This past week has seen significant changes to the NCAA, both in terms of its governance model and in terms of its ability to restrict compensation to Division 1 men’s basketball players and Football Bowl Subdivision (FBS) players for their names, images and likenesses (NIL, hereafter). The rich truly will get richer.
First, the NCAA Board of Directors granted considerable new authority to the Big Five Conferences (ACC, Big 10, Big 12, Pac 12, SEC, plus Notre Dame) to control their own destinies. This has been brewing for years, as the big boys for some time have resented having to do business with the smaller institutions. I recall hearing complaints from my big-school colleagues back in the mid-1990s as they resented potentially having their votes cancelled by the schools in the West Coast Conference, where I worked.
In addition to the NCAA grant of increased control to the Big Five, big news came from the 9th District Court in Oakland, as Judge Claudia Wilken issued her findings in the O’Bannon case. Wilken ruled that the NCAA may not cap payments to Division 1 men’s basketball players and football players at FBS institutions for the rights to their NIL at less than the value of full cost of attendance (COA) while the players are in school, and may not cap trust fund payments to the players at less than $5,000 per year per player when they graduate or exhaust their eligibility.
Wilken did not compel institutions to meet that COA limit or the trust fund cap, whatever the NCAA ultimately determines for that amount. Of course, institutions that do not meet the maximum cap amounts will surely lose recruiting wars to those institutions that do meet the maximum permissible amounts. For example, the value of a full scholarship under NCAA rules typically is $3,000 to $5,000 less than the full COA. Further, the NCAA could set a cap for trust fund payments at a level higher than $5,000, making it even more expensive for the majority of Division 1 institutions to match.
Any way you look at it, Division 1 institutions that do not participate in the riches of newly-negotiated conference football television rights fees are bound to struggle. Wilken noted that institutions are free to pay less than the cap amounts for NIL rights, but in the competitive world of recruiting, that could automatically brand a school as less-desirable to recruits (and their parents).
A significant unknown factor is the potential impact of Title 9. I wonder how a Division 1 institution that receives Federal funds, and is therefore subject to the Federal law that is Title 9, could justify paying it’s men’s basketball players and football players (at FBS schools) more than it would pay any women’s student-athletes.
Wilken also noted that schools could decide to pay less than the established cap (presumably, that includes a decision to pay nothing) as long as each school reaches its own decision free of collusion with its competitors. I wonder if that complete absence of collusion is a realistic expectation in the real world. In any event, of the roughly 350 Division 1 Men’s Basketball institutions, most of whom are not participating in lucrative television contracts, how many can afford to pay the additional costs the O’Bannon decision will drive, plus whatever budget adjustments will need to be made pursuant to Title 9?
It would appear that the result of these NCAA governance and legal actions, even assuming an appeal by the NCAA and perhaps by the O’Bannon plaintiffs, will be to increase further the distance between the haves and have-nots of Division 1. Actually, I think the term “have-not” is misleading. Many Division 1 institutions that do not belong to the Big Five and do not sponsor FBS football have experienced athletics success on a national scale in a variety of sports. The West Coast Conference members (excluding BYU and its fine football program) are examples of institutions that don’t sponsor big-time football but have had a national impact in a number of sports over the years. I hope the smaller schools can continue to make an impact, but at least in men’s basketball and football that will be more difficult if the smaller schools cannot ante up to meet the new NIL caps. Recruiting is everything and recruits and their families will follow the money.
There have been many misstatements about the O’Bannon case, and we would all welcome clarification. For example, I would be interested in learning Judge Wilken’s rationale for allowing the NCAA to set a minimum amount of $5,000, or any amount, for the NIL trust fund minimum amount, given that she found it impermissible for the NCAA to set a cap of zero heretofore. Wouldn’t allowing the NCAA to set any minimum level or maximum cap amount be a violation of antitrust law? I will defer to the antitrust experts, and clearly Judge Wilken is one of them, to weigh in on that question.
Here is an excellent article by Michael McCann about the O’Bannon decision and possible next steps. I think all Division 1 institutions that are not the beneficiaries of a substantial rights fees payment for a conference football or basketball television package will be facing considerable challenges in the future.
I welcome your thoughts. Thanks.
