In one year, how revenue sharing went from taboo to inevitable

Flash back one year: College sports’ administrative class was so averse to sharing revenue with athletes that the subject was widely hailed as taboo, far too explosive to broach publicly.

Now, even as many industry leaders struggle to fully embrace it, a landscape-shifting revenue-sharing model is universally considered an inevitability. Schools are actively preparing to share a slice of their revenue pie for the first time with athletes.

As the On3 NIL and Sports Business Newsletter today celebrates its one-year anniversary, On3 examines the remarkable one-year evolution in industry-wide sentiments surrounding the most consequential issue confronting college sports and what it says about the current state of play.

The dramatic about-face underscores the accelerated pace of change within a risk-averse industry that traditionally takes forever to change collective mindsets on even small matters.

“Reality has set in – most are finally starting to accept it,” David Ridpath, a professor of sports business at Ohio University who has appeared before numerous Congressional committees regarding college athletics, told On3. “The college sports industry has only hurt itself by trying to delay the inevitable and fruitlessly – and expensively – trying to stop it from happening. 

“The current warming toward revenue sharing is just a tortured evolution that we have seen with NILs and even the stipend over the years. Most arguments against athletes getting more revenue have been destroyed.”

Why pivot on revenue sharing took hold

Doomsday predictions are nothing new. There was a day, Ridpath recalled, when Jim Delany groused about how the stipend would damage college sports and that even the robust Big Ten could be relegated to Division III status if a so-called pay-for-play model took hold.

Treasured college sports sage Sonny Vaccaro had given me a word to best describe Delany’s warnings: “Insanity.”

Similar declarations since then about how putting dollars in athletes’ pockets would chill interest in college sports have been rendered laughable, especially on the heels of the most-viewed college football season across all networks in history and unprecedented interest in women’s basketball.

Bottom line: Stakeholders had no choice but to pivot 180 degrees and now accept revenue sharing.

Walker Jones, executive director of the Ole Miss-focused Grove Collective and a leader in The Collective Association, told On3 that the NCAA is “being forced to change that very bureaucratic, traditional way of thinking. It’s the quote from ‘Moneyball’ from Brad Pitt – ‘Adapt or die.'”

Revenue sharing rhetoric incrementally evolved

The evolution of public rhetoric has been striking. 

Last summer, the furthest even the most forward-thinking leaders would go was to say it was time to at least explore what a revenue-sharing model would entail. Then came the money grab that was the summer conference realignment craze, which made it impossible for stakeholders to keep a straight face while asserting that athletes still don’t deserve a revenue slice.

Jim Harbaugh’s repeated endorsements of a revenue-sharing model then provided cover for others. On the administration front, there were breakthroughs last year as well, such as venerable Oklahoma Athletic Director Joe Castiglione telling On3 in November: “I support establishing a new structure that allows for us to rightly share some revenue with student-athletes. That has to be part of our path forward.”

Looking back, Jim Cavale of Athletes.org recalled he first heard an industry leader say revenue sharing was inevitable during a meeting with an SEC athletic director in March 2023. 

Since early fall, Cavale has engaged in countless one-on-one conversations with “athletic directors, commissioners, [NCAA President] Charlie Baker, and nobody has ever said to me, ‘No, you’re wrong. Revenue sharing is not inevitable.’

“They all know it is going to happen.”

Realization NCAA is on wrong side of antitrust law

To be clear, the administrative class’s reversal on revenue sharing doesn’t necessarily reflect sudden goodwill toward athletes. It reflects the realization that the NCAA’s amateur model is on the wrong side of antitrust law and that the outcome in the landmark House v. NCAA case will ultimately rubber-stamp that.

At this point, the best-case scenario for the NCAA is a settlement in which the organization pays at least $2.7 billion to thousands of athletes and ushers in a revenue-sharing model.

“They get embarrassed every time they are in court,” Yves Batoba, co-founder of Vestible and former Big 12 student-athlete representative for the NCAA, told On3. “If they lose $4 billion [a potential outcome with no settlement], they cease to exist. They are trying to do everything in their power to just continue to operate.”

As Jones noted, the evolution in industry sentiment surrounding revenue sharing is similar to the evolution in rhetoric surrounding donor-driven collectives. When they first started to emerge in the fall of 2021, the word “collective” may as well have been included among George Carlin’s seven dirty words – no administrator dared utter it.

Now? Good luck finding a newly hired coach worth his seven-figure annual salary who doesn’t start immediately beating the drum publicly about the need for fans to support the school’s affiliated collective. 

Leaders knew NCAA’s proposal didn’t do enough

As NIL approaches its third birthday, reliance on collectives has increasingly been viewed as an unsustainable model, an acute stress test for the breadth and depth of schools’ donor bases.

“With a completely or almost completely donor-funded model and essentially the fans having to pay a fan tax to support this market, I think that has forced these administrators to go, ‘Hey, this isn’t sustainable. Donor fatigue is real. And unless we are competing for championships every year, we are going to run out of money and run out of relevancy,'” Jones said. 

“So, the only way to be competitive is to figure out a way to take the pressure off the donor-funded model and add sustainability through TV revenue, which is true name, image and likeness, and that reality has probably been the biggest catalyst to changing the mindsets about talking about rev share.”

In addition, a significant development occurred not necessarily with the unveiling of Baker’s forward-thinking reform proposal, Project Division I, in December, but rather the power conference reaction to the plan. While the proposal was bold, many leading stakeholders (rightly) believed it did not go far enough to stave off further lawsuits against the NCAA.

Several sources told On3 that a revenue-sharing model served as the “sweet spot,” best positioning the enterprise between being exceedingly vulnerable to litigation and a full-throttle employee model that they felt would introduce an array of adverse consequences.

How can athletes collectively bargain?

Now, revenue sharing is such an inevitability that the biggest industry question is not if it will take hold.

Rather, it’s when it does take hold, what is the best subsequent move to introduce much-needed athlete collective bargaining: unionization, or a hybrid scenario [which requires Congressional action] that would enable athletes to collectively bargain without being legally deemed employees of their institutions?

That answer will come another day. For now, industry leaders are actively preparing to lift the curtain on the revenue-sharing era.

Leagues are meeting to discuss details of the proposed House settlement and what such an outcome means practically for schools’ budgets, Title IX implications and how the revenue is paid to athletes. Schools are now including provisions in contracts to trigger renegotiated compensation when a revenue-sharing model takes hold. And some are cutting staff for similar reasons. 

“The NCAA is losing everywhere – in court, with the public and certainly has gotten zero traction in Congress,” Ridpath said. “They really have no other choice but to face it or find something else to do. They are defeated.”