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A Radical New College Sports Model: Calling for Revenue Sharing Legislation for Student-Athletes

Last month as a Nick Saban/Jimbo Fisher back and forth played out in the media, it focused attention on the dramatic changes of the Name, Image and Likeness (NIL) era.

If the acceleration in television revenue in college sports was like the wine flowing freely for the past ten years or so, the past ten months have been like Henry Hill’s character at the end of Goodfellas moving a mile a minute on a cocaine binge. And like that movie, someone (or many "someones") is going to end up under oath telling everything they can about how much money is being thrown around in pay-for-play schemes.

It is that hectic. As a former coach, a university Trustee, a co-founder of the NIL Success With Honor Collective and a consultant in the NIL industry I can tell you it is changing pretty much every day.

But one of these days, and it will be sooner than later, the college sports world is going to realize that the day of reckoning is upon us.

It is time to stop kidding ourselves. It is time for universities around the country look at each other and admit: “We are in the sports entertainment business.”

Admitting the problem is the first step to resolving it. The quaint amateur sports model is gone, a victim of the greed and big money of major college sports. Unchecked greed is a powerful drug, often killing its addicts.

Universities, administrators and coaches have been enjoying lavish salaries, building expensive over-the-top facilities and doing so under the guise of being a tax-exempt, non-profit educational enterprise.

If and when the next Big Ten television contract tops $1 Billion a year, every athlete and their families will see that number. When a college football coach signs a 10-year deal that will break $100 million those same people will see that number too.

One could argue that there has always been big money in college sports. That may be true. But in the last four or five years a couple of notable thresholds have been passed.

1. Head football coaches now routinely make more in salary than the entire scholarship pool for all players. At one school the head coach makes $8.5 million while the entire spending for all 85 scholarships comes in at just over $4 million.

2. Even at the biggest programs, the football expenses have surpassed the revenue brought in from playing the games (tickets, concessions, parking, bowl expense checks). The shortfall is made up from the television contracts and charitable donations.

3. Television contract revenue, even among some of the biggest programs is now higher than the gameday income mentioned above. Guess who dictates when and where you play the game?

These recent developments reinforce big-time college sports as a television-driven enterprise. And even as big as some of that money may be, a $170 million athletic department is a very small revenue source for a University like Penn State with an annual budget of nearly $8 billion.

Universities are running an auxiliary operation producing sports entertainment television content for major network broadcasters, streaming services as well as an in-person crowd.

Certainly, players can garner Name, Image and Likeness money now. But they must find those deals. And for most athletes it is more work than it is worth. For the NCAA and the schools, allowing them to make some NIL money is the easy way out. The NIL money the players make doesn’t come out of their coaches’ or administration’s pockets.

I don’t fault anyone for that, it’s just the nature of the business these days.

But you know who did notice the power they wielded in playing during the 2020 Covid season? Players noticed. Their families noticed. Schools were so desperate to fulfill their television contracts, they played games in empty venues to keep collecting those checks. That drove home this simple fact; the players’ performance is central to the whole business model.

They now know they hold the cards, and NIL and the free-wheeling transfer portal have strengthened their hand. A player’s peak ability to demand money is during the recruiting process and when they enter the transfer portal. That is where the biggest bidding happens.

For old school college fans, we may not like it, but it is reality.

And the transfer portal jump around hits the academic mission. Football grad transfers are showing up at a new school for the fall and spending little time in a classroom. Once their team loses a second game and they’re out of the playoff hunt, they no longer must be eligible for a bowl game they’ll skip. So they can stop going to class. (Maybe an expanded playoff will force more guys to pass two classes to stay eligible).

For one and done players and grad transfers in men’s basketball, they pass the minimum credits needed to be eligible for the spring semester. Then they can stop going to school. And the tuition money being spent and the class slots they take and never show up for are money and class opportunities that could benefit other students.

The good old days are gone. So let’s stop kidding ourselves.

Schools now have two choices. De-emphasize like the Ivy League has done, or admit the new reality and move towards a future business model that makes sense.

In lieu of schools having that epiphany on their own, it may be time for higher powers to intervene by way of legislation. A good place to start would be right here in our own Commonwealth of Pennsylvania.

The Commonwealth of Pennsylvania’s Legislature should pass legislation with a few goals in mind.

1. Allow student-athletes to organize and have collective bargaining.

2. Require major college Universities to develop a revenue sharing plan to supplement the scholarship money student-athletes already receive.

3. Allow Universities and their student-athletes’ organized collective bargaining group to negotiate a blanket policy for Name, Image and Likeness.

4. Allow graduate transfer students to take that graduate year as a paid sports internship.

5. Require universities to provide full medical benefits to student-athletes.

Passing legislation will force the NCAA and other states to act. Ultimately the model will need to be uniform nationally with the revenue sharing money pooled and shared across conferences and schools.

But by acting first the schools in Pennsylvania will gain an advantage as the pioneers of revenue sharing. The players here will start with a guaranteed income on top of the aid they may already be getting. It also establishes collective bargaining so that schools have an organized group to negotiate with across from them to decide future issues that will arise.

And while student-athletes can make money through NIL, the schools, television networks and their advertisers are also using the players images to make money. The players should get a piece of that.

Keep in mind that if you look at scholarships for student-athletes as the "labor costs" associated with producing big-time college sports, those labor costs for the most important people represent only somewhere around 7.5% of all revenue.

How could it work? Keep in mind the following numbers are just a simple proposal, and certainly the revenue sharing numbers won't replace the big numbers some athletes may get, but they do help all student-athletes.

Taking 30% of Penn State’s estimated $57 million annual Big Ten distribution would generate enough revenue to pay every one of Penn State’s 850 student-athlete just over $20,000. In the next Big Ten contract that number could jump to $25,000 or even $30,000 for every student-athlete. Equal distribution among all athletes would keep Penn State in compliance with Title IX requirements.

Using current budget numbers, the 30% revenue share would be $17.1 million. That total revenue sharing for all athletes would still be smaller than the salaries being paid to employees in the football program.

And since only a small fraction of Penn State’s 850 student-athlete are on full scholarship, much of that revenue sharing could help student-athletes and their families pay tuition and lower their student debt. Much of that revenue sharing money will likely come back to the University’s academic budget as some student-athletes use it to pay tuition.

The challenge of a $17.1 million revenue share will force athletic departments to push spending to more sustainable levels. With a new Big Ten contract scheduled to boost each school’s revenues by perhaps as much as $20 million a year (or more), schools could find revenue sharing money in the budget through those future increases.

Calling for this step may seem radical, but revenue sharing is coming soon. Supreme Court Justice Kavanaugh’s opinion in the Alston Case makes that clear.

By acting first, the Commonwealth of Pennsylvania can step into the leadership void that exists in college sports. By admitting the true nature of major college sports today and taking the lead we can dictate the course ahead.

This proposal is a starting point. The devil will be in the details. But make no mistake, college sports will sooner or later have to dance with the devil they’ve created.

Be sure to check out Jay Paterno's novel "Hot Seat: A Year Inside College Football's Pressure Cooker" --click here to get your copy


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