NCAA faces inflection point: Will it concede inevitability of new financial model?

Amid the NCAA’s mounting legal setbacks, ESPN analyst Jay Bilas paints the state of play in vivid terms:

“It is an absurd model that they have, but they also won’t admit where this is headed,” Bilas told On3 in a lengthy, wide-ranging interview Monday. “The NCAA is basically the Titanic. They see the iceberg, and they are steering right into it. It’s over. So now they’re going in front of courts, and they’re having to show that their anti-competitive illegal practices are somehow legal, and they can’t do it – and they know it.”

On the heels of a series of consequential legal setbacks in recent months – most recently Friday’s preliminary injunction issued in the lawsuit filed by Tennessee and Virginia attorneys general – the NCAA faces (yet another) inflection point.

If the last few years were a 10-part Netflix docuseries – and someday it may be – it’s clear where this plot is headed: Athletes will ultimately be empowered to collectively bargain with schools or leagues for compensation and health and welfare benefits. The new model’s parameters will be governed by collective bargaining agreements.

Will NCAA help create new ecosystem? 

Much of the remaining drama surrounds whether the NCAA will soon concede the inevitability of this scenario taking hold, pivoting to create a palatable new ecosystem that is not subject to further antitrust lawsuits. Or, will the association continue to dig in its heels as an obstructionist, ultimately paying a costly financial price and watching as external forces shape a new model that brings athletes to the negotiating table?

Several sources, particularly at the Power Four level, assert that the association’s three-month-old reform proposal does not go nearly far enough – if it’s even implemented – to stave off further antitrust lawsuits. In fact, the SEC and Big Ten’s recent creation of a “joint advisory group” is widely cast as two super conferences moving toward taking the wheel from the NCAA to create a financial model more aligned with the law.

NCAA is ‘spending players’ money’

Stakeholders see an industry barrelling toward an employment model, at least for some athletes.

A National Labor Relations Board regional director has already concluded that Dartmouth’s men’s basketball players are employees of the college – they will hold a union election next Tuesday. Plus, the NLRB trial of USC, the Pac-12 and the NCAA resumed this week in Los Angeles.

The NCAA is also confronting a tsunami of ongoing lawsuits, most notably the House antitrust lawsuit scheduled for trial next January. The NCAA and power conference defendants could owe thousands of athletes some $4.2 billion in retroactive NIL pay and shares of broadcast revenue. 

The case poses an existential threat to the NCAA.

A central component of the NCAA’s strategy is to continue to aggressively lobby federal lawmakers for a bill that affords the association limited antitrust protection and codifies that athletes are not university employees. A flurry of discussion drafts of reform bills have been introduced.

Not one has gone to a vote.

And yet, the NCAA holds out hope of a Congressional lifeline despite a torrent of high-stakes issues elsewhere – including geopolitical fires raging abroad and a polarizing presidential election fast approaching.

“Their only shot is to beg Congress for an antitrust exemption, and how can they reasonably think they are going to get that?” Bilas said. “They are not going to, in my view. Maybe they will. But we’ll see. Instead of just running this like the business it is … It boggles the mind that they’re willing to spend this much money lobbying Capitol Hill. They’re spending the players’ money doing that. And it just seems absurd to me.”

Rooted ideas amateurism model are ‘falling’

Jason Stahl, the founder of the College Football Players Association, told On3 that peoples’ long-entrenched ideas about the amateurism of college athletics are “pure propaganda that has been promoted by the administrative class and the NCAA for a long time. It is falling but it needs to fall further for [athletes] to really see the true value of their god-given abilities.”

Two decades from now, Stahl said, he hopes the college sports world looks back and says, “‘Wow, can you believe we did that to [college athletes]? [NCAA President] Charlie Baker making his $3 million just is so up in arms that there might be some offensive lineman out there making six figures.’ That fact they can do that with a straight face.” 

Stahl called college sports’ amateurism construct “one of the most exploitative labor regimes that still exists in the United States.” 

To his credit, Baker, who has been strident in his opposition to an employee model, told On3 this winter that there is “no doubt college sports have been slow to change but in the last several months the association is transforming to put student-athletes’ interest first.” 

“I’d also like to see the association become nimbler moving forward,” Baker added.

One of the primary challenges is the apparent need to create different financial models tailored to the unique needs, resources, financial capabilities and missions at the multiple levels of the collegiate ecosystem, which encompasses more than 1,100 disparate institutions.

At the Division I level alone, four groups of like-minded leagues are emerging: The SEC/Big Ten super conferences; the other Power Four leagues (ACC, Big 12); Group of Five conferences; and FCS/Division I-AAA leagues. 

Tom McMillen, CEO of LEAD1 Association, told On3 “it won’t surprise me if one conference decides to go off and maybe pay some athletes and others decide not to.”

Greg Sankey, the SEC commissioner, told On3 this winter that putting different groups of schools in the same room and saying, “‘Make effective decisions across the spectrum of universities, colleges and athletics programs,’ is highly challenging right now – more so than ever. 

“The NCAA is going to have to adapt,” he added. “All of us should confess we’re part of it. We’ve been slow to adapt. I think there’s a clear need for a national association, and the NCAA can fill that role. But change is going to be a constant and more rapid as we try to decipher what that role will be.”

‘Astounding’ athletes have no say in CFP growth

What’s Bilas’ move for the NCAA?

Call Jeffrey Kessler, the attorney for the plaintiffs in the House lawsuit, settle the case and work with Kessler on creating a framework that everyone can live with. But if the NCAA goes to trial and loses a $4 billion judgment?

“They are done,” Bilas said, adding that if the NCAA loses and wants to appeal, it would need to post an appeal bond for the entire amount.

“The appeal bonds are there for a reason, so that parties that lose can’t just stretch this out and not pay for a decade,” he said. “If they want to stretch it out, it’s going to cost them a lot of money.”

In the meantime, the NCAA is spending countless dollars on legal fees while “claiming victimhood,” Bilas said, while an alternative solution looms: “If you want people to stop suing you for antitrust violations, stop violating antitrust law. It’s amazing how all these American businesses don’t get sued for antitrust violations. They don’t violate antitrust law. It’s not that hard.”

The wall preventing athletes from having a seat at the table is poised to eventually come tumbling down as well.

Just last week, the 10 FBS commissioners and Notre Dame’s athletic director who comprise the College Football Playoff‘s Management Committee met for nearly nine hours in Dallas, where they notably broached the possibility of already expanding the newly expanded 12-team tournament to 14 teams in 2026.

Conspicuously absent from the meeting?

A single athlete.

“It is astounding,” Bilas said. “The players have no vote in this. They’re the ones that have to be on the field or on the court when they’re adding these additional games and adding wear and tear. The players should be involved in it.”

The College Football Playoff, of course, is independent of the NCAA central office. But the issue is a familiar one: Athletes don’t yet have a seat at the table.

“Hey, guys, can we have a season or two with this 12-team format, which you expanded to without the players’ input?” Stahl said. “Can we see how players’ bodies and minds hold up against more labor that you have heaped upon them? It is despicable what is happening here.” 

NCAA’s doomsday scenarios are ‘all lies’

For years, some NCAA stakeholders have bellowed that the NIL Era would chill interest in big-time college sports. In reality, we’re fresh off the most-watched college football season across all networks in history.

“Every doomsday scenario that the NCAA puts out – ‘If we do this, therefore we’ll have chaos and, therefore, people will turn away’ – ratings are up, there’s more interest, not less,” Bilas said. “It was all a lie. And it’s a lie that they can’t do it through employment. It’s a lie that they can’t sign the players to contracts. It’s all a lie. They just don’t want to do it. And I get it – if I didn’t have to pay the people who provide services to me, I’d be happy not to pay them. It’d be great if I didn’t have to pay our landscape crew.”

Last decade, the landmark O’Bannon case revealed legal cracks in the NCAA’s model. In 2021, the Alston case revealed further cracks, exacerbated by U.S. Supreme Court Justice Brett Kavanaugh’s blistering concurring opinion in which he wrote in part, “The NCAA’s business model would be flatly illegal in almost any other industry in America.”

Kavanaugh added: “Price-fixing labor is price-fixing labor. And price-fixing labor is ordinarily a textbook antitrust problem because it extinguishes the free market in which individuals can otherwise obtain fair compensation for their work.”

Efficiency needed regardless of model

Under any model – whether it’s today’s broken NCAA “student-athlete” construct or media rights sharing through employment, which is almost a certainty for some athletes in the near future – efficiency will be needed based on the athlete and school knowing the athlete’s respective market value, according to On3 CEO Shannon Terry.

“That’s why it’s more critical than ever for athletes to understand the On3 NIL Valuation and their Roster Value,” Terry said. “The On3 NIL Valuation was created to solve the inevitable problem of determining an athlete’s value through NIL and Roster Value. With the recent ruling and many more to come, Roster Value deals will become more transparent and player contracts will demand an efficient marketplace.”

~90% of the On3 NIL Valuation is Roster Value — the marketplace between Athletes and the Schools/Collectives. Roster Value deal data this past recruiting and portal season drove valuation. Deal data will now become more known and reported on by the media outlets.…

— Shannon Terry (@ShannonTerry) February 23, 2024

Legal threats and setbacks are mounting. And the NCAA finds itself at another inflection point: When, if ever, will it concede the inevitability of an athlete collective bargaining era looming on the horizon? If it chooses not to, external forces are already in motion creating a new financial model.

“It is over,” Bilas concluded. “They just don’t want to admit that it’s over.”