The NCAA and the top five college sports conferences have approved a nearly $2.8 billion settlement, marking a historic shift towards a more professional payment model in college athletics, as reported by ESPN. Awaiting nods from plaintiffs and a federal judge, this move promises to rectify missed endorsement earnings for thousands of athletes and ushers in an innovative revenue-sharing system slated to impact numerous schools by fall 2025.

Compensation Details

Around $2.77 billion will be awarded over the next decade, addressing approximately 14,000 claims that date back to 2016. Prominent plaintiffs such as former Arizona State swimmer Grant House and TCU basketball’s Sedona Prince spotlight the case. Calculating exact payouts for each athlete involves a complex process with legal and judicial oversight, relying on a specially devised formula.

Forward Funding

The revenue-sharing model introduced will predominantly be funded by the Big Ten, Big 12, ACC, and SEC conferences. This arrangement permits schools to funnel as much as $21 million yearly directly to athletes. Over the coming decade, the financial commitment for each of the 69 participating schools is projected to reach $300 million. This initiative will necessitate significant revisions to existing NCAA rules and requires schools to decide whether to participate, potentially influencing their competitive standing.

Scholarship and Roster Adjustments

A pivotal change will transition from the traditional scholarship cap to a roster-based system, determining the number of athletes supported per sport. This could enable richer schools to extend more substantial financial benefits to a larger pool of athletes, enhancing their competitive advantage. Such a shift will compel schools to meticulously strategize their financial contributions across different sports.

Who’s Footing the Bill?

The NCAA will cover 41 percent of the overall $2.77 billion. Major Division I conferences—including the ACC, Big Ten, Big 12, Pac-12, and SEC—will contribute 24 percent, while other significant football conferences like the American Athletic, Mid-American, Conference USA, Mountain West, and Sun Belt will cover 10 percent. The lower-tier Division I football conferences, the Championship Subdivision, will account for 14 percent, and the non-football D-I conferences will manage the remaining 12 percent.

Financial Strategy and Impact

To manage these payments, the NCAA will cut costs, utilize insurance and reserve funds, and reallocate money usually distributed among 352 Division I schools. This has raised concerns among smaller institutions about the potential financial strain, fearing how these changes could affect their budgets and athletic programs.