As we discussed yesterday, two major changes are facing NCAA Division I members. First, back pay of $2.8 billion to former student-athletes to be paid over 10 years. Second, the remaining Power Four conferences have agreed to pay all their athletes going forward and begin ‘revenue sharing’. Mid-majors, including DU, can opt-in by paying some or all of their athletes.
Denver can likely afford the estimated $3 million back-pay to former student-athletes over ten years. However, the Power Conference agreement to pay every student-athlete in addition to their call for unlimited athletic scholarships is problematic, especially with Denver’s limited revenue from sponsorships, media rights, and ticket sales. Most of Denver’s sports are non-revenue and the Pioneers’ sports revenue is modest, at best, compared to the Power Four. Add Name, Image, and Likeness (NIL) payouts to athletes at Power Four programs and there is a risk the University of Denver could, eventually, become a farm team for the Power Four, even in their marquee sports.
It may be too late in the negotiation process but the Mid-Majors may go back to the Power Four members and seek greater participation from them in settlement payments. Huge media rights deals, especially for football, should allow the Power Four to accept a greater share of the overall settlement agreement than their current 40%.
Even mid-major conferences like the West Coast Conference (WCC), BIG EAST, and Atlantic 10 who looked to be on relatively firm ground a week ago will be crushed by the Power Four as college sports get more unbalanced, especially in these basketball-focused conferences without major football programs. Mid-major conferences that used to get 2-3 bids to the NCAA basketball tournament may only get one automatic qualifier in the future as the Power Four recruiting advantages grow over time and their basketball brands fade.
The “Hail Mary” play for most athletic departments would be a governmental award of an Antitrust Exemption for the NCAA and a more balanced agreement struck between student-athletes and universities to provide a structure that encourages competitive balance. Such a move would also result in consistent guidelines nationally, rather than the current patchwork of state laws aimed at student-athletes and the NCAA. We are a long way from that point today but this could be a future possibility.
So, what is the University of Denver going to do?
- The DU Athletics Department is likely to look to mitigate the cost of the back-pay penalty (estimated at $3 million over 10 years) via increasing revenue streams and cost-cutting.
- In the short term, Denver will try to protect their key sports – hockey, men’s and women’s lacrosse, and gymnastics. Will any of these sports fall under the yet-to-be-determined revenue-sharing scheme? Will DU men’s and women’s basketball student-athletes benefit directly from the revenue generation of the NCAA Tournament in the future? It is all unclear and extremely murky at this time.
- If DU absorbs additional costs, they will likely look at their non-revenue sports and determine what and where they can cut. As an NCAA Division I-AAA member, Denver must sponsor 14 varsity sports with no football program. The University’s teams must roughly align with the school population demographics to meet Title IX requirements – Denver currently sponsors eight men’s teams, eight women’s teams, and one co-ed team (skiing). Men’s and women’s basketball is required by the NCAA.
- Denver can opt to selectively pay student-athletes directly under a yet-to-be-defined revenue-sharing scheme. They would have to carefully manage Title IX implications as well but they could implement a pay formula for their ‘key sports,’ though it would come with a risk to other sports and student-athlete morale. Such a move would need to be carefully managed and would come at a dollar cost. Revenue sharing might instead be narrowly applied to football, basketball (and hockey in Denver’s case) which are programs that generate direct revenue for many schools and universities. As we have said before, ‘revenue sharing’ is a bit of a misnomer for mid-majors as nearly every program and team loses money on athletics. Furthermore, athletes may take legal action if revenue is not fairly and equitably applied. Denver is unlikely to compensate any student-athletes until the guidelines are clear.
- The Power Four conferences are said to have a formula that caps their student-athlete department payments at about $20 million a year per school based largely on football and basketball revenue and media rights and they agreed to pay all of their athletes. Denver will have to evaluate how they can compete against those schools for athletes and see how much money is siphoned to lacrosse, gymnastics, hockey, and other sports where DU faces these schools head-to-head. The Power Four are also likely to uncap their athletic scholarship limits. Could Denver do the same for their key sports? It, too, would come at a dollar cost. DU will be watching closely how this develops.
Example: The University of Texas has 691 student-athletes. If UT distributed the maximum revenue sharing amount of $20 million evenly, that would be approximately $29 thousand per student-athlete. If they decided to give half of the money to the revenue sports, basketball (15 players) and football (116 players), each player would get $76,000. The non-revenue athletes would get $18 thousand each. Since the Power Four intends to lift scholarship caps, the University of Texas would also have to provide 2 additional full scholarships for basketball (from 13 to 15) and 31 additional full scholarships for football (from 85 to 116). Full scholarships for all their teams would be in addition to the $20 million revenue-sharing settlement.
- Mid-majors, including Denver, may eventually petition the NCAA to reduce the minimum number of Division I-sponsored sports requirements. This could result in the elimination of some sports or the creation of more liberal guidelines that allow the move from D1 to D2 status for some non-revenue sports. Or, there could be a completely separate agreement on what constitutes non-revenue sports and those athletes would be exempt from compensation.
- ‘Collectives’ (i.e. groups of donors that identify opportunities and raise funds for athletes) will still exist to facilitate marketing deals between athletes and companies and entities. While there will be efforts to tighten up how money is generated and paid to athletes via collectives, efforts to restrict student-athlete payments will be met with legal challenges. The current NIL structure sits outside the settlement. DU’s Crimson & Gold Collective, for example, will continue to operate but there will be efforts to increase transparency between student-athletes and the end-user payee.
No matter how all of this shakes out, you can bet there is chatter between coaches, athletic administrators, and the University administrations on DU’s options. In the short term, Denver can afford to survey the landscape and make calculated moves to protect their most valuable athletic properties. However, make no mistake, the future of DU athletics has never been murkier since their elevation to full Division I in 1999.
You reference “the Power Conference agreement to pay every student-athlete.” Where does it say that the power conferences agreed to do this? I thought it was still up in the air how revenue would actually be shared?
Multiple source articles cite that going forward, the Power Four will pay all their student athletes. What is not clear is the formula and split between revenue and non-revenue sports. Plus, there is the added complication of Title IX because most (not all) women’s sports are non-revenue..
I have not seen anything that suggests the Power 5 will pay *all* student athletes. I thought it could be all, or it could be a subset. Where did you see that?
CBS Sports: “plus a signed pledge (by the Power Four) to invest millions of dollars annually at the power-conference level for the next 10 years to continue to pay college athletes, no matter what sport they play or how accomplished they are. The star quarterback will earn a stipend just as the backup lacrosse goalie and second-string soccer striker will.”
Link: https://www.cbssports.com/college-basketball/news/historic-house-case-settlement-has-college-basketball-not-college-football-to-thank-for-saving-the-ncaa/
Thanks. Honestly, this is the only place I’ve seen anything like this written. To my knowledge, everyone else is treating this as though it’s totally up to the schools and/or currently undecided how the money will be allocated. For example, there is no way many of the Power 5 schools will ever be able to pay all of their athletes. Many athletics departments are already in the red, even before reallocating money towards players.
For example, this article says:
“Athletes in all sports would be eligible for payments and schools would be given the freedom to decide how that money is divvied up among sports programs.”
https://www.boston.com/sports/college-sports/2024/05/23/ncaa-billion-settlement-setting-stage-college-athletes-paid/
I think they mean different amounts could be awarded to different sports. I think, either way to avoid litigation, Power programs will give all their athletes something to avoid litigation and meet the intent of Title IX.
Also, here:
“How will schools distribute revenue?
Short answer: It is at the discretion of each school. There are no constraints on the distribution of revenue.”
https://sports.yahoo.com/ncaa-settlement-qa-how-will-schools-distribute-revenue-what-is-the-future-of-nil-collectives-and-more-125519681.html#:~:text=Short%20answer%3A%20It%20is%20at,addressed%20in%20the%20settlement%20terms.
I’m a mathlete where is my piece of this pie?
As fan, I wanted to thank you for a thoughtful explanation on the many issues DU and others face in light of the NCAA settlement. I grew up in Minnesota and became a DU Hockey fan just eight years ago. I have, though, become so impressed with DU and the DU culture.
NCAA Division 1 sports have a strong fan base, inside and outside the Power 4. Here’s hoping that this gets sorted out in a way that furthers college sports, for the benefit of colleges, students, athletes and the communities that support them.
Thank you – much appreciated. We love what we do!
Very insightful, well-written 2-part commentary on the Pandora’s Box that has just been opened. I fear for the future of all amateur sports. So many unknowns ahead, including the lack of clarity regarding women’s sports.
Caitlin Clark has brought incredible exposure to her sport. Let’s hope revenue streams may follow her to the WNBA and back to her beloved women’s NCAA. This article series highlights some of the shifting paradigms in college sports. It is a dizzying array of economic pressures, thundering down on universities. Maybe the future will look like Major League Baseball, with farm systems of lower-tiered college teams (plus foreign hotbeds such as Dominican Republic, Venezuela, Cuba). Some athletes will elect to become educated. Those who realistically dream of careers as athletes may seek higher reimbursement available only at athletic elite schools. Honest self-appraisal SHOULD cause many athletes to feel absolutely giddy that they are even capable of playing sports during college, let alone with any scholarship or NIL funds. Yet the pre-frontal cortex is not yet fully developed for their age demographic. As Clint Eastwood eloquently stated, “A man’s got to know his limitations”.
Here’s a fun hypothetical: Imagine if Bronny James, a mediocre NCAA basketball player, had declared for USC’s women’s basketball team. If you think there is chaos in athletic departments now, wait till all teams face Lia Thomas controversy issues. All while attempting to balance a budget, recruit, manage the transfer portal, comply with federal regulations; add to those concerns the sudden need to minimize risks of Title IX litigation, sexual assault claims, etc. Who wants to serve as a University AD now?
In the end it all comes down to which athletes are competing for the love of the game. Those with selfish motives and unrealistic sense of worth will be exposed. Universities that foster an environment focused on the highest values will be exalted. There may be great opportunity for DU so long as the Pioneers adhere to integrity and excellence.
As a former member of the NCAA ski team, this obviously has me concerned for the future outlook of the team and DU Athletics as a whole. Even in the dominant years of the team (2010s), the athletic department was playing around with budget cuts for skiing. The coach at the time would mention how it only takes one domino to fall for the future of the team to be in jeopardy.
Now looking at DU Athletics as a whole, I hope they can navigate this impending landscape of college athletics. DU has many storied programs as we all know, and to lose one/demotion to DII would be extremely disappointing. I know when I was considering going to DU, the ultimate driving factor was the athletic prestige. Hopefully the incoming student-athletes don’t lose their perspective of competing with the best.
Thanks for the write-up. I will be following this transition closely.
Interesting perspective from someone on the ‘inside’. DU has often hit above its weight – even when under resourced. Some argue revenue sharing should only go to revenue sports and non-revenue sports would be untouched. Ultimately, this will take an antitrust exemption to standardize how revenue and non-revenue sports are treated. Skiing is so central to the University of Denver brand – it would be a shame to lose such an historical program.
On a more positive note, the more you look at this, the Power Four are going to be under extreme financial pressure and they will have to make tough choices, too. Charter jets, facilities, coaching salaries and massive salaries are likely to take a hit for most programs as they committed to millions of dollars to their athletes. Denver and other mid-majors will have more flexibility as it stands now.
McMahon points out that the changes to the scholarship cap might have the most immediate impact on college hockey. I’m guessing that DU and a few others in the NCHC could provide scholarships above the 18 scholarship limit.
“As part of the settlement, the NCAA will be removing scholarship limits and instead instituting roster caps.
For example, men’s hockey currently has an 18-scholarship limit. This will likely be removed in favor of a roster cap (25 players? 30 players?), where everyone on the roster is eligible to receive a scholarship and potentially participate in revenue sharing (at some schools).
From a hockey perspective, this is actually the bigger story than revenue sharing. Most of the revenue sharing will go to football and basketball players. However, the potential for uncapped scholarships will further deepen the divide between the rich schools and the not-so-rich schools in college hockey.
Using scholarship limits, every team was, in theory, operating under the same “salary cap.”“
Curious how DU might see this.
Enjoy DU’s current competitiveness for NCAA D-I titles in multiple sports (right now) while it lasts.
I can’t see DU remaining this competitive in the future in this kind of quickly-stratifying professional environment.
Truly sad when my pessimism about change aligns with Puck’s opinion.