III. Building Blocks and Positioning

The Collegiate Model at Risk

Mr. S. Scott Barnes

Intercollegiate athletics has grown exponentially since its first known competition in 1852 and the eventual formation of the National Collegiate Athletic Association (NCAA) in 1906. In particular, the popularity of college football has fueled significant new revenue growth. At the highest level of competition Autonomy 5 (A5) athletic conference media contracts, college football playoff proceeds, campus multimedia rights guarantees, and other growing revenues have contributed to a multibillion-dollar industry. By examining recently adopted NCAA legislation, current and proposed state and federal laws, recent articles and events, best practices, and my own experiences, I’ll explore the seismic shifts occurring in intercollegiate athletics and the potential aftermath. In recent years, excessively rising expenses, particularly in college coaches’ salaries and facilities, have increased scrutiny and attention as well as created the narrative that student-athletes do not get their fair share. This narrative helped fuel the advent of Name, Image, and Likeness funding (NIL), new educational benefits allowed via the Alston Supreme Court ruling and NCAA transfer portal rules, each creating significant new financial benefits and unfamiliar flexibility. At the same time these benefits have compounded the escalating cost of operating an A5 program and, in the case of NIL, have begun to shift revenues away from athletic departments and directly to the student-athlete. While these new opportunities are financially beneficial to the student-athlete, unintended consequences come with them. The lack of national standards in the NIL space and ineffective enforcement of NCAA recruiting rules, a free agent market that has emerged out of new transfer portal legislation, mounting financial pressures making it more difficult to fund broad-based sports programs, and navigating federal Title IX laws that are becoming increasingly difficult to comply with to name a few. With the college landscape pendulum swinging closer to a pay for play model how will the current collegiate model be affected and how will autonomy five athletic departments navigate these changes?

Intercollegiate athletics has grown and evolved exponentially since the first known competition, widely thought to be a men’s rowing race in 1852 between Harvard and Yale (Shiff 2017). Motivated by safety concerns, primarily around football, and the need for nationally standardized rules in competition and recruiting, President Theodore Roosevelt established the National Collegiate Athletic Association (NCAA) in 1906 as the main governing body of intercollegiate sports (“History” 2021). This model, which fully integrated intercollegiate sports into the university ethos, was unique to the world. To this day no other institutions of higher learning around the globe employ this type of sports programming in a higher education setting. Intercollegiate sports has produced enormous benefits for the student-athlete both directly and developmentally. Further, the life lessons gained through participating as a college athlete are undeniable. Yet intercollegiate athletics has endured much scrutiny and criticism throughout its existence. As early as that fateful boat race in 1852, ineligibility and financial inducements were reported to be in play. Over time major college sports have gained a reputation for having too much money flowing through the system, thus creating a culture of cheating and corruption. Moreover, the notion of college athletes having amateur status has been challenged by many, to the point, that the NCAA no longer uses amateurism in describing student-athletes’ participation in college athletics. Rather, it has adopted the moniker of a collegiate model in hopes that it is a more palatable portrayal of the happenings in college sports to the critics (Dodd 2021).

Many of the talking heads reporting on college sports say that student-athletes should receive a direct share of the revenues generated by college athletic programs (Bouchrika 2023). Fast-forward to 2023 and student-athletes who for decades received a full-ride scholarship consisting of room, board, tuition, fees and books, additional meals, now receive significant additional financial benefits. In 2015 Cost of Attendance legislation (COA) was granted by the NCAA as a permissive cash award in addition to the full scholarship (NCAA 2015). Nearly all Football Bowl Subdivision (FBS) institutions participate in COA, which can be up to $6,000 annually per student-athlete based on the cost-of-living index in each city (Solomon 2015). Further, student-athletes receive Alston benefits, additional meals, nutritional supplements, academic and mental health counseling, health care, strength and conditioning training, and coaching. Per the Oregon State University business office, the department invests an average of $275,000 in student-athlete-related benefits and resources over the course of five years for nonresident student-athletes. The aforementioned benefits are rarely reported on by the talking heads, and the practitioners of college athletics (athletic directors) must do more to educate the public on what the current investment in our student-athletes includes.

The Alston Decision

The Alston decision and Supreme Court Justice Brett Kavanaugh’s subsequent reference to student-athletes as “workers who should be paid a market rate for their work” (McLaughlin 2021) are threats to the collegiate model. The Alston ruling was a unanimous decision by the Supreme Court against the NCAA. This June 2021 ruling said that the NCAA could not enforce certain rules limiting the educational benefits provided to student-athletes such as computers, graduate scholarships, paid internships, study abroad programs, and cash awards for academic achievement. Under previous NCAA legislation student-athletes could not be paid. The grant and aid money offered and received was capped at the full cost of attendance, and the NCAA defended its rules as necessary to preserve the collegiate model. Once the Alston ruling went into effect, the NCAA no longer could restrict educational benefits for its student-athletes. Further, the ruling only considered football and men’s basketball, the high-profile revenue sports. However, due to the inability of NCAA member institutions to meet federal Title IX requirements by providing these benefits only to football and men’s basketball, the NCAA ruled that it would open Alston benefits to all student-athletes in sponsored sports (Supreme Court of the United States 2021).

The ruling is permissive, allowing each institution and athletic conference to fund these benefits based on financial resources available. As Alston benefits have begun to roll out in athletic departments across the county, the primary focus at the Autonomy 5 (A5) level is to provide cash awards of $5,980 which may be awarded for academic achievement. This amount was derived from a suggested equivalent value of athletic awards a student-athlete might receive for participation in preseason tournaments, post-season playoffs, and championships. With student-athletes already receiving full scholarships, cost of attendance benefits, and many non-cash awards such as equipment, graduate scholarships, and internships, this additional monetary educational benefit was debated among NCAA member institutions as to whether it was necessary. Ultimately, athletic programs realized that in order to stay relevant in the recruiting space, Alston cash benefits needed to be provided. As such, in just its second year of existence, nearly all sixty-five Autonomy 5 institutions are providing the full cash award of $5,980. Recruiting pressures have dictated that these funds be provided across all sports sponsored by member institutions. Awarding these funds to only the highest achievers (student-athletes with a 3.5 or above),could create a less equitable distribution of funds among underrepresented groups.

The estimated cost per athletic department is in the seven-figure range per year depending on the number of sports programs each institution sponsors and their respective distribution model (Kurdziel 2022). In most cases, cash awards for academic achievement are provided when student-athletes meet NCAA minimum eligibility requirements. At Oregon State University (OSU), 50 percent of the Alston cash award is distributed based on meeting NCAA minimum eligibility requirements while the remaining 50 percent is based on participation in student development programming; financial literacy, résumé writing, and Diversity, Equity, Inclusion and Belonging (DEIB) education are a few examples.

The allocation model at OSU mirrors the scholarship distribution model based on headcount sports. Student-athletes receive full scholarships, and equivalency sports student-athletes receive mostly partial scholarships; they receive proportional awards—for example, if a student-athlete is on a 25 percent scholarship, they receive 25 percent of Alston benefits. This “mirroring” assists in staying compliant with Title IX requirements and is utilized in other Pac12 programs. An additional consideration among Pac12 conference intuitions is whether to provide Alston benefits to walk-ons (non-scholarship student-athletes). In most circumstances it is difficult to balance Title IX requirements due to the imbalance football creates because the sport typically carries far more walk-ons than any women’s sports.

In a world dominated by a pay-for-play narrative, it is important to clarify that the Alston decision did not decide whether student-athletes could be paid for participating in college athletics, rather, its ruling was narrow and tethered specifically to not allowing the NCAA to cap educational benefits. It is expected that the OSU Alston benefits program will cost $2 million annually. These benefits are new unbudgeted line-item expenses for OSU and will contribute to the mounting costs required to operate our athletics programs. Alston benefits are one of many recent examples of new mounting unbudgeted expenses that continue to add to growing athletic budgets.

Name, Image and Likeness

Absent NCAA rule enforcement and guardrails for Name, Image, and Likeness (NIL) is another threat to the collegiate model. NIL can be traced back to a court case between former UCLA basketball player Ed O’Bannon vs the NCAA in 2015. In this case O’Bannon and others sued the NCAA saying they violated antitrust laws for not allowing student-athletes to receive a share of the revenue for using their likeness in video games. Fast-forward to 2019 when California Governor Gavin Newsom signed the Fair Pay to Play Act in California (Keller 2023). This, coupled with the NCAA’s shattering loss vs. Alston in the spring of 2021, created enormous pressure for the NCAA to create its own NIL legislation (Supreme Court of the United States, 2021). The Division I, II, and III NCAA governing boards passed NIL rules on June 30, 2021. Immediately following the Alston ruling, several states, including Oregon, passed Name Image and Likeness (NIL) legislation which allowed student-athletes to engage in NIL activities for compensation from third parties while participating in intercollegiate athletics. For states that now had new NIL rules athletic departments launched frantically into creating policies and procedures. The NIL airplane was still being built as it lifted off the runway.

In most states these new permissible NIL activities include social media posts, influencer activities, private lessons, camps, clinics, sale of autographs, goods and services, starting a business, advertisement appearances and personal appearances, as well as other third-party endorsements. Although the passage of this new legislation was a seismic shift in the collegiate model, most university leadership worked to embrace these changes. After all, the entire general student body has always been able to participate in NIL types of activities. The thought was if an undergraduate majoring in music could provide piano lessons for a fee, why couldn’t a golf student-athlete provide golf lessons for a fee too? Or if a student, majoring in entrepreneurship wanted to start an apparel business, why couldn’t a football student-athlete start his own lawn care business utilizing his name, image, and likeness? It was understood that the NCAA would strongly enforce current rules and develop guardrails, particularly in the recruiting and transfer space, to combat potential bad actors from engaging in illegal NIL activities. A NIL committee was formed in part for this purpose. However, the NCAA rolled out weak interim NIL guardrails concurrent with various state laws, stating that the legal and legislative landscape prevented them from a more permanent solution. Further, the NCAA said that they were waiting for Congress to create a federal solution.

Each state, governed by its own NIL laws, can be very different from the others. The states with fewer restrictions have the upper hand in recruiting and retaining student-athletes. For instance, in Tennessee, Ohio, and Louisiana, athletic department employees are permitted to arrange NIL deals for their student-athletes, which provides a distinct competitive advantage over most states where this is not permissible. The states that do not have NIL laws in place have even fewer restrictions. Currently, twenty-nine states have NIL laws with twelve, including Washington, DC, having proposed legislation (Keller 2023). Compounding these problems is the overall lack of enforcement by the NCAA.

Several senators have begun championing proposed federal bills for the purpose of setting national NIL standards, but none has yet to become ratified as law. Some of these draft bills are more in line with the collegiate model while others move closer to the pay-for-play model. In the meantime, cheating is becoming commonplace. One evolving example of corrupt NIL activity is the abuse found within the formation of collectives. These LLCs or 501c3 entities are created by boosters to pool funds for distribution to student-athletes who participate in NIL activities, which is permissible. However, the growing concern is that these pooled funds are being used to illegally induce recruits not yet enrolled at a university or to poach transfer student-athletes enrolled at other universities (Auerbach 2022). Boosters who make up these collectives are creating a highest-bidder marketplace where NIL activities are not commensurate with the large sums of money these prospects and transfer student-athletes are being offered. In some cases, these NIL deals are in the millions of dollars and are absent of any true fair market value. In the case of impermissible contact of recruits or transfer student-athletes, it is difficult to trace because many college coaches and staff members are encouraging third-party representatives or family members to contact their institutions or recruits to gauge interest rather than college coaches making contact directly. In many cases, deals are being negotiated ahead of these students being enrolled at a university, which is expressly prohibited by current NCAA rules. The lack of enforcement by the NCAA early on has led to a growing climate of corruption. The under-the-table inducement activities that have occurred for years are now blatantly out in the open, have grown exponentially, and will not easily be curbed without strong, enforceable federal standards.

The impact NIL will have on these revenue streams is yet to be fully understood, but many schools are beginning to see stakeholders make choices that are directly affecting athletic department revenues. For example, a donor who was considering a financial contribution to a particular philanthropic initiative within the athletic department now may consider choosing between that or contributing to a NIL collective to benefit the student-athletes or splitting the gift between the two. Similarly, a business that has in past years purchased an athletic department sponsorship package may now choose to reduce its investment to support a student-athletes NIL activity directly and thus reducing revenues to the athletic department.

NCAA Transformation Committee

The 2022 NCAA national convention was deemed the Constitutional Convention focused on the decentralization of the NCAA governance structure to empower each of its three subdivisions to create their own structure independent of each other. The premise was that an Autonomy 5 (A5) institution generating over $200 million in annual revenues has little in common with a Division III institution that generates $200,000 in annual revenue. Or for that matter, what does a Division I Football Championship Subdivision (FCS) institution that generates $500,000 in annual revenues have in common with the same A5 institution? NCAA president Mark Emmert said the new constitution was “more of a ‘declaration of independence’ that will allow each of the association’s three divisions to govern itself” (CNBC 2022). Not only was a new path created for independent governance structures at the Division I, II, and III levels but legislative concepts that created independence within Division I itself continue to be considered. Ultimately it was decided that keeping Division I under one umbrella was best but only if minimum standards directly in support of the student-athlete are met by member institutions. These new standards could include enhanced mental health services, expanded medical insurance coverage, career and life skills, and financial counseling while enrolled, as well as extending medical coverage and scholarship support well beyond a student-athlete’s eligibility. These concepts will likely be ratified into legislation in the near future.

The NCAA constitution has shrunk from 43 to 18.5 pages and this decentralized model is believed to reduce intercollegiate athletics’ legal battles (CNBC 2022). With antitrust lawsuit pressures mounting the NCAA commissioned the Transformation Committee to develop proposals for Division I through the lens of mitigating antitrust legal risk in intercollegiate athletics. NCAA rules that addressed things closest to the field of competition (playing rules) were deemed the least risky, and those rules furthest from the field of competition (limits on coaching personnel and scholarships) were the riskiest when considering potential lawsuits. The committee was tasked with improving the student-athlete experience specifically by (1) elevating the direct support for student-athletes’ mental, physical, and academic well-being; (2) enhancing the Division I championship experience; and (3) building a faster, fairer, and more equitable Division I, including improved efficiencies in the infraction process, governance, and decision-making (NCAA 2023). With several antitrust attorneys in the room guiding the process these proposals were also focused on removing long-standing NCAA bylaws that put limits on things like scholarships, roster sizes, and the number of coaches you could employ for each sport sponsored by your institution. These limits had been in place for decades largely for the sake of cost containment and preserving competitive equity.

With the primary focus on mitigating risk and being “transformative,” many concepts born out of the committee’s work lacked common sense and fiscal responsibility, making them impractical, therefore challenging the collegiate model. These concepts included unlimited scholarships and an unlimited number of full-time coaching positions for each sponsored sport. A bit of common sense prevailed, however, and these concepts were either met with compromise or shelved for further review. Providing unlimited scholarships morphed into potentially providing equivalency sports with higher limits that mirror roster sizes. For example, baseball is capped at 11.7 full equivalency scholarships, but would be increased to 30–35 based on average roster size. Instead of passing a proposal that allowed unlimited full-time coaching positions, a proposal was adopted that allows sports utilizing volunteer assistants (or graduate assistants in football) to convert them to full-time coaching positions. Limiting access to championships was considered another liability concern. As such, a concept to increase access for participation in post-season championships to 25 percent of the total programs sponsoring the NCAA championship sports which have at least two hundred institutions participating in the regular season in that sport. Perhaps the most sweeping proposal is to create minimum standards at the A5 level. These standards are primarily focused on providing a baseline of additional student-athlete benefits specific to overall health and wellness. For example, to participate at the A5 level and receive the requisite distributions you must provide a baseline of mental health resources. Extending health benefits beyond eligibility is another concept being considered. The committee’s recommendations will undoubtedly put further financial pressure on athletic department budgets.

The Transfer Portal Phenomenon

A new liberalized approach to handling transfer student-athletes via the transfer portal coupled with illegal NIL inducements is another factor negatively affecting the collegiate model. In the fall of 2018, the NCAA launched the transfer portal database to help manage and facilitate student-athletes seeking to transfer from one institution to another. The portal has brought transparency to the process and real-time national exposure to anyone who desires to transfer. This, unfortunately, has created a perceived enhanced value for the transferring student-athlete because added exposure is provided on this instant national platform. In 2021 transfer rules were greatly liberalized in the name of student-athlete rights. Student-athletes in Division I football, men’s and women’s basketball, ice hockey, and baseball are now able to transfer at any time of year, including in the middle of a season of competition, without having to establish a year in residency, and they could immediately play the following season. In prior years not only did transfers have to sit out a year but in the Pac12 for instance, they also lost a year of eligibility if they transferred to another school within the conference. Although viewed by some as a draconian measure, this penalty helped dissuade Pac12 member institutions from cannibalizing each other by recruiting from each other’s active rosters.

The advent of the transfer portal’s liberalized transfer rules and NIL inducement activities together have created an unhealthy sort of free agent market effect in college athletics. There are without question many sound reasons for student-athletes (or students generally) to transfer, which benefit them long-term. However, these current conditions have created a student-athlete mentality that sticking with it, competing where you are, and overcoming adversity are no longer the focus. We have fostered an easy way out, a “grass is greener” mind-set in the student-athletes, and in doing so we have legislated some of the life lessons experienced within the collegiate model out of college athletics. This notion is supported by the staggering increase in transfer activity. During 2021-22, 2,067 Football Bowl Subdivision (FBS) football student-athletes were in the transfer portal compared to 1,042 in 2019-20. In Men’s Division I basketball, 1,501 were in the portal in May 2022 compared with 855 in May 2020. Even more concerning is the fact that 24 percent of both football and men’s basketball student-athletes are not finding new homes with a scholarship (Transfer Portal Data: Division I Student-Athlete Transfer Trends 2022). Due to this increased transfer activity, NCAA Division I members wanted to slow this migration trend down. One concept is to create transfer windows for select sports to narrow the timeline for when a student-athlete may transfer. Another is waiting until the end of a given sport’s competitive season to open the transfer window and closing it within forty-five days, which, may create a more informed and less emotional decision-making process for the student-athletes because they have completed their season. Further, it would afford coaches a better opportunity to manage their team rosters for the following season by potentially limiting transfer activity.

A Tipping Point for College Athletics

The introduction of a new bill in California, the College Athlete Protection Act, is yet another example of the forces eroding the future of the collegiate model (Murphy 2023). This bill calls for direct payments to student-athletes via revenue share for simply participating in their sport. The closer we move toward a pay-for-play model, and perhaps even the reclassification of the student-athletes as employees, the further we move away from our mission and core values, which are underpinned by delivering the holistic development of the student-athlete through broad-based sports sponsorship within the framework and ethos of higher education. This mission and framework, although far from perfect, continues to deliver on the promise to help develop tomorrow’s productive citizens and leaders through the experience each of our student- athletes have across all our sponsored sports. There are many forces at play, from Supreme Court Justice Kavanaugh referring to “student-athletes as workers who should be paid a market rate” to the out-of-control cheating occurring in the A5 name, image, and likeness space, to the free agent mind-set the transfer portal has helped create. The collegiate model is at a tipping point. If more dollars are directed to fewer student-athletes because a pay-for-play employment model is adopted, the more likely it is that broad-based programs disappear, and scholarship and participation opportunities will be lost (currently sixteen sponsored sports are required at the FBS level). They would be replaced with poorly funded semiprofessional sports programs in the major revenue sports, and the collegiate model would no longer serve as an attractive alternative to professional sports currently supported by the general public.

There are several potential solutions to the issues intercollegiate athletics are facing today. Finding a solution starts with changing the narrative and sharing very publicly the significant benefits, platform, and opportunities we provide to our student-athletes and the immeasurable success stories we witness daily.

In closing, it is important to acknowledge that nearly every A5 athletic department is considered an auxiliary enterprise on the campuses where they reside, and most of the funding for these athletic departments comes from external sources. This necessitates an entrepreneurial self-reliance, risk tolerance, and workflow pace that is not typical of other units on campus. In addition, the NCAA legislative process, including the ability to adopt emergency legislation dictates that decisions be made much faster in athletics than the general university-shared governance process is used to. All this demands that the athletic department operates with a high degree of integrity, develops strong lines of communication with campus partners, and facilitates collaboration on key issues. Effective athletic directors understand that to be excellent in their role they must be willing to learn and take interest in the larger university priorities, support other units as well as the campus community at large. This coupled with prioritizing communication and collaboration with key campus partners, building trust by taking appropriate actions, and being accountable for those actions will develop confidence in the athletic department, creating a more effective work environment at a time when collegiate athletics is at a tipping point.

References

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McLaughlin, Kelly. 2021. “Supreme Court Justice Brett Kavanaugh Ripped the NCAA, Saying the Organization Is ‘Not Above the Law.’” Business Insider, June 21, 2021. https://www.businessinsider.com/justice-kavanaugh-says-ncaa-is-not-above-law-alston-ruling-2021-6.

Murphy, D. 2023. “New California Bill Pushes for College Sports Revenue Sharing.” ESPN, January 19, 2023. Retrieved February 14, 2023. https://www.espn.com/college-sports/story/_/id/35483573/new-california-bill-pushes-college-sports-revenue-sharing.

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Solomon, Jon. 2015. “Cost of Attendance Results: The Chase to Pay College Players.” CBSSports.com, August 21, 2015. https://www.cbssports.com/college-football/news/cost-of-attendance-results-the-chase-to-pay-college-players/.

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The Collegiate Model at Risk Copyright © 2024 by Mr. S. Scott Barnes is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License, except where otherwise noted.