Monumental shift: Power conferences, not NCAA, to control policing athlete compensation
By: Ross Dellenger - Yahoo! SportsWASHINGTON — A committee of power conference administrators took significant steps this week toward the creation of a new entity that will govern the evolving professionalized aspects of college sports, a milestone moment in the industry’s history.
During a two-day summit in the nation’s capital, a “transition team,” charged with operationalizing concepts of the House settlement, inched closer to establishing a new structure to oversee, manage and enforce the settlement-related athlete compensation system for all of NCAA Division I. The newly created LLC, overseen by a CEO or executive director, is centered on a new enforcement arm to police violators of the industry’s new salary cap and is expected to feature revenue-sharing policies and a corresponding penalty structure for violators.
Multiple sources with knowledge of the meetings and issues spoke to Yahoo Sports under condition of anonymity.
This new entity dovetails with a proposal introduced last month from the power conferences that grants them more autonomy and creates a new division or subdivision within the NCAA. It stands as another shift in the transformation of major college athletics as the NCAA deregulates itself and cedes more authority to the power leagues after court rulings toppled its long-standing amateurism rules.
Who are the new enforcers?
This new, nameless entity — running adjacent and intertwined with the NCAA — serves as a sea change in how college athletics is policed, replacing a much-maligned NCAA-controlled process of lengthy investigations, controversial enforcement decisions and, what some believe to be, unnecessary committee hearings. The NCAA’s enforcement unit, for now, will continue to police matters around eligibility and academics.Builders of the new framework, the transition team is made up of two athletic directors from each of the Big Ten, SEC, ACC and Big 12 conferences. The four power leagues, named defendants in the settlement, are leading the implementation of the agreement’s most significant piece: that schools are permitted annually to share millions in revenue with athletes under a capped system scheduled to begin July 1.
Members of the committee — unannounced and kept secret now for months — are from some of college football’s biggest brands, including Ohio State’s Ross Bjork, Clemson’s Graham Neff and Texas A&M’s Trev Alberts. Others represented include Arizona, Cincinnati, Washington, Georgia Tech and Kentucky. Commissioners, compliance officers and general counsels of the four power conferences are leading the group.
The transition team is expected to continue its work over the coming weeks. A final approval hearing for the settlement is scheduled for April 7. However, even if the settlement is rejected, college leaders are prepared to move forward with compensating athletes under this new model.
The transition team gathered in Washington on Sunday and Monday to further explore details around this newly created framework, which entails a three-prong approach of enforcement: (1) a cap management system; (2) an NIL clearinghouse; and (3) an investigative and infractions unit — much of which Yahoo Sports has previously reported.
At least two NCAA representatives were part of the meeting this week along with officials from LBi and Deloitte. LBi, a software company that maintains the NBA’s player contract management system, is serving as the cap management company.
Deloitte, the world’s largest professional services network, will operate the new NIL clearinghouse, which is charged with determining fair market value of income earned by athletes outside of the school (ie: name, image and likeness deals). Deals affiliated with a booster, booster group or any entity deemed to be associated with the school are the only ones subject to the clearinghouse’s more rigorous fair market value standard.
What will they police?
Perhaps most notable among the transition team’s decisions, the group began to finalize new policies, penalties related to the revenue-sharing system and the new entity’s leadership team. Multiple penalties are under discussion for those found to be circumventing or exceeding the new cap or any other rule violation (ie: tampering), including school fines, revenue-share pool reductions and coach/administrator suspensions.The LLC is expected to employ a head investigator as well as a CEO or director who, perhaps with a small team of people, will be charged with being the ultimate decision-maker(s) on infractions cases using a more timely process than the one currently existing.
Athletes whose outside NIL deals are found not to be at fair market value will be ruled ineligible if they execute those deals. As part of the settlement terms, there is a separate, court-overseen arbitration system that serves as an appeals process for athletes who believe their NIL deals were unfairly struck down.
All of this is tied to the NCAA and power leagues’ landmark decision to settle three antitrust cases (House, Hubbard and Carter), all of them seeking, in some way, compensation for athletes. The settlement features two primary parts: (1) $2.77 billion in back-damage pay that will be distributed over the next decade to mostly former athletes; and (2) the revenue-sharing concept going forward that permits schools to spend millions on their athletes annually under the escalating, capped system.
Schools can opt out of the revenue-sharing provision, though all power league schools are expected to opt in. The opt-out deadline for next year is March 1.
In many ways, the settlement’s goal is to shift the payments to athletes from unwieldy outside entities — such as boosters — to the schools themselves, permitting universities to all share the same amount of pool money with athletes on an annual basis. The pool’s cap — 22% of an average of certain power conference school revenues — will apply to all schools and will fluctuate based on built-in escalators and school revenue increases.
The NCAA’s projection of the Year 1 cap is $20.5 million. However, some schools and their collectives are already gearing up to surpass the cap amount by generating outside NIL deals that may or may not meet fair market standards — a divisive issue that, many believe, poses legal problems.
Not everyone is in agreement
Though it is expected to distribute at least $20 billion to college athletes over its 10-year existence, the settlement has been the target of wide-spread criticism from an array of groups: the Department of Justice (arguing the rev-share cap is anticompetitive); the Department of Education (arguing the revenue distribution violates Title IX policy); hundreds of athletes who will see their roster positions eliminated because of new roster limits; and even the named plaintiff in the case, Grant House, who told Yahoo Sports in December that he did not approve of some of the settlement’s concepts.However, NCAA and plaintiff attorneys are confident that the California judge, Claudia Wilken, will approve the agreement. More than 50,000 athletes have filed claims to receive some of the back-damages as part of the settlement, said lead plaintiff attorney Jeffrey Kessler. Less than 500 athletes have chosen to opt-out of the settlement — a small fraction that, Kessler says, makes it “clear the overwhelming majority of class members support the settlement.”
Another group at odds with at least one portion of the settlement is The Collective Association, a group of more than 40 school-affiliated booster collective directors who have been publicly critical of the settlement’s NIL clearinghouse, questioning the legality of the fair market value standard. Members of the association spent a couple of days in Washington this week holding their annual meetings and visiting with federal lawmakers.
At the same time, college leaders lobbied on the Hill in a continued effort to encourage lawmakers to pass legislation that codifies the House settlement and protects the NCAA and power leagues from enforcing the very same policies that the transition team is exploring.
Some believe federal legislation is a necessary component to the settlement providing stability within college athletics and preventing future legal challenges that may derail those efforts. Others argue that the NCAA and leagues should not be granted even limited antitrust protection and believe that the only solution to the instability is collective bargaining with athletes.
Months before the settlement’s final hearing, issues are already arising within the sport over revenue-share contracts.
In a test case with wide ramifications for the future, a Wisconsin defensive back transferred from the school to Miami despite signing a revenue-share deal with UW that is contingent on the settlement’s approval. The university and Big Ten have suggested in public statements that they plan to pursue legal avenues.
Dozens of schools, in fact, have distributed settlement-contingent revenue-share contracts to athletes this fall and winter. Others have relied on their booster collectives to continue signing athletes to contracts, inserting in those deals a clause that assigns them to the university on July 1.
