NIL Of A Predicament

As college athletics avails itself of labor law and bumper cars its way around the present landscape, the Big Hats believed they had some guidelines in place that would provide a semblance of direction and stability. That is, until a Federal judge said, ‘Nope, this won’t fly; back to your legal pads and laptops.’ 

Last May, the NCAA and remaining Power Conferences agreed to settle three cases that challenged the payment of athletes – the primary one known as “House v. NCAA” and two similar cases. The major points were that the NCAA and P4 would pay out $2.78 billion in damages to current and former athletes who were denied the opportunity to make money from their Name, Image and Likeness (NIL), dating back to 2016. Conferences also agreed to a revenue-sharing plan that would permit schools to direct approximately $22 million annually to athletes for use of their NIL, beginning as early as next season if the settlement is approved. Across-the-board increases in scholarship limits and roster sizes are also part of the deal. 

This does NOT look like 
a person to be trifled with

The settlement also attempts to eliminate spiraling payments to athletes by boosters and collectives, verboten by the old NCAA but shelved in 2021 as unworkable if not illegal. Instead, payments would be funneled through schools, where they would be regulated and where outside arbitrators would determine if rules were violated. U.S. District Judge Claudia Wilken studied the settlement proposal and, in a Sept. 5 hearing, voiced concerns and objections. Among them: the notion of the NCAA attempting backdoor restrictions of payments to athletes; whether it’s possible to distinguish between allegedly legitimate business/endorsement deals and straight-up NIL payments without restricting athlete compensation. 

Though the settlement and proposed model quacked and waddled, the NCAA insisted that it was not in fact waterfowl, which led to this exchange during the hearing: NCAA: “Our position is that pay-for-play is prohibited.” Wilken: “But in this ‘House’ settlement, if it is approved, you will be explicitly paying for play or allowing schools to pay for play. So that ‘no pay-for-play’ thing is kind of not going to be there anymore, is it?” NCAA: “There’s still going to be a prohibition on pay-for-play, and there’s discretion for schools to make payments as they see fit under the new regime.” Wilken, incredulously: “And that won’t be pay-for-play?” 

Wilken, you might recall, isn’t some judicial naif wading into the athletic bog. She ruled against the NCAA a decade ago in the O’Bannon case, saying that the NCAA violated the Sherman Anti-Trust Act by prohibiting athletes from earning money from their names and images when they were used by schools, conferences and businesses to generate revenue. This time, she told the NCAA and the conferences to at least alter some of the language, if not the entire proposal, and she would revisit it in the coming weeks. The inference being that they likely would be kneecapped again in the courts if challenged. 

Indeed, plaintiffs’ attorney and apex legal predator Jeffrey Kessler said in the hearing that NIL payments for athletes from boosters or collectives are likely to increase in the coming years, not remain static or decrease due to a settlement. There’s a Wild West, gold rush mentality afoot. Recent stories pegged Ohio State’s football roster at approximately $20 million for transfers, recruits and retention of current players. Most top-25 programs spend well north of $10 million. 

CBS Sports took a crack at an NIL transfer portal pay structure for football back in May and determined that quarterbacks cost $500,000-$800,000, with a few receiving as much as $2 million. Running backs typically cost $200-300,000, offensive linemen $350-500,000, receivers between $75-300,000 and defensive linemen $250-600,000, with top-shelf edge rushers likely commanding a little more. 

For a hoops example, University of Washington transfer Great Osobor, a Spanish-English power forward who previously starred at Montana State and Utah State, will receive $2 million in NIL money, according to ESPN. Here's a couple of examples closer to home, from friends and former colleagues plugged into the Virginia college athletic scene: A defensive lineman who played at Alabama chose to transfer after last season. He considered both Virginia Tech and Michigan. He was told by Tech interests that if he didn’t visit Michigan, he could expect $600,000 in his bank account. Reporters haven’t seen the player’s bank statements, but he didn’t board the plane for Ann Arbor, and he suits up for the Hokies. 

A Tech booster boasted that he helped facilitate the transfer of a quarterback from UCLA, also supposedly for $600,000. The young man is a redshirt senior and the Hokies’ backup, so even considering the possibility of exaggeration, it’s likely that Tech interests sank at least a half-mil for a one-season rental who may not see the field. 

And then there’s the scholarship and roster size component of the proposed settlement. Division I programs will now be able to offer scholarships to every player on every roster, eliminating sports-specific restrictions that have been in place for decades. For example, D1 baseball programs were allowed a total of 11.7 scholarships, and men’s soccer permitted 9.9 – obviously, far fewer than the number of players on the roster. Aid was routinely chopped up and parceled out, a half-scholarship here, a partial scholarship there. Under settlement terms, baseball can now offer full schollies to a maximum of 34 players on the roster, men’s soccer can offer to a roster max of 28 players. Scholarships can still be carved and parceled but overall costs most certainly will increase. 

Football figures in the mix, as well. FBS programs are permitted to carry 105 players on their rosters, but scholarships presently are capped at 85. Under settlement terms, programs can now offer scholarships to all 105 players. For Power Conference schools, it would be competitively irresponsible not to fully fund the roster. And don’t you know that if a department suddenly funds 20 more men’s scholarships, there are Title IX and women’s sports advocates who will bang on the door and seek 20 more for women, justifiably so. Many major D1 programs have approximately 500 scholarship athletes. The settlement proposal could increase that number to 1,200. 

Programs are planning to goose their scholarship budgets by $5-10 million. Factor in the previously mentioned $22-million NIL outlay for athletes and scholarship increases, and some schools are looking at forking out at least an additional $30 million per year. 

If you wonder, is this sustainable, you aren’t alone. Massive TV contracts and payouts for the Power Conference schools will absorb some of the blow. Alphas Big Ten and Southeastern conferences will distribute somewhere above $60 million per school annually, while ACC and Big 12 schools will receive an estimated $40 million per year. But all that cabbage is earmarked for far more than gaps and shortfalls. Group of Five conferences and lower-tier D1 athletic programs will simply be unable to keep up and left to conduct business as usual. 

Perhaps the most sensible path forward is also the least appealing to many suits and traditionalists. Collective bargaining, a la union and organized labor practices, would provide guardrails and structure for payments and athlete compensation. It also would essentially concede that athletes are employees of universities, something the NCAA has fought forever (worth noting that the NCAA introduced the odiously self-serving term “student-athlete” in 1953 as part of a strategy to avoid paying workmen’s compensation for injured players). Courts have repeatedly ruled in favor of athletes as the arrangement between management and labor climbed into Gilded Age territory this century. Predictable doom arguments that paying athletes and a departure from the status quo would lead to the demise of major college athletics have been every bit as inaccurate as contentions decades ago that free agency and increased salaries and player movement would kill professional sports. 

Which brings us to where we are now, with the NCAA and college athletics playing catch-up because they were unable or unwilling to read the room and prepare accordingly. They would dearly love for Congress to step in and legislate … something. Maybe an exemption that permits collective bargaining without granting athletes employee status (good luck threading that needle). Perhaps a strategy of legal duck and delay, as any march through the court system likely will take years, and who knows what might transpire in the interim? It’s exhausting. Free markets can be so unruly when they’re open to the help. And billable hours remain undefeated.