“Show Me The Money!” The iconic line spoken by the character Ray Tidwell, a professional football player in the 1996 movie Jerry Maguire, was a pivotal moment in the storyline where Tidwell demanded that his agent, Jerry Maguire, get him a contract that paid him what he felt he deserved. Such is the case now in what was once college amateurism. As of Friday, a new era is upon us.
U.S. District Judge Claudia Wilken has signed off on the final settlement agreement, commonly referred to as the House Settlement, in the landmark class-action antitrust lawsuit House v NCAA, which has been a long time coming. It has been in litigation for over five years and the settlement itself has taken nearly a year to finalize.
Starting July 1, colleges in the power conferences will be allowed to pay athletes directly and share up to $20.5 million of their revenue this school year. The rev share cap will increase by at least 4% each year during the 10-year settlement term.
Schools have been planning for this day for a while and some had already indicated they would likely divide the rev share with 75% going to football, 15% to men’s basketball, 5% to women’s basketball and 5% to all the remaining sports. Doing the math, that’s over $15 million for football, over 3 million for men’s basketball, more than 1 million for women’s basketball, and more than 1 million for all other sports.
It will be interesting to watch the evolution of 3rd party and collective NIL deals with the athletes. Prior to the House settlement, these outside entities could enter into contracts with athletes to pay them for their services with no oversight or limitations on the amount athletes were paid other than the long-standing NCAA premise that “pay for play” was not allowed. However, no one was policing how much was too much to pay an athlete for the type of service they were providing; i.e., appearances/meet and greets, autograph sessions, social media posts/promotions, TV/radio commercials, hosting webcasts, leading youth sports camps, etc.
Now, athletes will be required to submit their NIL deals valued over $600 to the newly established College Sports Commission, which will review the deals and determine if the compensation exceeds an athlete’s fair market value for the services they are providing. The CSC will make these evaluations based on data from past deals and any deals that are scrutinized will go through an arbitration process that will also involve eligibility and penalty determinations.
It’s a new era in college athletics that is looking more and more like professional sports. First, it was t-shirt/jersey sales and NIL deals and now it’s direct payment and revenue sharing. What’s next? Are student-athletes going to become employees of the colleges that pay them?
