Navigating the New Landscape: College Athletics Revenue Sharing Models

The landscape of college athletics is undergoing a monumental transformation with the implementation of new revenue-sharing rules, primarily driven by the House v. NCAA settlement. This settlement introduces a direct payment model from universities to student-athletes, a significant shift from the traditional amateurism model. Just as Bishop Business has adeptly managed the evolving landscape of business since 1954, always prioritizing customer success, college sports now face the task of navigating these seemingly overwhelming changes.

Key Components of the New Revenue-Sharing Rules

The core of the new rules, born from the House v. NCAA settlement, introduces a direct payment model from universities to student-athletes. Several key components define this new era:

Direct Payments from Schools: For the first time, Division I schools are permitted to share athletic department revenues directly with their varsity athletes.

Revenue Sharing Cap: There’s an initial annual cap on how much a school can pay its athletes. For the 2025-26 academic year, this cap is set at approximately $20.5 million per school. The $20.5 million for the 2025-26 academic year is no arbitrary figure. It is 22 percent of the average revenue of a Power 4 athletic department, including ticket sales and media rights distributions. It will be recalculated every three years (with the same formula), and in the years in between calculations, it will increase by four percent from the previous year to address inflation.

Applies to All Varsity Athletes (with caveats): While the rules apply to all varsity athletes, the reality is that most of the revenue-sharing pool is expected to go to athletes in revenue-generating sports. Many schools have said publicly that they plan to spend about 75 percent of that amount on football players, with most of the remaining amount spent on men’s and women’s basketball players. Some schools, such as Oklahoma, will distribute money to baseball players, softball players and gymnasts. Each athletic department must choose where to direct its money; anything spent on a dominant Olympic sport - like the dynastic Oklahoma softball program - takes away from the amount available to all others. The Oklahoma Sooners won the DI Softball Championship from 2021 through 2024.

Optional Participation: Schools have the option to “opt-in” to the settlement. Institutions that opt in to revenue sharing will have up to $20.5 million to spread among their athletes. The ACC, Big Ten, Big 12, Pac-12 and SEC were named defendants in the House case, so their schools automatically opted into the settlement and its stipulations.

Elimination of Scholarship Limits, Introduction of Roster Limits: The settlement removes traditional scholarship limits in favor of roster limits for each sport. This means schools can offer full, partial, or no scholarships to players up to the new roster caps. The NCAA recognizes that revenue sharing will primarily benefit athletes in only a few sports. To address this issue, scholarship restrictions on all NCAA I sports will be eliminated and roster limits will apply instead.

Back Pay: The settlement also includes a substantial $2.8 billion in back payments to current and former Division I athletes who competed between 2016 and 2024, compensating them for past NIL opportunities. But, Baker said, it could have been far worse had the NCAA taken the case to trial and lost. Everyone in that room understood that the NCAA and its member schools were on the hook for nearly $2.8 billion dollars in back-pay damages, paid out over the next decade to athletes who were unable to monetize their NIL from 2016 to 2021. (NIL payments from third parties to athletes became legal on July 1, 2021.) Under the proposed $ 2.8 billion House settlement, the NCAA will pay $ 1.1 billion directly from its reserve funds and the remaining $ 1.665 billion will be paid by schools via reduced NCAA income distributions over the next ten years. Under the proposal, Power conference schools will be responsible for $ 675 million or about 40% and all other NCAA I schools will be responsible for $ 990 million or around 60%.

Tax Implications: Payments to athletes are generally treated as self-employment income (royalties), reported via Form 1099-MISC.

Title IX Compliance: Schools must comply with Title IX, meaning revenue sharing must be gender equitable. The back-pay provision is also heavily tilted toward football, which has already prompted an appeal on Title IX grounds, with plaintiffs alleging women are being shorted on damages.

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Potential Benefits and Drawbacks

The implementation of revenue-sharing models brings both potential benefits and challenges to college athletics.

Benefits

Fairer Compensation for Athletes: This is the most significant benefit. After years of court battles, a federal judge ushered in a new era for college athletics earlier this month when she approved a settlement in the House v. NCAA antitrust lawsuit, effectively ending the century-old model of student athletes as amateurs. Now students will be able to earn money for their athletic performance at colleges that opt in to the practice known as revenue-sharing, in which institutions share with players the money made off their teams.

Increased Financial Stability for Athletes: Direct payments provide a more stable and predictable income stream for athletes, supplementing or potentially exceeding third-party NIL deals.

Drawbacks

Increased Financial Strain on Athletic Departments: The $20.5 million cap (and rising) represents a significant new expense for schools. Despite the millions of dollars athletics departments can generate for an institution, only 25 Division I schools netted positive revenue in 2019, according to an NCAA database. “Every school is going to have to look at its financial statements and make decisions on endowment spending or even cutting programs to sustain athletic revenue-sharing models,” says Karen Weaver, academic director of the collegiate athletics certificate program at the University of Pennsylvania. Institutions will have to drive funding into athletics by adopting an “entrepreneurial mindset” with auxiliary revenue, says Bill Guerrero, senior associate athletic director at the University of Connecticut.

Financial Implications and Potential Adjustments

The new revenue-sharing rules represent a seismic shift in college athletics, aiming to better compensate athletes for their contributions.

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Financial Strain and Budget Reallocation

The $20.5 million cap represents a significant new expense for schools. “Those programs will lose about 20% of their funds to pay student-athletes,” Weaver says. As departments assume greater financial control, stakeholders may demand higher levels of transparency and performance in return for their contributions.

Cost-Cutting Measures

In addition to increasing revenues, colleges are looking for ways to cut costs. Athletic directors are currently looking at a new reality where the costs of sponsoring a (competitive) non-revenue sport are likely to increase significantly, while the historical offsetting subsidy from sports such as football is being substantially decreased due to revenue sharing. And sadly, we’re likely to see cuts to non-revenue sports at many schools.

Scholarship Adjustments

To address this issue, scholarship restrictions on all NCAA I sports will be eliminated and roster limits will apply instead. This could create a substantial increase in athletic scholarships especially in non-revenue sports. Under our calculations, NCAA I schools could award up to 86,212 additional “full-ride” scholarships. But the actual increase is going to be substantially less than $ 3 billion. Scholarships awards are optional - a school can fully fund a sport or make awards less than the maximum allowed. Many schools already operate with roster sizes less than the NCAA limit, and they will have a new financial incentive to operate with smaller teams.

Revenue Distribution Strategies

The distribution of revenue-sharing funds is not a one-size-fits-all approach. “As you can see by the numbers across various athletic departments, distributing revenue is not a one size fits all approach,” says Michael Haddix, founder of Scout, a fintech platform providing student athlete financial execution and athletic department revenue share services. “Every institution is going to have to consider a myriad of factors specific to their circumstances before deciding what works best for them to achieve their goals.

Sport-Specific Allocation

Some institutions may choose to divvy funds by sport based on raw totals based on what amount of money it’s believed or known to take to stay competitive. Jason Montgomery, a partner at the law firm Husch Blackwell, said that one commonly discussed formula would see 75 percent of revenue disbursed to an institution’s football team, followed by 15 percent to men’s basketball, 5 percent to women’s basketball, and the remainder spread across all other sports. At institutions that don’t have a football team, the bulk of the revenue will likely be directed to men’s basketball.

Individual Athlete Compensation

While football receives the most revenue sharing per team, Men’s basketball has the highest average per player due to much smaller roster sizes (15 versus 105). These are averages per athlete. In actuality, a few players per team will receive substantially higher than the average, while many will receive much less.

Texas Tech's Approach

In a rare example of an athletic department publicly sharing its revenue sharing plans, Texas Tech AD Kirby Hocutt and Deputy AD Jonathan Botros shared the school’s plans with the Lubbock Avalanche-Journal in December. The distribution percentages of Texas Tech’s projected annual revenue share by sport are similar to the share of annual revenue attributed to each program. Hocutt said the school won’t increase its number of athletic scholarships because that would limit the amount of direct revenue sharing payments. Texas Tech is also eliminating its education-related Alston awards in order to instead use those funds for revenue sharing, according to the Avalanche-Journal.

Missouri's Approach

Missouri has attributed 72.2% of its attributable revenue to its football program, which has received 65.4% of the school’s payments to Every True Tiger.

The Role of NIL Collectives

It’s also worth considering the post-House collective landscape at a given school. Most schools would prefer that donor funds currently flowing to collectives instead go directly to the schools, where they can be used for areas in most need and even help pay for a school’s revenue sharing commitment: i.e., schools should determine how donor funds are spent. Athletic department budgets would be healthier if schools did not have to compete with collectives for contributions from the same boosters. Revenue sharing is in addition to any third-party NIL compensation an athlete may receive.

The Wildcard of NIL Collectives

The wildcard here are the NIL Collectives. Some collectives have transitioned to act as a true marketing agency or folded entirely.

Real NIL vs. Inflated Market

Learfield executive vice president Solly Fulp, whose company partners with and represents the multimedia rights for more than 100 schools, said he believes the next arms race in college sports will be around what he calls “real NIL.”“Real NIL is the exchange of goods and services between a student-athlete and a brand partner,” Fulp said. “I think that that was what it was intended to be all along.” A high-profile example of real star power leading to a valuable endorsement deal is Caitlin Clark’s deal with State Farm while playing at Iowa. But other examples are happening daily in college towns, from a gymnast who loves chocolate milk partnering with the state’s dairy association for social media posts to an athlete who lost a loved one who partners with an organ donation drive at a local hospital. For somebody to just slide you a few dollars because they want you to come to or stay at a certain school and call it NIL, that’s make-believe, that’s not a real thing,” Bobinski said. “That is the recruiting insanity that we’ve allowed to drive too many behaviors.”

NIL Clearinghouse

An NIL clearinghouse (“NIL Go”) has also been created to assess the validity of all third-party NIL deals exceeding $ 600. The objective is to ensure that compensation is being made for legitimate NIL and not prohibited payments such as pay to play. An NIL clearinghouse, run by Deloitte and called NIL Go, must approve all deals worth more than $600.

Impact on Recruiting and Competition

The emergence of revenue sharing & NIL collectives is going to substantially widen the already large financial gap between big revenue schools and everyone else. The NCAA is in a very difficult situation, while it truly strives to have member schools compete fairly, settlement of the ongoing anti-trust cases may require that competitive equity be sacrificed. Non-Power conference schools have much smaller revenues and their athlete revenue sharing pool will likely be a fraction of what big schools can - and will - pay. Recruiting by non-power conference teams in revenue generating sports is likely going to be more difficult.

Altered Competitive Balance

Since inception of the NCAA in 1906, all Division I member schools have recruited athletes subject to the same financial parameters: all schools were subject to identical scholarship limits per sport, and no member school could compensate athletes directly. Revenue sharing will uproot this this long existing playing field, and drastically alter the competitive balance between big budget and small budget NCAA I schools.

New Arms Race

It’s the “new arms race” required for institutions to remain competitive in retaining top talent, wrote Jeramiah Dickey, athletic director of Boise State, which joins the PAC-12 next year.

Oversight and Enforcement

A new independent enforcement agency, the College Sports Commission, has been established to oversee compliance to the rules governing the annual revenue sharing cap, roster limits, and third-party NIL payments. The new system is run by the College Sports Commission (CSC), an independent non-NCAA entity led by Bryan Seeley, who previously served as Executive Vice President, Legal & Operations at Major League Baseball, where he oversaw investigations. He’s in the process of building out his executive team and the new enforcement arm of the CSC.

The Need for Strict Enforcement

Bobinski said he believes that college administrators and coaches who have been complaining about a lack of regulations have to agree to be governed moving forward. That includes the enforcement arm of the CSC; if a school skirts the rules by paying athletes more than the capped amount, it needs to be penalized.

Challenges and Future Legal Battles

Experts expect imminent legal challenges on two fronts - Title IX in the revenue-sharing era, and NIL compensation restrictions and/or the annual cap for school payments.

A Cultural Shift and the Importance of Accountability

The transition to revenue sharing in collegiate athletics is more than merely a financial adjustment. It’s a cultural shift that requires athletic departments to foster an environment in which all stakeholders-administrators, coaches, and players-clearly understand their roles and responsibilities in this evolving model. The House settlement and its resulting revenue sharing model are more than just financial innovations. They represent a paradigm shift in how college athletics operates. For institutions to thrive in this era, accountability must be embedded in every level of the organization. This is a pivotal moment for college sports-one that holds the potential to redefine relationships between players, coaches and administrators.

Increased Expectations for Head Coaches

One group that faces amplified expectations is head coaches. These moves reflect the financial realities of modern college athletics. Institutions are increasingly focused on making sure significant spending translates into measurable results.

The Importance of Transparency and Performance

As departments assume greater financial control, stakeholders may demand higher levels of transparency and performance in return for their contributions.

Long-Term Sustainability and Potential Solutions

Castiglione did not mince his words when discussing the settlement and college athletics’ path forward. “This is not, in its current form, a long-term solution. It’s not.,” he said. Asked whether he meant Congressional help (in the form of a narrow antitrust exemption) or collective bargaining with athletes directly, Castiglione said both.

Congressional Intervention

For years, observers have speculated that Congress might get involved in college athletics. “It’s a long shot that Congress intervenes,” Montgomery said, arguing that college athletics is not a priority for lawmakers at the moment.

Collective Bargaining

He is no lawyer but has spoken to enough in recent years to believe there may be a way to collectively bargain with athletes even if they are not employees (or unionized).

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