NCAA Settlement and Implications for NCAA D1 Wrestling

[steamboat_charlie]

I haven't seen this discussed in depth here (I could have missed it), and I view this as a potential seismic event in terms of future implications for the collegiate athletics landscape.  I'll do my best to summarize below.  Disclaimer: I'm not a lawyer.  

What are the facts?

• Two weeks ago, the NCAA and its P5 conferences (Big 10, Big 12, ACC, SEC, Pac 12) agreed upon terms for a settlement to pay approximately $2.8 billion in back-pay to student athletes that competed between 2017 - 2020, a period during which NIL payments were still prohibited.  
• While an agreement was reached, the settlement hasn't yet been accepted by the federal judge.  This should take place in the next several months.
• The $2.8 billion will be paid over a 10 year period.
• About 40% of the settlement will be paid by the NCAA itself.  Power five conference members will pay about 24%.  The remaining 35% will be paid by non-P5 schools.  
• The settlement will largely be funded by NCAA withholding revenue distributions (primarily from NCAA basketball tournament revenue) from its member institutions.  
• While the majority of P5 institutions voted to accept the terms of the proposed agreement, many institutions were not in favor--notably, many SEC institutions.  
• In addition to the monetary back-pay settlement, this proposed agreement would provide a framework for universities to share revenue with their players. 
• Revenue sharing in the proposed agreement would be permitted up to approximately $20 Million, representing approximately 22% of revenue for an average P5 institution.  
• Allocation of shared revenue will be at the discretion of each member institution (i.e. each school can decide who they want to pay, and how much). 
• Additionally, scholarship limits will be removed whole-sale, and replaced with roster limits.  
• If everything is approved on a reasonable timeline, this would take effect as early as Fall 2025.  

What remains unknown?

• While terms have been agreed upon, there still isn't an official agreement in place for the judge to review. 
• Even once there is, there will still be a several month review process and there is no guarantee that this judge will approve the agreement.  While there is a feeling from many that it will be improved, rejection is a possibility.
• Schools paying student athletes directly throws gasoline onto an already lit fire with regard to athletes' treatment as employees by universities.
• There are multiple outstanding cases regarding this topic, and the ability for student athletes to unionize, and consequently, collectively bargain with their universities. 
• Despite the particulars of revenue sharing being left to institutions individually, each school is still subject to Title IX regulation. 
• Are schools within their rights to pay players on a percentage basis based on program revenues, or do these payments need to be distributed equitably across men's and women's programs?  It's easy to speculate how an institution paying $19 million of their $20 million limit to football players could open themselves up to serious litigation risk with respect to Title IX.  
• This would not "take the place" of NIL.  However, the future of NIL funding and collectives is completely unclear.  Would some funding currently directed toward NIL efforts be shifted to the athletic program itself?  Will schools competing at the top level in football treat this as a soft cap and use NIL to incentivize players above and beyond the $20 million?  Seems likely.  

My take: implications for NCAA D1 wrestling

• The $2.8 billion back-pay obligation is not a major issue for wrestling.  The settlement is to be paid out over 10 years and split across all member institutions.  The most any school will be "paying" on an annual basis is <$3 million.  When we're talking about a majority of P5 institutions with annual budgets north of $100 million, it's not exactly a rounding error, but it does feel manageable.  
• Most university presidents were happy to jump at a settlement they they could wrap their arms around that maintains some semblance of the status quo, in an effort to put a stay on the potential hundreds of additional lawsuits that might be brought against them on this matter.  If this were to continue in the court system there is/was a non-zero chance of a significantly larger settlement, of a magnitude that would simply crush the NCAA--some presidents were in favor of simply letting it burn down, but most are just happy to kick the can down the road for 10 years and let someone else deal with it when the time comes. 
• The real issue for wrestling is not the payment itself, but rather the future payment of athletes.  Tightening the athletics budget by a couple million dollars doesn't upset the apple cart.  However, tightening it by ~$20 million (if ~$20 million is going to be paid to football and basketball players) is a major, major problem. 
• Athletic departments are going to have to make some very difficult decisions.  Some departments are simply going to say, "No--we can't afford to pay players and we're not going to try to compete with the universities that can."  This is actually a better scenario for wrestling at those institutions.  
• The schools to watch for are the schools that are going to try to compete with the big boys by spending up to their limit, but don't have the same financial flexibility.   
• It's hard for me to imagine any of the ~$20 million revenue share will find its way into the pockets of wrestlers, unless a school decides to make an equal flat payment to all athletes.  
• The removal of scholarship limits will only serve to further increase the gap between the haves and have nots in D1 wrestling, and continues the current trend of the NIL era.   
• If this goes through as presently envisioned, there are going to be D1 sports programs eliminated from MANY universities.  When programs are getting put on the chopping block, I think we all know wrestling is one of the first names mentioned.  

Edited June 5 by steamboat_charlie

[juniorvarsity]

Ttal NCAA athletes by school and the payout per athlete based on $20M shares annually back to athletes:

Iowa, Nebraska, Penn State- 800 athletes - $25k

Ohio State, Michigan - 1000 athletes - $20k

Missouri - 550 athletes - $36k 

All are ballpark numbers and Google. Still, interesting to look at. You would need to cut a lot of sports to grow that number. I am going to guess title XI will not allow the money to go to just football and basketball. 

[fishbane]

15 hours ago, steamboat_charlie said:

 

• Are schools within their rights to pay players on a percentage basis based on program revenues, or do these payments need to be distributed equitably across men's and women's programs?  It's easy to speculate how an institution paying $19 million of their $20 million limit to football players could open themselves up to serious litigation risk with respect to Title IX.  

There will be a lawsuit regardless.  There is a fairly widely held belief that the opportunities must balance or at least be proportional to the makeup of the student body to pass title IX muster and that the payments to athletes could be proportional to revenue.  I'd be surprised if any power 5 school pays the women's athletic staff as much as the men's.   Schools are free to pay based on ability, experience, knowledge, and economic value for these positions why would it require the opposite for players?

It seems likely that at least some schools will take this interpretation and run with it. This in turn makes it more likely for others to follow suit since that would put them at a disadvantage recruiting athletes to revenue sports.  

On the other hand making a flat payment to all athletes regardless of sport/revenue probably gets another antitrust lawsuit. It would seem to deny athletes in revenue sports from making their true worth in the market. Another lawsuit is inevitable regarding this, so I'd imagine administrators will likely choose to take the path that doesn't put them at a competitive disadvantage in the sports that are most important to their institution.

[steamboat_charlie]

1 hour ago, fishbane said:

I'd be surprised if any power 5 school pays the women's athletic staff as much as the men's.   Schools are free to pay based on ability, experience, knowledge, and economic value for these positions why would it require the opposite for players?

It seems likely that at least some schools will take this interpretation and run with it. This in turn makes it more likely for others to follow suit since that would put them at a disadvantage recruiting athletes to revenue sports.  

Playing devil's advocate, treatment would be different for the players because they're not technically employees.  

I think you're probably right that this is the path most of the heavyweights will take, until forced to do otherwise.  Many schools will not be wading into these waters at all.  

[fishbane]

2 minutes ago, steamboat_charlie said:

Playing devil's advocate, treatment would be different for the players because they're not technically employees.  

I think you're probably right that this is the path most of the heavyweights will take, until forced to do otherwise. 

I'm inclined to think the days of them not being employees are numbered.  When they start writing checks to the players I think they are employees.

I could see a path to equal pay prevailing.  US Soccer settled an equal pay lawsuit with the Women's national team a couple years ago essentially agreeing to split the World Cup revenue of the men's team with them essentially giving them the same win bonus potential as the men.  The women had failed in the courts though they were appealing and I think the settlement came not because its what would ultimately have been the result in court, but because of PR and to avoid the extended litigation.  

The men getting the short end of the stick, in that the revenue they earn is going to the women is to some extent  moot currently given the relative performances of the two teams on the world stage and the relatively small amount of money we're talking about compared to their club contracts. If the men were to somehow go deep into into or win a World Cup only to see their substantial win bonus split with the woman, there might be another lawsuit from the other side.  Then again the men are paid quite well from their clubs as it is so it might not be worth the fight.  This could end up the situation in NCAA where unregulated NIL funds make up the difference between pay from the school and a revenue player's true economic value. 

24 minutes ago, steamboat_charlie said:

Many schools will not be wading into these waters at all.  

I think that's true.  As far as wrestling schools the service academies I don't see impacted by this.  Lower division (D2 and D3) and schools that are wrestling up (F&M and the PSAC schools) probably are unlikely to be paying players any significant amount of money.  The power 5 schools can probably afford to do this as the limit is set to only about 20% of their average revenue anyway and doesn't include revenue from donations.  I would guess the largest area for concern from a wrestling perspective would be FBS schools that are not in a power 5 conference with wrestling teams.  There aren't a ton of these (App State, Ohio, UB, Kent State, NIU. Central Michigan, ect.), but if competing in FBS is a priority for them they might drop some other sports to redirect funds.

[steamboat_charlie]

2 hours ago, fishbane said:

I'm inclined to think the days of them not being employees are numbered.  When they start writing checks to the players I think they are employees.

Agreed.  This is coming, it's just a matter of when. 

 

2 hours ago, fishbane said:

I could see a path to equal pay prevailing.  US Soccer settled an equal pay lawsuit with the Women's national team a couple years ago essentially agreeing to split the World Cup revenue of the men's team with them essentially giving them the same win bonus potential as the men.  The women had failed in the courts though they were appealing and I think the settlement came not because its what would ultimately have been the result in court, but because of PR and to avoid the extended litigation.  

Exactly.  Have to think about who the decision makers are, and what their appetite is for the negative PR that will come when there's undoubtedly an avalanche of lawsuits on their doorstep, even if they have a solid legal case.  For university presidents, the answer is typically that they have next to no appetite for this.  They know how fickle most of their boards can be, and the average length for these jobs is <5 years.  So why would they pick this fight, unless they have the absolute backing of all of their constituents (e.g. someone like Alabama or Clemson).  This is why I think we'll have a handful of universities that are vying for CFB national titles getting out in front paying football players, and many deciding to sit it out altogether. 

2 hours ago, fishbane said:

The power 5 schools can probably afford to do this as the limit is set to only about 20% of their average revenue anyway and doesn't include revenue from donations.  I would guess the largest area for concern from a wrestling perspective would be FBS schools that are not in a power 5 conference with wrestling teams. 

I tend to think that the FBS schools are not going to pay players in a meaningful way.  So Ohio State and Michigan are paying $20mm to their football team... how does this change the athletes that CMU football can recruit?  They are still going to be doing their best to work with develop whatever 2* and 3* athletes they can get.  

Also, I don't think most power 5 schools can afford this.  The very top echelon, probably.  But the mid-tier P5 schools for the most part cannot.  Those that attempt to do it in order to stay relevant are going to have to come up with those funds from somewhere, and the list of schools in that typical AP 25 to 60 range that can fundraise $20mm annually for it isn't really a list at all, it's maybe a handful of schools at best.  These are the schools to watch. 

[CHROMEBIRD]

7 hours ago, juniorvarsity said:

Ttal NCAA athletes by school and the payout per athlete based on $20M shares annually back to athletes:

Iowa, Nebraska, Penn State- 800 athletes - $25k

Ohio State, Michigan - 1000 athletes - $20k

Missouri - 550 athletes - $36k 

All are ballpark numbers and Google. Still, interesting to look at. You would need to cut a lot of sports to grow that number. I am going to guess title XI will not allow the money to go to just football and basketball. 

Details of the settlement have yet to be finalized, but it sounded like programs would be able to selectively pay athletes by sport. They'll use roster caps on all sports to keep a lid on expenses. 

One question (can of worms) will be the statutory definition of employee vs. contractor in the context of college sports, which category athletes fall under, and what the legal rights both players and athletic departments will have, from unionizing & collective bargaining, striking, at will employment, right to work, subcontracting, and more.

 

@steamboat_charlie: couple of other threads here

https://intermatwrestle.com/forums/topic/4680-ncaa-and-power-5-agree-to-allow-schools-to-pay-players/

https://intermatwrestle.com/forums/topic/4681-college-wrestling-is-cooked/

 

[RYou]

This news may warrant its own discussion, I'll post it here since it dovetails with the recent NIL settlement posted or years past.  This one has potential to benefit NCAA championship teams for every sport covering over 100 years.

North Carolina State's 1983 national title-winning men's college basketball team has filed a lawsuit against the NCAA, wanting past earnings when NIL wasn't legal.  

NC State 1983 basketball team sues NCAA over NIL earnings | Raleigh News & Observer (newsobserver.com)

This one has potential to benefit NCAA championship teams for every sport covering over 100 years, though the value will probably be limited to existing business records documenting NCAA revenue.  All of this NIL revenue sharing / settlements are already impacting school athletic budgets and the size of the revenue payouts to conferences.  The schools created their athletic budgets with championship revenue forecasts.  In the end, those shrinking revenue forecasts will result in a new round of cuts to non-revenue teams.

[fishbane]

46 minutes ago, RYou said:

This news may warrant its own discussion, I'll post it here since it dovetails with the recent NIL settlement posted or years past.  This one has potential to benefit NCAA championship teams for every sport covering over 100 years.

North Carolina State's 1983 national title-winning men's college basketball team has filed a lawsuit against the NCAA, wanting past earnings when NIL wasn't legal.  

NC State 1983 basketball team sues NCAA over NIL earnings | Raleigh News & Observer (newsobserver.com)

This one has potential to benefit NCAA championship teams for every sport covering over 100 years, though the value will probably be limited to existing business records documenting NCAA revenue.  All of this NIL revenue sharing / settlements are already impacting school athletic budgets and the size of the revenue payouts to conferences.  The schools created their athletic budgets with championship revenue forecasts.  In the end, those shrinking revenue forecasts will result in a new round of cuts to non-revenue teams.

NIL was never illegal it was just an NCAA rules violation.  I assumed that the limit on backpay for athletes in the original settlement being discussed (2017-2020) was because of some statute of limitations.  If that's there case the NC State case could have some problems, but might be able to get some cut from the NCAA using the footage in more recently produced content.

[Interviewed_at_Weehawken]

23 hours ago, fishbane said:

NIL was never illegal it was just an NCAA rules violation.  I assumed that the limit on backpay for athletes in the original settlement being discussed (2017-2020) was because of some statute of limitations.  If that's there case the NC State case could have some problems, but might be able to get some cut from the NCAA using the footage in more recently produced content.

Yes.  The Pack celebrating the win is shown during every men's college basketball game in March for the last 40 years. 

[CHROMEBIRD]

Saw an announcement today that Northwestern's AD will be appointed as its new VP of Athletics Strategy to advise the president and athletic dept on the House vs. NCAA settlement, pay for play, NIL, and conference realignment, among other things. Unclear who he will report to, and if it's a university or athletic dept role. But schools are making moves to get in front of all this.

[Camel Wrestling Fan]

My concern is football and basketball carry the athletic budgets. A football player could sue saying they earned the money and nobody has the right to take one penny from them and use it for anything not football/basketball related. The argument will be be they earned it and it should stay with them. Every penny. Where would the other 30 sports get the funding?

[billyhoyle]

2 hours ago, Camel Wrestling Fan said:

My concern is football and basketball carry the athletic budgets. A football player could sue saying they earned the money and nobody has the right to take one penny from them and use it for anything not football/basketball related. The argument will be be they earned it and it should stay with them. Every penny. Where would the other 30 sports get the funding?

They can go on strike and collectively bargain for more salary or specific revenue distribution policies, but it's not going to work to sue and say the university has to cut other sports to pay football players more.  That will happen anyway to stay competitive though.....Non revenue sports are screwed unless there is some type of federal regulation to protect them.