Sports are a personification of American culture. We live in a sports-centric society where a premium is placed on success on the court and field of play. However, most sports enthusiasts would argue that while Americans share an affinity for sports in general, there has always been a stark contrast between intercollegiate athletics and professional sports that has made one more attractive to sports fans than others. Studies show that nearly 60 percent of fans prefer college over professional sports. Many of these fans possess an innocent, child-like love for their sport, based solely on their love for the game and their alma mater or adopted school of choice. They detest the inherent nature of professional sports. From contract and labor disputes to the constant roster influx due to free agency and player availability, they believe the business aspects of professional sports diminish its entertainment value. They contend that the National Collegiate Athletic Association’s (NCAA) principles of amateurism—that intercollegiate athletics are centered around a much larger educational mission, and that student-athletes are required to embody that mission—should be preserved at all costs.
It would be logical to assume that an organization whose stated purpose is to serve as a filter that rids intercollegiate athletics of any semblance of professionalism would also uphold those same foundational principles of amateurism. However, that’s not the case in the present world of intercollegiate athletics. The balance of this article will discuss the 3 factors that have led to its infrastructural change, and why it is on a course that cannot be reversed.
Name, Image, and Likeness (NIL)
NIL is a legal concept that refers to an individual’s “right of publicity”, which means their ability to capitalize on anything that identifies them, including their ability to engage in third-party sponsorships and endorsements. NIL was first adopted by the state of California in 2019. Governor Gavin Newsom signed a bill that allowed student-athletes in California to accept compensation for the use of their name, image, and likeness. Shortly thereafter, in NCAA v. Alston, the United States Supreme Court handed down a monumental decision that has changed the parameters by which intercollegiate athletics may be governed. In Alston, the Court struck down any potential limitations on benefits that student-athletes were permitted to receive. They strongly rejected the NCAA’s principle of amateurism as being “overly broad” and as an “outdated defense” for failing to allow its labor force and revenue-drivers to be compensated.
After the Court’s decision, the NCAA instituted NIL, which was intended to be a temporary policy to permit student-athlete compensation by third parties. However, an overwhelming majority of states ensured this policy change would be permanent by enacting their own similar laws that permitted student-athletes to receive fair market value compensation for the use of their name, image, and likeness. In the context of intercollegiate athletics, NIL is inconsistent with the NCAA’s principle of amateurism because it allows student-athletes to receive compensation outside of their financial aid and scholarship agreements from third parties.
From the NCAA’s perspective, one of the many unresolved issues posed by NIL is finding a common ground between permitting student-athletes to trade in the free market without allowing NIL to become a license for corruption, where universities abuse its legislative intent by making it a legal pay-to-play scheme. As a result of its abuse of its power over decades, many believe the NCAA does not possess the political capital to take the appropriate regulatory stance to provide structure and guidelines to NIL. And based on the most recent comments of Charlie Baker, the organization’s newly appointed president, the NCAA is now playing catch-up in an ever-evolving world of intercollegiate athletics: “I think it was a big mistake by the NCAA not to do a framework around NIL when they had the opportunity to. And I think there were too many people in college sports who thought no rules would work really well for them.”
Unfortunately, the hurdles related to NIL aren’t exclusive to the governing body level of intercollegiate athletics. At the member-institution level, the distinction between the 68 schools that make up the 5 largest conferences (the Power 5) in the NCAA—the Southeastern Conference (SEC); Atlantic Coast Conference (ACC); Big Ten; Big 12; and the Pac 12— and the other member-institutions has become much more pronounced in the NIL era. The Power 5 schools have always held an advantage over their smaller counterparts in regard to athletic budgets and their vast alumni networks. Historically, because of these advantages, Power 5 schools competed against one another in the recruitment of the highest rated high school talent, while institutions outside of the Power 5 were relegated to recruiting against member-institutions who had comparable athletic budgets. The advantage of the pre-NIL world for schools outside of the Power 5 was that the recruiting markets were so defined that they bordered on being unwritten rules. For example, coaches from basketball bluebloods like Duke, North Carolina, or Kansas would fuel-up their private jets and travel coast-to-coast, scouring the nation for the next five-star high school prospect, while coaches from smaller schools concentrated on players in closer proximity, with a few less stars next to their names, in hopes of managing their more conservative recruiting budgets and ensuring their efforts (and dollars) weren’t wasted on kids that were “out of their league.”
That recruiting model has changed in the era of NIL. And many schools outside of the Power 5 are not equally benefitting from the landmark legislation in comparison to larger, more resourceful institutions for the following reasons: First, Power 5 schools are not only able to recruit the top high school players. Schools outside the Power 5 are now witnessing them recruit their players. Not the high school players they are targeting in recruiting, but the ones who are on scholarship at their institution and members of their rosters. Similar to professional baseball, we’re witnessing the development of a farm system in intercollegiate athletics, where the best players from schools outside of the Power 5 are now being targeted by Power 5 schools. The problem that NIL has created for schools outside of the Power 5 is that many of their student-athletes are now auditioning for scholarships at Power 5 schools, which puts these schools at a major disadvantage when it comes to retaining their best student-athletes.
Second, since NIL has not been regulated by the NCAA or the state legislatures that have enacted legislation on the issue, there is no cap on how much a player can earn through a sponsorship or endorsement deal. Many Power 5 schools can sign a blank check for the “services” of a student-athlete from a school outside the Power 5 with minimal concern that a bidding war between the two member-institutions will ensue.
Third, many Power 5 institutions have formed “NIL Collectives”, which are groups that raise money and seek sponsorship and endorsement deals on behalf of the Collective, with the intent of being able to offer their student-athletes the most lucrative opportunities. Most schools outside the Power 5 lack the network and brand name to present comparable counteroffers to their student-athletes who are being pursued by Power 5 institutions.
Although NIL has changed the infrastructure of intercollegiate athletics from the governing body and member-institution levels, the most concerning aspect of NIL’s restructuring of intercollegiate athletics involve the effects it has had on college coaches, who are on the frontlines of a seismic shift in the business of intercollegiate athletics. Most coaches would agree that recruiting has always been an inexact science based on the fact that they have the challenge of convincing young men and women to make life-impacting decisions who aren’t even old enough to purchase alcohol legally. However, they would all agree that NIL has made an already difficult job even more difficult. This is primarily because many high school players and college transfers are making their college decisions based on which school can provide them with the best NIL deal. Pre-NIL, student-athletes’ college choices were based on a combination of factors such as his or her relationship with the coaching staff; their ability to receive the amount playing time they believed their ability warranted; the reputation of the coach; the school’s brand; and that institution’s ability to provide them with the platform to showcase their skills for the professional level. Even in the NIL era, the aforementioned factors are still somewhat important, but none of them take precedence over the school’s ability to provide an NIL sponsorship or endorsement deal that suits the desires of the student-athlete. In other words, a nationally ranked program with a reputable coach that has failed to develop an adequate NIL Collective will have far less success on the recruiting trail than a program with an NIL Collective that has secured a significant amount of resources and corporate partnerships but lacks the sport-specific attributes of its competitors. This presents a major challenge in evaluating coaches because their ability (or inability) to build a quality roster is dependent on factors beyond their control. NIL Collectives are independent of a university’s athletics departments. And even though a coach has the freedom to express his or her general wishes regarding the Collective; their formation, structure, and management are entirely separate from the athletics department. NIL Collectives work in conjunction with athletics department for the overall benefit of the athletics department, but they are not a part of the athletics department. In the NIL era, Collectives, sponsorships, and endorsement deals are the drivers in recruiting, and college coaches are the passengers; and player loyalty has now been exchanged for immediacy, while three to four-year commitments have been substituted with the uncertainty of year-to-year agreements.
In today’s landscape of intercollegiate athletics, after a coach has assembled their roster, the real work begins. Pre-NIL, the only compensation a student-athlete received was the stipend provided for his or her living expenses. All student-athletes on scholarship received an equal amount, regardless of their significance to the overall success of the program. The same cannot be said for sponsorship and endorsement deals under NIL. NIL allows for major discrepancies in compensation to exist between student-athletes. The best and brightest stars receive the most lucrative deals. And many coaches believe this type of structure breeds jealousy amongst teammates, which makes it difficult to form the requisite chemistry needed to perform at the highest level as a team.
College coaches acknowledge that the challenges posed by NIL make their jobs more demanding than ever before because they are required to manage so many issues that are unrelated to their particular sport. Many believe these costs outweigh the benefits. The vast majority of these coaches once believed that intercollegiate athletics was the most logical career path to combine their deep passion for their particular sport with their desire to develop student-athletes as young men and women, on and off the court. Many coaches now believe that in order to retain their positions and for their programs to remain (or become) relevant, they must concede to the manner in which intercollegiate athletics has been restructured and conform to the new model.
The Transfer Portal
There are two documents that create a legally binding relationship between the student-athlete and the university. First, there is the letter-of-intent, which can be defined as an athlete’s binding promise to attend a particular school and play a particular sport. It is worth noting that an athlete’s agreement via the letter-of-intent is with the university, not a particular coach or individual. The second legally binding document is the statement of financial assistance. This outlines the financial agreement between the university and the student-athlete. It simply states that the university will provide the athlete with the financial assistance to pursue a college degree. In exchange, the student-athlete must provide the university with their athletic services and remain eligible to participate athletically. Additionally, the student-athlete must comply with the rules and regulations of the university, the conference of which the university is a member- institution, and the NCAA. Failure to meet the academic requirements or comply with university, conference, or NCAA rules automatically terminates the financial agreement.
From the 1960s until 2021, if a student-athlete expressed a desire to transfer from one NCAA member-institution to another, the only legal means to remedy a breach of that binding agreement would be to prohibit the student-athlete from competing in their first season at their new school. This rule applied to all lateral transfers, which is a transfer from one Division I school to another. The only exception where a student-athlete was immediately eligible was when he or she transferred to a lower-level NCAA member-institution (i.e., Division II, III, or to an NJCAA junior-college). In 2021, the NCAA’s Board of Directors revisited its nearly 60-year-old rule on student-athletes’ ability to transfer without penalty. In a nearly unanimous vote, new legislation was enacted. The new transfer policy allows for a one-time transfer from one member-institution to another without penalty, which grants a student-athlete immediate eligibility at the time he or she transfers. Since the new transfer rules were passed, over 9,000 student-athletes have exercised their right to do so.
Proponents of the new rule insist that the previous rule was archaic, while the new legislation has modernized intercollegiate athletics. They believe the modern era is the era of player empowerment, and the rules should reflect that. Opponents argue that there are no winners when it comes to this legislation. They contend that coaches are disadvantaged by the constant turnover to their rosters. And since every program attempts to establish its own culture, the new rules make it far more challenging for that culture to take root when there is no guarantee that he or she will coach the same player or group of players every year. They also point to the fact that team sports require trust. And since trust can only be developed over time, rosters that are constructed and deconstructed all within a calendar year affect team chemistry, and ultimately result in a lesser product being exhibited on the court and field of play.
They further contend that the new transfer rule not only impacts the student-athletes and coaches, but it also compromises the interests of the fans. College sports fans—particularly those of proud, tradition-rich programs—are the most loyal and engaged fans in all of sports. The fanbases of these programs value the connections they establish with the student-athletes who represent their institutions. They not only witness their athletic development over a three to four-year period, but they are also privileged to watch many of them mature into young men and women, fully prepared to become productive members of society. To college sports fans, these are the elements of fanhood that define them. And the fly-by-night nature of the new transfer rule could pose a serious threat to that. Over time, this could result in fan disengagement, which would ultimately affect the fabric of intercollegiate athletics.
Ironically, those who oppose the new transfer rule believe the new legislation is the most detrimental to the group it is intended to benefit: the student-athletes. They argue that the new transfer policy directly contradicts the NCAA’s educational mission to serve as a governing body that “provides opportunities to learn, compete, and grow on and off the field.” They insist that the new rule amounts to the miseducation of the student-athlete because it endorses the following: the devaluing of commitment (by not honoring the letter-of-intent signed by the student-athlete); the inability to develop problem-solving skills (by providing a means to make a long-term decision based on a short-term result); and the eschewing of the development of conflict resolution skills (by providing an easy exit strategy as opposed to resolving the issues they may face at their current school), all of which are fundamental to success in any undertaking they may choose as adults.
Conference Realignment
It’s well established that professional sports organizations are primarily for-profit businesses that provide entertainment for sports fans. Far too often, intercollegiate athletics’ economic interests and its partnerships with corporate America seem to go unnoticed. This is partly because the NCAA is a non-profit organization which benefits from its tax-exempt status in the same manner as other educational institutions. However, when it comes to the NCAA, even though there are no retained earnings because all of the money that flows into the organization must also be accounted for as an expense on its outflow, non-profit is not synonymous with a lack of resources.
In order to fully comprehend the economic incentive associated with conference realignment, one must have a basic knowledge of the financial structure of intercollegiate athletics, and specifically, how the NCAA and its member-institutions each earn their revenue. The NCAA earns 98 percent of its revenue from television and media rights deals and the men’s and women’s NCAA basketball tournaments. In 2022, that amount was over $1.1B—over $940M for their television and media rights deals, and $198M for the men’s and women’s NCAA tournaments. Roughly 50 percent of those revenues (approximately $500M in 2022) are redistributed to the member-institutions primarily based on performance in the NCAA tournament and other scholarship and supplemental funds. The other half of their revenue is used to fund their operation. The major portion of these expenses come in the form of sponsoring the men’s and women’s NCAA tournaments and championships in other intercollegiate athletics sports.
Like the NCAA, member-institutions also earn revenue based on television and media rights deals, but it’s separate from the NCAA’s media rights deal, and it’s primarily based on their conference affiliation. The larger conferences that feature schools with large, reputable brand names earn a significant amount of revenue in this category. Member-institutions also generate their own revenue based on ticket sales and marketing and licensing deals.
But the most significant portion of each member-institution’s earnings are derived from revenue-sharing, where conferences pool their earnings from the men’s and women’s NCAA tournaments and payouts from football bowl games and the College Football Playoff (CFP) and redistribute them to each conference member. This revenue category is significant because it is the single-most important factor for why so many schools are severing—in some cases, decades old conference alliances—in order to form new ones. This economic motivation is primarily based on the fact that football programs generate over 80 percent of an athletics department’s earnings, so member-institutions are forming conference alliances with the most prominent football programs in hopes of having the largest amount of pooled resources to be redistributed to conference members. And once that revenue is redistributed, it funds scholarships, economic reinvestment, and research and development across all departments.
The following figures illustrate the football revenue generated by the SEC during the 2021-2022 fiscal year. Of the 14 member-institutions, a total of 13 participated in bowl games, 2 of which competed in the CFP, with both advancing to the National Championship game, which produced $1.13B in revenue. And the SEC is not a statistical outlier in the amount of football revenue generated. In that same fiscal year, the Big Ten Conference earned $1.127B, followed by the ACC ($723M), the Big 12 ($689M), and the Pac 12 ($679M). In sum and after each conference’s expenses, the Power 5 collectively had over $3.16B dollars that were available for redistribution, with an average redistribution amount of $46M per member institution. Two logical conclusions can be drawn from these numbers: a football program is the lifeblood of a university’s athletics department; and without a successful one, the odds are unfavorable that an institution will be an attractive candidate to join other conferences (with the intent to share revenues) if the athletics department’s most significant revenue producer is not economically viable.
Conclusion
In less than four years, intercollegiate athletics has endured the most significant infrastructural overhaul since the NCAA was founded in 1906. And for the following reasons, this restructuring has set it on an irreversible course: First, member-institutions are voluntary members of the NCAA. And collectively, they grant the NCAA its governing power to preside over all of the affairs related to intercollegiate athletics. In other words, without the endorsement of its member-institutions, the NCAA lacks the policing and legislative powers to operate the system of intercollegiate athletics. Contrary to popular opinion, it is not an independent organization. Its regulatory powers are limited to the matters its member institutions vote to have legislated. The current landscape of intercollegiate athletics is one that has been permitted by the NCAA’s member-institutions. The NCAA’s legislative powers are contingent upon whether these institutions are dissatisfied with the overall direction of intercollegiate athletics. And since there is no evidence that suggests that is the consensus opinion amongst university presidents, more of the same can be expected. Second, the economic incentive for intercollegiate athletics to remain on its current course is far too enticing to resist. From the perspective of the student-athletes, NIL provides universities with yet another means to attract the most talented student-athletes, while the new transfer rule grants student-athletes the freedom of movement to pursue those economic opportunities. And the argument that intercollegiate athletics restricts student-athletes’ rights of free trade can no longer be made. At the member-institution level, one cannot make a plausible argument opposing conference realignment because it is economically beneficial to every department of a university, which means it positively impacts the entire student body. Lastly, today’s technologically-advanced society makes information more accessible, so it’s virtually impossible for large entities to make decisions without factoring in the public’s potential reaction to those decisions. The topics discussed in this article are part of the public consciousness. And the vast majority of individuals with opinions on this particular subject matter strongly support the rights that have been granted to student-athletes via the NIL and transfer rule legislation.
If student-athletes are now permitted to get a piece of intercollegiate athletics’ proverbial economic pie, and universities are forming strategic alliances with other member-institutions in good faith to ensure that they possess an infinite amount of resources to benefit students across all departments, are the forces that oppose this movement powerful enough—politically and economically— to disrupt it and cause it to change course? No, they are not.
