Their payment is free tuition, room and board and the rest of the perks along with the opportunity to make it big. That’s the contract. At least that’s what we should have preserved maybe with an annual spending stipend. If you’re ready to go pro at 18, have at it. IMO. But that’s done now.

 

[fluoxetine]

They aren’t employees, they are student athletes. Their payment is free tuition, room and board and the rest of the perks along with the opportunity to make it big. That’s the contract. At least that’s what we should have preserved maybe with an annual spending stipend. If you’re ready to go pro at 18, have at it. IMO. But that’s done now.

But they weren't and aren't allowed to have at it. And it was a cartel enforcing those contract terms. There were many schools who were willing to pay more than that and risked the wrath of said cartel to do it.

 

[pmvon]

Was hoping to share info for discussion. If already known, please ignore. Otherwise debate on the merits is futile.

 

[pmvon]

But they weren't and aren't allowed to have at it. And it was a cartel enforcing those contract terms. There were many schools who were willing to pay more than that and risked the wrath of said cartel to do it.

Well they should have been. That was an easy fix because nearly all of them Would be mauled in the pros.

 

[Eagleton96]

Ehh, sure, but then if there are no profits the endeavor eventually goes away and you stop having a job.

And that’s a choice RU could make. Drop the whole thing. But if we are talking about compensating players, it’s based on their market value. And that’s what the settlement says.

If the university wants to spend their portion of the revenue on volleyball or just mismanages it or nobody cares about their team and no revenue is generated… the player has no influence over that and it’s not their problem.

 

[NickRU714]

They aren’t employees, they are student athletes. Their payment is free tuition, room and board and the rest of the perks along with the opportunity to make it big. That’s the contract. At least that’s what we should have preserved maybe with an annual spending stipend. If you’re ready to go pro at 18, have at it. IMO. But that’s done now.

When was that payment structure established?
How has money and spending changed since that time?
Would have no pr9blem with the "tuition/room and board" arguments if the entire rest of the sport wasn't making much more money now.

How much were coaches making?
How has their payments changed?
How much were Athletic Departments making?
How much has that revenue chsnged?

 

[pmvon]

When was that payment structure established?
How has money and spending changed since that time?
Would have no pr9blem with the "tuition/room and board" arguments if the entire rest of the sport wasn't making much more money now.

How much were coaches making?
How has their payments changed?
How much were Athletic Departments making?
How much has that revenue chsnged?

Head coaches making a lot at P5. So maybe 150 people.
It’s gone up
Nearly all AD lose money. Look at the data I just shared.
Revenue goes up along with cost. They still lose money. Maybe more now than ever.

 

[NewJerseyHawk]

No one loses money in athletics, otherwise no one would watch games, buy tickets etc. No sane AD would report a profit.

 

[pmvon]

No one loses money in athletics, otherwise no one would watch games, buy tickets etc. No sane AD would report a profit.

Look at the revenue and expenses. OSU and other report and surplus/profit. So some do. Most don’t because there isn’t one. Do you think RU wants to report a 40 million hole?

 

[fluoxetine]

And that’s a choice RU could make. Drop the whole thing. But if we are talking about compensating players, it’s based on their market value. And that’s what the settlement says.

If the university wants to spend their portion of the revenue on volleyball or just mismanages it or nobody cares about their team and no revenue is generated… the player has no influence over that and it’s not their problem.

Right but it also goes a bit to what the purpose of the endeavor is and what market we are talking about.

A lot of prior player compensation had a lot more to do with paying to win than it did with any kind of financial kind of market value. I'm not even saying that that is illegitimate, just that I think it's more complicated than being an employee of a business.

 

[NickRU714]

Head coaches making a lot at P5. So maybe 150 people.
It’s gone up
Nearly all AD lose money. Look at the data I just shared.
Revenue goes up along with cost. They still lose money. Maybe more now than ever.

Are they though?
If nearly all AD lose money, why does everyone involved keep getting raises?
Well except for players.

It's called priority of expenses.
Player costs (along with coaching costs) are a very high priority.
Cut spending other places if necessary.

Just like every other entity has to do when losing money.

 

[NickRU714]

Look at the revenue and expenses. OSU and other report and surplus/profit. So some do. Most don’t because there isn’t one. Do you think RU wants to report a 40 million hole?

If the $40m hole was an actual problem they wouldn't be giving out raises 4 year into a 8 year contract or giving the OC a raise after 1 year.

 

[fluoxetine]

Are they though?
If nearly all AD lose money, why does everyone involved keep getting raises?
Well except for players.

It's called priority of expenses.
Player costs (along with coaching costs) are a very high priority.
Cut spending other places if necessary.

Just like every other entity has to do when losing money.

Some entities are not created to make (or even not lose) money though.

Is, like, the Eastern Michigan University athletic department supposed to make money? Is it supposed to break even?

 

[LotusAggressor]

1) Since when has anyone in a position of power in college football cared about competitive balance?

2) The NCAA scrutinizing NIL deals will lead to the selective enforcement bullshit that we saw before NIL.

 

[NickRU714]

No one loses money in athletics, otherwise no one would watch games, buy tickets etc. No sane AD would report a profit.

Funny how nobody ever bemoans AD spending except when it comes to compensating players.

Nobody in the DC replacement threads are saying we need to pay the next DC less because the AD loses $40m.

 

[NickRU714]

Some entities are not created to make (or even not lose) money though.

Is, like, the Eastern Michigan University athletic department supposed to make money? Is it supposed to break even?

Agreed.

But bring up player compensation and all a sudden fiscal responsibility is the top priority for many.

 

[fluoxetine]

Agreed.

But bring up player compensation and all a sudden fiscal responsibility is the top priority for many.

I don't really see this? I don't think anyone has argued that we can't pay players because it isn't fiscally responsible. The people who are pointing out that the AD loses money are presumably doing so because they are making an argument along the lines of:

Athletics is a money losing endeavor => the players do not have a positive $ market value

 

[LotusAggressor]

Funny how nobody ever bemoans AD spending except when it comes to compensating players.

Nobody in the DC replacement threads are saying we need to pay the next DC less because the AD loses $40m.

It's like when Hollywood studios claim that they lost money on the blockbuster that made 500 million when the time comes to pay people.

 

[NickRU714]

I don't really see this? I don't think anyone has argued that we can't pay players because it isn't fiscally responsible. The people who are pointing out that the AD loses money are presumably doing so because they are making an argument along the lines of:

Athletics is a money losing endeavor => the players do not have a positive $ market value

Do coaches have a positive $ market value?
They keep getting raises even though the AD loses money.

The losing money is only brought up in context of player compensation increasing.

https://www.nj.com/rutgersfootball/...nt-coaches-including-super-bowl-champion.html

 

[pmvon]

I don't really see this? I don't think anyone has argued that we can't pay players because it isn't fiscally responsible. The people who are pointing out that the AD loses money are presumably doing so because they are making an argument along the lines of:

Athletics is a money losing endeavor => the players do not have a positive $ market value

They have value. Their value is the money they already receive. People keep conflating revenue with profit. All actors are moving revenue up so profit margins are the same. The people who work in the industry make money. Are they making money greater than the inflation adjusted amount they were making before? Outside of P5 head coaches no. Now players want more of the pie, so it will have to come from other sources since most schools have no profit to distribute. So expect other sports to be cut and/or tuition and fees to increase. Others don’t seem to care that lacrosse 🥍 layers will lose an opportunity, I do. I prefer the social construct that cast a wider net. All because some kids play one particular sport. Most of whom will never play pro and will rely on the degree they would have never earned on academic merit alone to have a living.

 

[fluoxetine]

Do coaches have a positive $ market value?
They keep getting raises even though the AD loses money.

The losing money is only brought up in context of player compensation increasing.

https://www.nj.com/rutgersfootball/...nt-coaches-including-super-bowl-champion.html

To be fair I think people complain about coach's salaries all the time.

The problem is that these things can have "value" outside of financial value. Most universities are not really businesses.

Let's go away from the big money programs that you are seeing on TV for a bit. Let's look at like.. a D3 volleyball program.

I don't think the coach has positive financial market value. I think that it is likely that if the school were just a business the entire program would be cut and the coach would be fired. The sports are there as part of a well rounded student experience. The coach in this case is doing a job. The players are not doing a job and certainly aren't generating some value for the school that they need to be compensated for any more than the players at your local middle school are. This is still true if the program has some small revenue from ticket sales or whatever that doesn't fully offset the costs.

This was kind of the original dynamic of college sports before things got weird because football and to a lesser extent men's basketball started generating huge amounts of revenue.

 

[fluoxetine]

People keep conflating revenue with profit.

Some people may be doing this but I am not.

What is the proper division of accounting here? If the football program is profitable but the athletic department as a whole is not which one should we look at when considering the value of a football player?

What value do we ascribe to the indirect benefits the school gets from high profile athletic programs (e.g. exposure)?

The answers aren't obvious.

 

[Caliknight]

I guess that’s one way to look at it. Another way to look at it is that the people that are actually generating the revenue and the fan interest and all the value and benefits should be the ones that receive the money. Why should athletes that play in a sport that generates no revenue receive a cut of revenue generated by the football and basketball players? Maybe there’s an altruistic case for it, but from the perspective of the players, no one would expect them to choose a school that’s gonna say: hey come here, generate a lot of revenue for us, so that we can give it to the women’s volleyball team.

Also, if schools follow the NCAA guidelines for distribution of the revenue share, the non-revenue sports will get a huge windfall. Even the scraps of the revenue generated by football and basketball would be a huge bump compared to where they are.

If you are looking at it as a business, why are the sports (football) who've lost more money than all other sports combined being paid? Revenue doesn't mean jack shit. Profit does.

There is a business around college sports but the reality is they are an expense. The benefit is advertising your school and brand. Some sports have more eyeballs but no one wants losing associated with their brand. To do that you need to invest. Holloway very much got it. Hopefully the next President does as well.