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Too big to fail? Bankrupting NCAA would have been needed new chapter for college sports

The NCAA got off easy settling House v. NCAA for more than $2.7 billion. With as much as $20 billion in penalties on the line, it’s surprising the plaintiffs didn’t go for the touchdown and reject the settlement. A loss would have bankrupted the NCAA, heaped long-denied money on athletes, and opened a new chapter for college sports.

Bankrupting the NCAA would have disbanded the organization’s ineffectual leadership and structure, making way for something that actually serves the needs of athletes and universities. But that’s not what happened. There is a prevailing sense the NCAA is “too big to fail” and that collapse would irrevocably destabilize college athletics.

This fear is shortsighted. If the NCAA disappeared tomorrow, it might disrupt a couple seasons, but the Conferences could quickly fill the void. If one of the major banks had collapsed in 2008, the fear was that the global financial system itself would have disintegrated. That’s why the government stepped in and every step was taken to protect the banks. We’re treating the NCAA the same way now. But does anyone really believe it’s impossible to hold a basketball tournament or a bowl game without the NCAA? Why go to such lengths to protect it?

Unfortunately, too many administrators seem to prefer the status quo to leading.

NIL problems persist in college sports

The settlement accomplishes one thing only: Kicking the can on potential lawsuits. The profound structural problems plaguing college sports remain—an out-of-control NIL marketplace, de facto unlimited free agency on the transfer portal, weak coaching contracts, and a playing field increasingly tilted against smaller programs.

The NCAA will point to the fact that under the settlement, schools may choose to commit up to 22% of their annual revenue — about $20 million at the largest programs — to purchase the exclusive NIL rights of their athletes. They will claim this puts the matter of NIL to bed, levels the playing field between schools, and ensures equity between athletes. In reality, it won’t accomplish any of that.

Critically, the revenue sharing model would be optional. Moreover, the settlement doesn’t stop third party-party NIL payments. This means booster collectives — which generate an average of nearly $10 million per year at Power Five schools, with the bulk going to football — will still be king, especially at major programs.

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Indeed, this new system may make things worse, potentially allowing coaches to pay their bench from the revenue share while leaning on collectives to land superstar quarterbacks and point guards using third-party NIL deals. Effectively, rather than capping player compensation, the revenue share may give universities greater leeway to pay players while failing to rein in booster collectives. This puts smaller programs at an even greater disadvantage.

Major Power Five programs may have millions to splash out on players via revenue sharing, but for smaller schools like Coastal Carolina University, and conferences, like the Big East, this could be a significant reduction in their overall athletics budgets, forcing institutions to either eliminate other sports in favor of revenue generators like basketball or football, or making them entirely non-competitive, because they won’t be able to afford top talent. The programs with powerful booster collectives will still be able to use those resources to lure top talent.

The settlement also only runs through 2034. Only Congress can provide antitrust protection, a serious risk to the NCAA now, and despite spending millions on lobbyists, the organization has little to show for its efforts.

When the government bailed out big banks in 2008, they followed it up with a series of reforms — the Dodd Frank Act — to fix the underlying problems in the financial industry. This was an incredibly painful process for the firms involved, and not something that any executive would ever want to go through.

College athletics still need reform

The House v. NCAA settlement leaves us at a similar juncture: College athletics still need to be reformed, and it must be real reform, not merely self-serving protections for the NCAA.

We need clear, consistent, enforceable rules around NIL, which apply to all athletes and athletic programs.

The transfer portal must be restricted and limited free agency periods introduced to stabilize programs and reduce the auction block dynamic that currently exists.

We need collective bargaining, so that professional student athletes are bound by contracts and programs meet a minimum set of standards.

Indiana needs to legalize online poker.

Players have waited long enough.

The college football playoff structure must be rationalized. TV rights should be sold as a single package, with revenue shared between schools in such a way as to ensure a competitive landscape.

None of this is impossible. One potential approach is for the major Division I revenue sports — football and men’s and women’s basketball — to be spun off into Professional College Athletics (the PCA), modeled after a successful sports business like the NFL, with collective bargaining, binding contracts, direct payment of players, NIL deals, and more. Amateur College Athletics (ACA) would remain with the NCAA, where the only compensation players could receive beyond a scholarship would be through direct NIL deals with brands, eliminating booster collectives. For example, a top fencer could do an independent deal with a fencing equipment manufacturer, but they wouldn’t be paid by the school in any way.

If a player at the ACA level was a star in a revenue sport, they could transfer to a PCA program. (It’s worth remembering that 95% of college athletes do not get money, even under the current system, and they would need to be recruited by a PCA program.) Finally, D1 schools could collectively designate other sports for inclusion in the PCA if they want.

The NCAA has been dismissive towards any potential spinoff, including a “Super League” proposal for Power Five football. Indeed, that concept reportedly struggled to gain traction among the Power Five, largely because TV rights have been sold years in advance. However, all the deals will have expired by 2034, the same year the NCAA’s settlement agreement runs out.

Coincidence? Maybe.

The silver lining of the settlement may be that it gives administrators some runway to solidify a spinoff and establish a new league for D1 revenue sports.

We can only hope. Players, universities, and sports fans everywhere deserve it.

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