Tom McMillen on NIL collectives as conduits for revenue sharing: 'My God. It's insanity'

Buckle up for a pivotal fall in college athletics.

As college football readies for kickoff across the country, off-the-field developments promise to come fast and furious in the coming months and loom as far more consequential. The NCAA will continue its aggressive lobbying efforts in Congress, hoping by the end of the calendar year to secure a federal NIL bill. And developments emerging from the National Labor Relations Board hearing in November and the Johnson v. NCAA case in Pennsylvania could inch the enterprise ever closer to a potential employment model for student-athletes.

In an exclusive wide-ranging interview with On3, Tom McMillen, former U.S. Congressman and current CEO of LEAD1 Association, set the stage for a significant fall that will help chart the course for the enterprise in the coming years. Calling these next few months “very critical moments,” he said the true point of criticality won’t arrive for another year or two.

This is the third of a three-part discussion with Tom McMillen. Here you can find part one and part two. Among the highlights in this part of the interview:

Tom McMillen endorses what many stakeholders have told On3 in recent months: Bring NIL collective activity in-house under the umbrella of the university and its fundraising arm. It’s a win-win for all parties. It also prevents schools from potentially evading Title IX responsibilities. And if the industry moves toward revenue-sharing in time, this structure works best, with everything within the confines of the university.

“You’d want it within the confines,” McMillen said. “You don’t want to give dollars to collectives so you’re trying to bypass employment. They [collectives] are trying to say, ‘We’re the conduit for rev-share.’ I said, ‘My God.’ It’s insanity. Yet that’s what’s being pitched out there to avoid employment.”

In light of a spate of sports wagering scandals with Alabama baseball and athletes at Iowa and Iowa State, McMillen said: “We’re in for a very rough ride on this sports betting thing.” Months before those scandals emerged, McMillen had told On3 that sports wagering represented his personal number one biggest concern in college sports because it posed an “existential” threat where the damage could be “catastrophic.”

(The interview has been lightly edited for clarity and context.)

Q: Why doesn’t the NCAA green-light NIL collective activity to formally move in-house and work closely with school fundraising arms? Stakeholders tell me it would be a win-win and also likely ensure that schools remain Title IX compliant.

Tom McMillen: “The NFL and the NBA would never allow collectives to handle their most important asset, which is the players. The rationale for bringing it in-house is that you’ve got structure, you’ve got accountability, you’ve got Title IX. And Title IX, the way it works, you don’t have to have equal outcomes. You just have to have equal opportunities. The classic example is the bookstore. Well, if I have 100 men’s T-shirts being sold at the store and only one women’s shirt, that’s not equal opportunity. But if I have 100 of both and whichever sells, then I have equal opportunity. I just think putting it in the school makes a lot of sense. There’s been a tug-of-war between the NCAA and that. There should be a player division within the school. And it should be managed. 

“And if you ever want to go down the road with a rev-share model of sorts, that would be the model you’d want. You’d want it within the confines. You don’t want to give dollars to collectives so you’re trying to bypass employment. They’re trying to say, ‘We’re the conduit for rev-share.’ I said, ‘My God.’ It’s insanity. Yet that’s what’s being pitched out there to avoid employment. 

“There are only a few options. You let the system evolve, which is courts and litigation and all that. Two, the enterprise comes up with a model that they would probably have to get Congress to codify it in some respects or they go to Congress and come up with a model that works for everybody. 

“NIL, in the scheme of things, is kind of small ball. The employment issue, and we’re working on this, is so complicated. Every state has different laws and collective bargaining might work in certain states and doesn’t work in others. Collective bargaining may create a safe harbor for television monopolies. The NFL has a television monopoly as part of the collective bargaining because the players get 50% of the money. And so it’s very complicated. These issues are very complicated, and allowing third parties to be in the middle of this is just crazy.” 

Q: What is the view among Division I athletic directors about the pros and cons of a Power 5 football breakaway from the NCAA?

Tom McMillen: “What I hear is the following: Part of the allure of the structure is that you have scheduling pods. God, I’d hate to be the SEC and have to play Texas and Alabama. The scheduling variability is a factor here. Maryland can play Towson. They are close by. Probably get a win. Towson gets the money. “That would go away in a world where every game is hyper-competitive. 

“The idea that you have some schools in there that, like a Cinderella school with San Diego State basketball, is very appealing to public officials. It is not just money wins. And the reason I say that is because as college sports evolve, there’s going to be more and more attacks on it.

“The whole enterprise could be taxed. You can be treated like a business. In other words, the more that you go down the pure business route, the more you’re going to be treated like a business by Congress and regulatory agencies. So I think there’s a risk that if you get too business-oriented, I think the feds are going to start treating you like a business, more so than we’ve ever seen before. You start paying athletes and coaches are making millions of dollars, they are going to say, ‘Why should anyone get a deduction for giving to this? Is this advancing education? Take away all of their tax deductions. As a matter of fact, take away their whole non-profit status. Treat them like a business.’ 

“I mean, all those things are possibilities the more that you go down the business road. Those are things that have to be considered because you’ve got a lot of folks who might want to sort of attack some of the privileges of college sports if you didn’t have more balance.”

Q: With 2024 ushering in College Football Playoff expansion, coast-to-coast super conferences and likely more movement toward either revenue sharing or an employment model, are we near the dawn of a professionalized era?

Tom McMillen: “You’re missing one big factor, which I think is bigger than all the other ones – sports betting scandals. You talk to any integrity person, [U.S. Integrity’s] Matt Holt – they’ll tell you there’s a 100% probability of a major scandal. Yes, they may catch Iowa [athletes]. Yes, they may catch Iowa State [athletes]. Yes, they may get a stupid [baseball] coach at Alabama texting in the casino where the casino can take pictures of what he was doing. But what about prop betting? In-play betting? When I’m betting on a free throw and I’m doing it under a psuedo-name on my phone and I’ve talked to that player about missing those free throws? It happens so quickly that even the integrity people can’t follow it.

“The point is we’re in store for a very rough ride on this sports betting thing, in my view. It will be an overlay – a huge overlay – over all these other issues. Presidents are worried about things that get them fired. What gets them fired? A sports betting scandal on their campus. What gets them fired? Health and safety, a kid dies on the field because of negligence. 

“Programs are going to great lengths, spending lots of money, to try to keep it clean. But it is a very challenging environment when 60% of your kids are doing something, [betting] pools or gambling. And you’ve got these prop bets you can’t even regulate. You can’t divorce that. That’s what I call the anti-commercial force that goes the other way. You have these forces pushing it towards commercialism, rev-share, employment, and all that. Then you’ve got this other force going the other way saying, ‘Are we going too fast here?’ 

“In fact, we could be talking about, three years from now, not an employment bill, not an NIL bill, but a national sports betting bill, which is what Schumer and Orrin Hatch tried to do five years ago. So what will be the driver here? Will the driver be anti-employment status? Will we still be in NIL? Or will the Congressional driver be that 10 scandals have broken out at American universities?”