NCAA proposal would allow schools to pay their athletes directly

NCAA President Charlie Baker proposed a new economic model for college sports Tuesday morning, sending a letter to Division I schools that both laid out long-standing inequities and detailed his plan to address them. The crux of Baker’s proposal: To allow all Division I schools to compensate athletes directly through name, image and likeness (NIL) deals and remove the cap on education-related payments athletes can receive. Baker also pitched a new subdivision within Division I that would allow well-resourced schools, should they opt into it, to form their own set of rules to better suit their investment in athletics.

In the letter, Baker was more comprehensive about the subdivision than about how school-funded NIL might look. Schools that opted into this still-hypothetical subdivision would have to invest a minimum of $30,000 per athlete per year into an “enhanced educational trust fund for at least half of the institution’s eligible student-athletes,” according to the proposal. The funds would be subject to Title IX rules that call for an equal distribution of resources between male and female athletes.

While each school has a varying number of sports and athletes, an athletic department with 400 athletes would have to pay a minimum of $30,000 to at least 200 of them. That would start the entry fee to this subdivision for that school at $6 million. Schools in the subdivision could also enact their own policies separate from the rest of Division I, whether they address NIL, scholarship limits, transfer rules and so on.

Baker wrote that all schools should be able to “offer student-athletes any level of enhanced educational benefits they deem appropriate.” The NCAA doesn’t plan to define how athletes could spend that money, though schools could choose to put parameters on it. The proposal also doesn’t require a school in the new subdivision to pay the same amount of money to each of the designated students, though there is the expectation of Title IX compliance. Schools could choose to pay more than half of their athletes through the fund, too.

The upshot: Within the “framework of Title IX,” as Baker put it, schools could compensate athletes without restrictions (while also supplementing their trust fund earnings with NIL money).

Another upshot, something that’s been brewing for a while now: The proposed subdivision recognizes that not every school can operate the same way, priming the SEC, Big Ten, Big 12 and ACC — or “Power Four” — to play under different rules from most other schools but remain under the NCAA’s umbrella.

From here, the NCAA will work with its member schools to refine Baker’s proposal. How it could turn into policy was not immediately clear Tuesday, nor was how this might affect settlement discussions for major lawsuits and the NCAA’s discussions with lawmakers in Washington.

“The growing financial gap between the highest resourced colleges and universities and other schools in Division I has created a new series of challenges,” Baker wrote in the letter. “The challenges are competitive as well as financial and are complicated further by the intersection of name, image and likeness opportunities for student-athletes and the arrival of the Transfer Portal.”

Why now? That’s a layered question.

For starters, the NCAA is in the middle of several major lawsuits and National Labor Relations Board hearings that could drastically change the way it functions — and, in the House v. NCAA antitrust case, could end up with more than $4 billion in damages paid to a massive class of plaintiffs. While settlement talks continue in the House case, the NCAA lost a lot of leverage when the Supreme Court ruled 9-0 against it in Alston v. NCAA in 2021, which came right before the NCAA caved and permitted athletes to profit off their NIL.

The NCAA’s ongoing lobbying efforts in Washington — to bar athletes from becoming employees and to receive an antitrust exemption to shield it from current and future litigation, among other goals — haven’t led to much traction, with 10 congressional hearings in the rearview without more than a few drafts. So here we are.

“The courts and other public entities continue to debate reform measures that in many cases would seriously damage parts or all of college athletics,” Baker wrote, acknowledging that an uneven playing field calls for different sets of regulations.

“Therefore, it is time for us — the NCAA — to offer our own forward-looking framework,” he continued. “This framework must sustain the best elements of the student-athlete experience for all student-athletes, build on the financial and organizational investments that have positively changed the trajectory of women’s sports, and enhance the athletic and academic experience for student-athletes who attend the highest resourced colleges and universities.”

Again, as Baker notes at the end of that passage, this proposal foreshadows a break for the SEC, Big Ten, Big 12 and ACC from the rest of the pack. When realignment kicks in next year, Texas and Oklahoma will join the SEC; Oregon, UCLA, USC and Washington will join the Big Ten; Arizona, Arizona State, Colorado and Utah will join the Big 12; and Southern Methodist, California and Stanford will join the ACC. Television revenue is set to balloon some more.

Realignment, coupled with 21/2 years of NIL, have sparked constant discussion about whether schools should share revenue with its athletes and whether athletes should be considered employees of their schools and/or conferences. Baker’s proposal is the next step in that conversation, one that comes with a long list of questions about how the NCAA, conferences and schools would scale these proposals across the country:

What could this mean for the donor-funded collectives that have been the key to NIL success for programs across Division I sports? What might it look like if a power conference school declines to join the proposed subdivision, therefore subjecting itself to different rules from teams it will regularly compete against? Will the major conferences attempt to require its member schools to join? Will schools cut sports to lower its number of athletes, lessening the minimum payment to join the subdivision?

How will Title IX apply? Does it mean schools in the subdivision would have to have the same number of male and female athletes eligible for the payments that begin at $30,000 each, or just make sure the total amount of money is distributed evenly?

All of these questions are just the beginning. At the moment, the NCAA’s party line is that a lot of these decisions would be up to conferences and individual schools.