NCAA and power conferences agree to settlement to bring revenue sharing to college athletics

After a ground-breaking settlement, schools will soon be able to directly pay players.
NCAA National Office Exteriors
NCAA National Office Exteriors / C. Morgan Engel/GettyImages

Major changes are coming to college athletics. On Thursday, the NCAA and it's power conference leagues voted to settle pending antitrust cases by agreeing to pay out more than $2.7 billion over the next decade to former and current student athletes. It's restitution for the revenue that college athletes could have been earning had it not been for NCAA rules.

The settlement will allow D1 athletes going back to 2016 to receive a share of of that $2.7 billion in exchange for agreeing to not sue the NCAA over antitrust violations going forward.

But there's another massive part of this settlement. Starting in 2025, schools will have the ability to share up to approximately $20 million in revenue annually with athletes. For the first time, players will be able to be paid directly by schools and receive revenue that they ultimately helped bring in.

How schools distribute that $20 million is up to them

When it comes to how schools choose to split revenue amongst their athletes, it'll be their decision. The settlement provides no guidelines or requirements for how the revenue must be shared. While that freedom may be beneficial to some programs, it creates several questions.

Most notably, how does Title IX factor in? Will that money have to be evenly split amongst male and female athletes? Football and men's basketball are the only true revenue-producing sports that exist at the college level. Everything else, usually, loses money.

So now that players can receive the revenue they helped earn, will they be forced to give some of that up to meet Title IX regulations? We don't know, and there's likely to be some headaches over that in the near future.

NIL will still exist and still matter

Despite revenue sharing, NIL isn't going anywhere. In fact, the revenue sharing model will be classified as working through NIL. Players will still have the right to earn endorsement deals through other various NIL opportunities, and such deals will almost certainly be used for schools to circumvent the $20 million salary cap.

Collective funding doesn't count towards that $20 million, so programs with big time NIL operations that have tens of millions more to distribute will remain at an advantage when it comes to recruiting talent. And that's why if you're a Mississippi State fan who's contributing to the Bulldog Initiative, it's still important to.

Roster changes are coming

The settlement will bring new roster caps for each sport and require that each player on the roster now be on scholarship. Effectively, it's the end of walk-ons in college sports. Some sports, like baseball, could see their scholarship numbers increase. And for schools like MSU that invest heavily in baseball, they suddenly would be able to offer more than the absurdly low 11.7 scholarships amongst the team.

But for football, roster size will almost certainly decrease. They won't go lower than the current 85 scholarship limit, but many of the spots previously reserved for walk-ons are unlikely to exist. This is a major change to roster construction.

The NCAA is keeping the little bit of power it still has, but it hasn't saved itself

The NCAA's decision to settle is simple. It's the only way they can remain a somewhat viable organization that has any sort of power. They'll still be able to enforce the few regulations they have that haven't been deemed illegal by Congress.

While this move preserves the life of the NCAA residing over college athletics, it only helps them in the short-term. As long as the NCAA continues to argue that college athletes are not employees and therefore they cannot collectively bargain, the NCAA remains at risk of being sued for antitrust violations in the future over the limited salary cap.

An eventual split by the biggest college programs away from the NCAA so that players can become employees and those programs can effectively form their own lower-professional league still seems inevitable. This settlement may have just slightly delayed that move.