NASHVILLE, Tenn. (WTVF — For decades the NCAA maintained its athletes getting paid would threaten the spirit of amateurism that makes college sports great. The term student-athlete has been key to the defense of why players are not employees and therefore should not be compensated.
In fact, the term student-athlete was coined in the mid-1950s by then-NCAA executive director Walter Byers. He helped the organization successfully defend a workers’ compensation claim by the widow of Ray Dennison, who died while playing college football at Fort Hays A&M in 1954.
Byers stated that Dennison was not an employee, but rather a student-athlete participating in an extracurricular activity like band or theater. The courts agreed and the term “student-athlete” became a part of the American lexicon and a key part of the NCAA’s defense of its amateur model.
But 70 years later the NCAA is a multi-billion-dollar enterprise built upon the performance of student-athletes, and the courts and even the organization itself now say it’s time to pay up.
On July 26th, the NCAA filed paperwork in federal court to settle the lawsuit brought forward by former Arizona State swimmer Grant House. If approved as expected, the settlement will forever change the compensation model for student-athletes.
“We voted to support that,” said Middle Tennessee State University President Dr. Sidney McPhee, who is serving his third term on the NCAA’s Board of Directors. “Not only the (autonomous) five, but the non-A5, and also our student-athlete (on the board).”
The settlement was initially negotiated by the NCAA and the commissioners of the ACC, Big Ten, Big 12, and SEC along with the plaintiff’s attorneys. It consists of two parts; damages and a new model for the future.
The NCAA has agreed to pay more than $2.77 billion in back pay to former student-athletes who were unable to profit off their name, image, and likeness dating back to 2018. Seventy-five percent of that money has been earmarked for football players, with men’s and women’s basketball players expected to get between 15-20 percent of the remaining money.
The NCAA also agreed to move to a revenue-sharing model where players will be able to be paid directly. Beginning in 2025-26 schools will be able to pay their athletes up to 22 percent of the annual Power Five Conference program’s revenue.
“I think the student-athletes deserve it,” Middle Tennesse Athletic Director Chis Massaro said. “I think if we can kind of bring the scales back to normal where coaches make this and student-athletes make this and there’s not that huge disparity, I think it will be a healthier enterprise.”
But the deal is far from having universal support. Many schools from lower-level conferences believe they were excluded from the negotiations and then stuck with paying a significant portion of the bill.
The settlement will be paid out over 10 years with 41 percent coming directly from the NCAA through the reduction of revenue distributions during that timeframe. The rest will come from what amounts to be the return of past distributions from the Men’s Basketball Tournament television packages, with power conference schools paying 25 percent, while the rest of division one foots nearly 34 percent of the bill.
“I think there’s a lot of disappointment and frustration that we weren’t really involved in any of the negotiations,” Belmont Athletic Director Scott Corley said. “Particularly for a school like Belmont that doesn’t even have football. I mean the settlement has said about 80 percent of all the dollars is going to football players.”
McPhee says the NCAA’s Board of Directors viewed the settlement as the lesser of two evils.
“I think we all came to the agreement that this is the right step even though it’s not what we feel all the institutions are going to be on board with,” McPhee said. “But looking at the alternative if we were not moving in this direction, chances are the universities and the NCAA would’ve lost the case.”
The settlement avoids another loss in court and a potential $9 billion judgment that could’ve bankrupted the NCAA. But it comes at a significant cost to member schools.
Between paying back the damages and a lower revenue payout from the NCAA schools will see their athletic budgets take a hit of about two percent on average. At the same time, they will be trying to figure out how to pay around $23 million to student-athletes as soon as 2025.
“There’s not a magical pot where that comes from, right?” Vanderbilt Athletic Director Candice Storey Lee said. “It comes from what you’re already spending, so you have to raise the money or mitigate what you’re spending.”
That may be easier said than done. Of the nearly 1100 NCAA members competing in the 2021-22 school year, only 28 turned a profit in athletics, according to Forbes.
Many programs covered their losses through subsidies from general university funds or hefty student fees.
“There’s not enough talk about how few universities are actually in the black in college athletics,” Belmont University President Dr. Gregory L. Jones said. “In order to be in the black in college athletics overall you really need to have high-powered football with a very large stadium. But there are places in high-level division one where it is a fairly significant subsidy being paid by the general student population.”
With each school’s expenses about to jump significantly as they begin to pay players, many involved in college athletics see a difficult time ahead. Athletic departments and universities will have to try to balance paying athletes and remaining competitive in revenue-producing sports like football and basketball while still trying to support their remaining sports which may not make any money at all but provide valuable opportunities.
“People see the huge money coming from an ESPN contract or whatever and they think that money’s just sitting in the bank and we’re in here counting dollars. When the reality is that it is used to support the student-athlete experience. Every single dollar of it. For all the student-athletes. I don’t think it matters who you are. You’re going to have to make some decisions about how you want to operate in the future.”
Major decisions loom ahead for athletic directors and student presidents. But for now, the decision to settle the House case provides a framework for the NCAA to move forward.
Now it’s up to member schools to develop a structure that is sustainable for the long-term.
“No one is saying this is a panacea,” McPhee said. “No one is saying that we’re all jumping for joy here because there is that degree of separation between the schools like the Tennessees, the Alabamas, the Michigans and the MTSUs, the Belmonts, and Tennessee State., for example. But we’d much rather be in a position where we have some degree of control than no control at all.”
