A riveting story from On3's Andy Staples that should have the eye of both you the consumer as well as administrations such as Clemson.
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Tennessee is preparing for a world in which schools pay athletes directly by charging fans a “talent fee” to pass along to the players.
Though the House v. NCAA settlement that would usher in the era of revenue sharing has yet to be approved by a federal judge, Tennessee athletic director Danny White told On3 that his school will implement a plan to add a 10 percent surcharge to all season and single-game ticket sales. If the settlement is approved, schools would be allowed to pay about $22 million a year to athletes beginning in the 2025-26 school year.
White estimates that with the new roster caps included in the settlement — which would raise the number of available athletic scholarships — the actual cost is closer to $30 million a year. Tennessee hopes to recoup about $10 million of that through the surcharge, which will come in addition to a football ticket price increase averaging 4.5 percent across all seats. Knowing any hike in ticket prices would produce consternation, White and his team decided the best way to handle this one was to explain which part of the new money will be earmarked for the players.
“It’s a talent fee, and it’s going directly to the talent,” White said. “It’s going to our student athletes as part of this new world order in college sports. So I know our fans will embrace it.”
White said the best comparison is restaurants charging large groups an automatic fixed gratuity atop the price of the meal. Tennessee might be the first school to add such a fee, but expect plenty of copycats. As college sports’ economic model evolves, schools will need to find a way to fund player compensation without forcing donors to choose between players and the capital projects and administrative costs they’ve traditionally helped fund.
For decades, the schools colluded through the NCAA rulebook to limit the players’ earning power. In the past four years, state legislatures and the federal court system have teamed to end that collusion. But that change has come fast, and athletic departments are struggling to adjust to a potentially massive new line item that could require a significant chunk of their annual budgets. Tennessee’s athletic department made $202.1 million in 2023. So $22 million represents 10.8 percent of the budget.
West Virginia, for example, reported $105.2 million in athletic department revenue for the same period. So $22 million would represent 20.9 percent of the budget.
It’s still an open question as to whether the House settlement will be approved. Earlier this month, Judge Claudia Wilkes declined to grant preliminary approval because the settlement calls for the NCAA to restrict and police how much boosters can pay athletes in excess of the revenue-sharing cap. Plaintiffs and the NCAA and conferences have gone back to the table to clarify the language around the booster rules, but if they don’t word it in a way that doesn’t invite more antitrust lawsuits, Wilken might decline to approve and the schools may opt to go to trial in a case that they were already willing to settle for $2.4 billion.
White said Tennessee couldn’t wait on the settlement approval to make plans to raise more money for athletes. Fans will want to renew their tickets for next season, and the Volunteers have a 15,000-person waiting list for football season tickets. “You’re trying to solve a problem when you don’t know a lot of the details. We’re doing different scenarios all the time, but we can’t just put a 10 percent fee in the laps of our fans with a month before the season starts,” White said. “We have to be prepared. There are financial realities. In any scenario, it’s going to become more expensive to compete at the level we want to compete at.”
Even if the settlement isn’t approved, some administrators want to move to a revenue-sharing model because the current model — collectives taking donations to distribute to players — is inefficient and is burning out donors who are being asked to give money to the athletic department and to the collective. The question is how long the current model can last. The high-dollar donors who are funding both sides of the equation may ultimately choose one side or the other or get fed up with the process entirely. The most logical solution is to bring player compensation under the umbrella of the athletic department so those costs are mixed in with capital projects and other costs rather than pitted against one another in a competition for donor dollars that aren’t unlimited.
So White and Tennessee plan to prepare for that possibility starting now. It will be interesting to see how many other schools follow suit. White is confident Vols fans will keep buying tickets, and he suspects they might want to buy them even more knowing some of the money is going to the players.
“They do a phenomenal job of filling our venues, buying hats and T-shirts and in all the different ways that they invest in our program,” White said. “This is another way that they can help us be more competitive.”
