If a federal judge approves the settlement in the House v. NCAA antitrust case — and there is no guarantee that will happen — conference commissioners and athletic department officials still won’t sleep soundly because the agreement raises more questions than it answers about the future of college sports.
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“We don’t know the unintended consequences of what this looks like,” a small-conference commissioner told me, speaking on the condition of anonymity because of the sensitivity of the matter. “Do all these things like collectives and scholarship limits — do they all go away because the institution can now pay for these things? At the Power 5 level, they’re probably fine with this; the Group of 5 is probably more in the middle; and then you’ve got the lower-level DIs that get the DI basketball revenue and will have to take a cut. They’re the ones who this is going to hurt the most.”
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The focus since the House case was brought forward has centered primarily on the impact it could have among power conferences and, to a lesser degree, within the Group of 5. Seemingly little attention has been paid to the mid-majors or lower-level DI schools, which some administrators and executives believe could be left with three choices when addressing the loss of revenue stemming from the $2.8 billion settlement: 1) find a way to replace the monies; 2) make cuts to programs to offset lost monies; or 3) drop down a division.
The latter is already being discussed among some athletic directors who are fearful of what the new world order could bring, according to a small-school AD who has been privy to private conversations.
“There’s a major financial difference in operating a Big West Conference or West Coast Conference athletic department versus a high-level Division II department,” the AD said on the condition of anonymity. “The differences are in scholarships, scholarship equivalencies, what you’re paying your coaches, facility costs, administrative costs. There’s a massive difference. So, if you’re going to try to stay put in DI and have a go at it, where do you make up for the loss in revenue? People are tapped out. Donors? They’re fatigued, but you’re going to have to go back to them anyway.”
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Under terms of the House settlement, reported by The Athletic, former DI athletes would receive at least $2.75 billion in back-pay damages, paid out over 10 years. The NCAA would be on the hook for roughly 41 percent of that total — or $1.2 billion from reserves — while the power conferences would be responsible for about 24 percent through withheld future revenues, with the Group of 5 accounting for about 10 percent, the FCS schools about 13 percent and non-football DI schools about 12 percent.
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In a letter sent to member schools, and obtained by The Athletic, NCAA president Charlie Baker acknowledged smaller schools could be hit harder even though they were not the focal point of the House litigation, adding: “I understand this change will not be easy to manage, but given the challenges facing college sports over the last few decades, change is inevitable.”
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Some argue that smaller schools are part of the same exploitative system as the higher-profile programs, but it’s not an apples-to-apples comparison because many of the current lawsuits are directly tied to how student-athletes at power conferences helped bring in millions if not billions of dollars but were not compensated financially for it. And if it looks like the proposed new system is a form of financial Darwinism, well, it’s because it is. Baker can claim empathy for smaller schools, but his allegiance is to the power conferences that drive the massive broadcast deals. He knows it’s much easier for the Ohio States and Alabamas of the world to make up the lost revenue, even if it’s a projected $2 million a year, than it is for the Group of 5 and others, where the pathway to solvency is longer and harder.
“The reduction could be over half a million dollars annually for the Group of 5,” the conference commissioner told me. “Look at the (California State University) schools and the Mountain West — that’s a ton of money even for a San Diego State. Go a step deeper and it’s $175,000 to $200,000 annually for the mid-majors. That’s a lot of money for them. There’s a lot of concern there.”
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The kicker is that the House case, which incorporates two other antitrust suits, isn’t the greatest fear of some conference executives. It’s the Johnson v. NCAA case, which argues that student-athletes should be classified as employees under the Fair Labor Standards Act (FLSA) and subject to a minimum wage and overtime pay. The outcome of the case could officially eliminate the outdated notion of amateurism at the collegiate level and clear the way for athletes to unionize and collectively bargain working conditions.
“If that happens,” the commissioner said, “you’re going to see a lot of non-Power 5 athletic departments go away, including at the Division I level.”
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That sentiment was shared by a source who has participated in negotiations between conferences and broadcast networks.
“For years and years there have been rumblings that the amateur model is not sustainable, that the money and greed were becoming too big,” he said, speaking anonymously because he is not authorized to comment on the situation. “You’ve got universities paying coaches millions of dollars while preaching amateurism, which is really about maintaining free labor. At the FCS level, none of them are making money on athletics, so they’re going to start cutting programs.”
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Selectively or altogether. Or dropping to lower divisions. Or eliminating athletic departments, period. Higher education is already facing budget issues. Just last week, Birmingham-Southern College permanently closed its doors while its baseball team was competing in the NCAA Division III World Series. A sign of things to come? Perhaps not, but there’s little doubt that realignment as we know it will take on a new and dramatic meaning in the coming years.
It’s sad yet predictable that the smaller schools are being forced to pay disproportionately for the sins of the bigger colleges.
(Photo of NCAA president Charlie Baker, right, and SEC commissioner Greg Sankey: Andy Lyons / Getty Images)