UCLA Under Armour Deal Signals Either the Beginning or the End

The big money, mostly in TV rights deals and clothing deals, continues to pour into the Power Five conferences. The latest ‘deal’ was struck by the Pac 12’s UCLA and Under Armour when they agreed to a 15-year contract worth $280 million dollars. This comes on the heels of a recently struck B1G deal where Fox will pay as much as $250 million per year for the Big 10 television rights: approximately 25 football games and 50 basketball games per year. That is for half the Big 10 conferences games – they likely can nearly double that revenue with ESPN or if another network buys the remaining inventory of games.

“The fact that the college athletes can’t share any part of that money is unreal,’’ said Ed O’Bannon, a former Bruins basketball star. O’Bannon, who was a leader on UCLA’s last national championship team in 1995 and was the plaintiff in a landmark lawsuit against the NCAA that challenged the unpaid use of a college athlete’s image for commercial purposes. In a phone interview from Las Vegas, where he works for a car dealership, O’Bannon emphasized that his problem wasn’t with UCLA, but with the system it operates under.

These deals threaten competitive balance between conferences (big vs. small) and even within conferences as teams and conferences grab the big money.

The current imbalance is far too great to be sustainable and will continue to cause a schism between the Power Five and all the rest – as non-Power Five DI programs scramble to find funding for facilities, travel, coaching salaries, scholarships, and cost of attendance (CoA) stipends. It’s high time college presidents take control of this NCAA DI mess by creating revenue sharing across DI.

The formula should kick-in for power institutions as a % of total revenue (Example: say 15% of revenue) from tickets, endorsements, sponsorships and media rights over a predetermined target level (Example: $30 million gross revenue per year). These payments should be used directly for athletes from non-Power Five institutions  (<$30M gross revenue). These funds would be used exclusively for athletes – for cost of attendance (CoA) and scholarship support.

If university presidents really care about student athletes, why would they not want to share some minor portion of their excess revenue to assist all DI athletes and maintain some semblance of competitive balance? The National Football League, the country’s most successful sports association, shares revenues and TV money across the league to maintain a competitive balance.

So what is the benefit to the Power Five?

First, they get to keep 85% of their revenue over the threshold target. Second, the distributed funds are going directly to support student athletes – that benefits all DI student-athletes who work just as hard as if not harder than their universities’ administration.

Third, this helps maintain a more competitive balance across Division I. As it stands now, the gap between DI haves have-nots is rapidly increasing. Under this proposed revenue sharing formula, the Power Five would maintain their stranglehold on college athletics, but non-Power Five programs would at least be stabilized.

Fourth, this likely would benefit Title IX and women’s sports as more scholarships would be available for CoA payments for female athletes. Finally, the money would go directly to the support of athletes. These funds would not go to subsidize inefficient athletic administration and universities. Each school would still be accountable for the direct costs of their own program operations and administrative costs.

At what point, based on the cash flooding into Power Five coffers, do university presidents begin to report directly to the athletic directors? That sounds crazy, but it’s not really that farfetched when top programs are bringing in $60-100 million dollars per year. The logical response as this cash influx grows will be further demands from Power Five athletes to be paid full salaries – while many other DI athletes are fortunate just to get scholarships and token CoA payments – further widening the gulf.

The ball is in the hands of University presidents to get this imbalance under control. They need to step up before it is too late. If they don’t, it’s entirely possible that just 50-60 programs will remain in college athletics’ top tier while the other 80% will either disappear or move to Division II.