In his capacity as a Columnist for California Sports Lawyer®, Founder and Managing Attorney Jeremy Evans has written a column about the rising cost of doing business in college sports.
You can read the full column below.
~
The business of college basketball and football is booming. In addition to March Madness and sharing of revenues from that illustrious spring tournament, the first ever name, image, and likeness (“NIL”) tournament for men’s basketball saw players being paid a collective $9 million dollars just to compete in the Las Vegas, Nevada based tournament. It is likely just the beginning of payouts to players for in-season and post-season tournaments.
March Madness currently accounts for 85-90% of the NCAA’s yearly revenue and the $1.3 billion dollars (2022-2023) collected from television and streaming broadcast agreements, licensing (from owning the trademarks), sponsorships, and ticket sales that flows back to the participating conferences and universities. The NCAA encourages the athletic conferences to share the revenue equally with all universities in the conferences, but ultimately defers to the conferences to determine the revenue sharing formula. Each participating university in March Madness receives $2 million dollars per game played in the tournament, while some mid-major conferences receive $2 million just for making the tournament.
For 2022-2023, the NCAA distributed $669 million dollars to its 363 Division 1 member institutions (e.g., universities) with additional expenses of nearly $300 million to host the Division I, II, and III champion events and programs. If doing the math, that is nearly $1 billion dollars going back to the universities and their programs out of roughly a $1.3 billion dollar budget. The NIL tournaments are a drop in the bucket compared, but a $1 million dollar payment directly to a student-athlete is a large sum. The NIL basketball tournament money is in addition the $20-23 million dollars that will be paid to participating universities beginning July 2025 (e.g., those universities that opt into the settlement) via the House settlement with a 22% cap of money that goes to the student-athletes and increases in dollar amount when the athletic department budget increases. According to Yahoo Sports, the House settlement is causing concerns for the status of Olympic athletes, rosters restrictions that may disproportionately effect non-football and basketball teams, and the issue of many universities relying on student fees and taxes to fund athletic department budgets.
The College Football Playoff (“CFP”) introduces more parity and dollars by increasing to twelve university football teams. Each school will have to win at least three games to make it to and win the National Championship. The money from the CFP is also distributed back to the universities.
The cost of live sports content is also rising and it takes planning to get it right. Realignment, the student-athlete transfer portal, head coaching carousel, and massive changes to streaming games from traditional broadcasts has increased and convoluted the price and construction of television agreements. The cost of talent is also rising even without a players association or union. If current projections are correct, Division 1 basketball and football players will make roughly $140,000-218,000 dollars per year, which is the first time schools will pay students directly (not through NIL and collectives) and far less than what a top recruit can get to choose a university through NIL money. Indeed, the price of business is high and rising in college sports.
~
About Jeremy M. Evans:
Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.
Copyright © 2024. California Sports Lawyer®. All Rights Reserved.
