Revenue sharing, roster limits, less money from NCAA: How the lawsuit settlement impacts Purdue athletics

As the world of college athletics readies for another seismic shift where schools directly pay their athletes, how is Purdue preparing to handle this dramatic change, and what does it mean for the future?

Numerous questions have yet to be answered, but athletic departments nationwide are trying to develop answers by the time this new landscape begins in about 13 months. Purdue athletic director Mike Bobinski sat down with GoldandBlack.com to discuss the impending changes and the short- and long-term impact on the university and the athletic department.

Background: In May, the NCAA and Power Five conferences (ACC, Big 12, Big Ten, Pac-12, and SEC) agreed to a settlement in three antitrust cases, including House v. NCAA. It creates a path for former athletes who could’ve been compensated for their commercial use (dating back to 2016) and future athletes who can now share in the millions in revenue generated by athletic departments nationwide starting in 2025-26. The settlement must be reviewed and approved by Judge Claudia Wilken of the U.S. District Court for Northern California and the plaintiff’s attorneys.

If approved, $2.8 billion will be paid to former and current athletes over a 10-year period. That money will come from the NCAA (40%) and conferences (60%), with the power conferences shouldering the heaviest financial burden. Purdue – and other schools – will have revenue withheld from its annual distributions by the NCAA but will also be required to start paying athletes from a pool of roughly $22 million in the first year. The salary pool increases every year. Distributions from the NCAA include men’s basketball tournament revenue, funding for sports and scholarships, student-athlete assistance fund and educational programs.

Bobinski estimates “$1.2 to $1.4 million will be withheld per year for 10 years. It will just go away.”

Every school in the Big Ten will see similar reductions.

“Every conference is situated differently,” Bobinski said. “They receive different levels of payments. The haircut will be different in different places. The Big Ten is taking the biggest or the second-largest per institution cut over 10 years, but we’ve been receiving more in previous years.”

Here’s Part 1 of the conversation with Bobinski:

GoldandBlack.com: The next big thing is revenue sharing and the court case, and I know there are a lot of details yet to be finalized. Based on what you know and the framework you think it’s going to work under, how does this impact Purdue starting next year and what is it going to look like?

Bobinski: This upcoming year will be business as is. The 24-25 school year will operate under the existing framework and structure we’ve become accustomed to in recent years. Nothing will be different during this year. In 25-26, that will be the first year – assuming the settlement works its way through the system and remains intact, and again, we have not seen the actual document.

First and foremost, the days of scholarship limits will be over in 25-26. What that means is that certain sports will no longer be restricted to giving any specific number of scholarships, nor will there be a requirement that everybody in certain sports must get a full scholarship. All those things will come off the table as part of this settlement. In its place, limits on rosters. There will be some number you cannot exceed in all the different sports that are going to be offered by teams in our league and across the NCAA. That process is underway trying to identify what those roster limits should look like in 25-26. In lots of cases, they won’t look a whole lot different from what they look like right now. You’ll just have more financial aid flexibility in how you provide financial aid in the event resources are available. You might want to reallocate or provide greater emphasis in a sport or two that maybe you have a chance … ‘only if they had another scholarship or a handful of scholarships they could make a competitive jump.’ There will be strategic decisions that have to come around that.

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Two other pieces – the payment of the damages portion of the settlement, which will result in an impaired level of NCAA distribution for what looks like a 10-year period of time, and that will not be insignificant. That’s money right off the top we’re getting, and we’re using to operate our program, and we’ll be getting less of it as we work through the implementation of those damages.

The big piece is the revenue-sharing opportunity, which will be based on your percentage of media rights, your sponsorship rights and your gate sales, your ticket sales. Those are the elements that are to be shared. Exactly how that gets done, no one yet … we don’t have the ability to specifically plan to that at this point and time because we don’t have enough details yet on how that should be executed from a Title IV perspective, from a minimum to certain sports or not perspective. There are a lot of decisions yet to be made before you can actually move in any real way toward executing that plan. That’s got to get figured out here in the next 4-6 months because you start to sign people and recruit to that class. That will be an element, in some sports, an item for consideration. Knowing what that is going to look like sooner than later is important. But there are weighty questions you have to deal with before you get there. We’re working through that.

GoldandBlack.com: You also have to deal with the current players that are here.

Bobinski: Exactly. All of that has to be woven into a puzzle that fits together. A revenue-sharing cap is what it sounds like. It’s a cap. From a Purdue perspective, we are all for that. In today’s environment, where we have a sort of unregulated, unlimited, whatever you can find can be delivered under the guise of NIL, which is a term to be used very loosely. Real NIL, true NIL, absolutely – 100% we’re all for it.

GoldandBlack.com: Similar to what your athletes do on Instagram and other social media networks …

Bobinski: All that is going to continue and should continue to exist. The other foolishness needs to go away, and by virtue of this cap, there should be a much more balanced competitive opportunity for people to make offers and provide people with a financial or an economic package that is more like what other people receive. And then you can recruit to the same old things you used to – ‘Hey, we have a great coaching staff. We’re going to develop you. You’re going to have all those competitive opportunities. You’re going to get a great education at Purdue. You’re going to be supported by a tremendous fan base and by people who are going to pick you up academically and medically and develop you every other way from a post-college experience.’

I laugh when I read some of those folks and there’s so many opinions out there right now, but I would caution everybody before you listen to any of them, think about where that person sits and what their interest is in expressing that opinion. Every single one of them has a self-protectionist view of it. Someone from the collective association said the other day, ‘Do you think these Power 4 schools want to have the same resources available? How will you differentiate yourself?’ Like you used to. It can’t be just about money. Can it? It shouldn’t be, in my opinion. I think it’s a very short-sided approach to have it be about just money. Will there be dollars that will be involved more than in the past? Absolutely. We understand that, however, it shouldn’t be all you can get. It’s not a healthy environment for anybody. It’s a fantasy land, and that’s what we’ve been living in the last couple of years, and it’s time for that to end.

GoldandBlack.com: Several directions to go off of this but the figure I’ve seen is $22 million in revenue-sharing made available to athletes. Is that across the board or is that based on your marketplace?

Bobinski: It’s 22% based on an aggregated revenue pool across what was then the A5. That pool of media rights, gate sales, and sponsorships averaged out at $97.8 million. That calculation is not yet in stone but that’s the working number right now. It’s roughly $21.5 million and change, but it’s just below $22 million, and that number adjusts upward. There’s an escalator built in every year, and there’s a look-in after three years for a reset. That number is a living, breathing target that will continue to go up. Everybody will be dealing with the same number.

GoldandBlack.com: Regardless of where you‘re located?

Bobinski: You have the same number and the same opportunity to revenue share to that cap. That is the same for everybody.

GoldandBlack.com: One question – this comes out of your budget, correct?

Bobinski: Yes.

GoldandBlack.com: I’ve seen your financial figures, and you don’t have an extra $22 million.

Bobinski: Correct.

GoldandBlack.com: How do you find $22 million and, with the other piece of this, getting less from the NCAA every year? How do these two worlds co-exist?

Bobinski: That’s an excellent question. It’s going to require some creativity and honestly, lots of reimaging in some ways, and our relationship with the broader university. That has been well known and acknowledged by our leadership, by President (Mung) Chang, by our board that the scale of this is not something athletics can deal with it. We don’t have and I’ve made an allusion to this – it’s a COVID-level sort of disruptive event but it’s permanent and it’s structural and it requires solutions that are permanent and structural to be able to persist and provide a competitive opportunity that is equal to what our peers are going to do.

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Clearly, there’s an acknowledgment amongst the university community that having a competitive athletics program has and does and will provide value to Purdue. It is part of the fabric of this place. Walking back from that is not a viable option. We have a set of conditions to solve for and we’re going to work hard to solve those. We don’t have the answers yet but there is a resolve to get there, but it’s going to require some work and some considerations and different options and what makes the best sense going forward.

GoldandBlack.com: Is it a matter of raising money or finding another revenue source or sources to help fund that?

Bobinski: It’s a lot of things. I don’t think there’s a single answer, ‘Oh, there’s a $22 million solution just sitting over there waiting for us to grab it.’ It’s got to be repeatable and, reliable and recurring. This is not a one-shot, ‘Hey, we have a huge problem and how do we triage this problem?’ This is a structural adjustment that’s going to have to be made with a long-term view. I think lots of things will be on the table.

We’ve been very successful raising money but to presume we can raise another, in perpetuity, $21.5 million in annual operating dollars and growing. Our annual fund has gone from $6.5 million in 2016, which is what I’m familiar with, to $15 million. It’s probably not in the cards to do that and then some right away and then repeat it every year. That’s asking an awful lot of a lot of people. Do I think there’s some more capacity? Yes, I do. How we present this will speak to a lot of our people. We want to provide the very best opportunities, and we think this is an opportunity. While it’s a huge challenge, those numbers are sobering in scope, but there is an opportunity to be had here if we are able to find our way there. I think this leveling of the field a little bit and a more balanced and competitive opportunity is good for places like ours. It just is. It behooves us to get an answer as quickly as we can, and we’ll be working on that in the months ahead pretty diligently.

GoldandBlack.com: Your Purdue donor base has been reluctant to jump fully into the NIL game. Revenue-sharing, you’re paying the players is what you’re doing. How do you think the reception will be with them knowing their stance on this?

Bobinski: It’s no longer an elective thing. NIL was just a weirdly evolving environment. This is a legal decision. This is a legally constructive environment, and if we want to compete, we have to recognize that off the top of our budget every year will now come this number. The revenue we’ve been used to operating our program will be less. We’ve got to fill that gap somehow, in some way, in order to retain the program that we would like to have. There’s no greater example than the month of March when we had this incredible Purdue experience in Indianapolis, Detroit and Phoenix that was like a snowball going downhill and it just kept getting bigger and better. If you don’t find a way to compete, you don’t have those moments going forward. I don’t think anybody wants to sign up for that. I think everybody wants to find ways to make sure we’re in a position to provide those experiences and produce excellent opportunities that mean a lot to a lot of people.

GoldandBlack.com: Was there any pause from the university about this whole thing? Does Purdue want to be in this game? Is Purdue committed to doing this for however long? Was there any discussion of whether this is where Purdue needs to be in the future?

Bobinski: I know President Chang and I had conversations as it was working its way in front of the presidents in the Big Ten about the elements of the settlement. Is this the best available option? Had we played it out as a collegiate athletic enterprise in different ways, it was going to get worse not better. I don’t think there’s any question about that. We would’ve ended up with further patchwork of random judges’ decisions and random state legislative decisions and probably losing more lawsuits, which given our track record with the lack of success as an enterprise, probably likely would’ve lost all those suits. And the damages would’ve gone from $2.7 billion to $20 billion. This is the best of a series of challenging outcomes for sure.

And as the president and I talked about it, he consulted with the board, and intercollegiate athletics matters at Purdue. It is part of the fabric of the place. We’re a Big Ten institution. With that comes all that goes into college athletics. On the whole, it’s been incredibly beneficial for Purdue, and it’s been a good thing. Just look at the last several years and what it means to our students. They come out in incredible numbers. We sell out our ticket allotments in 24 hours. It’s not like it’s of no interest to the campus community at large. The way our people travel – all of that – shows there’s value and an appreciation for not only college athletics but also how we do it at Purdue. For us to be able to continue to do it and how you can do it in a way that has priorities in the right place in this new environment, it matters. I would say there was the appropriate consideration, but there was no hesitation.

GoldandBlack.com: And the university benefits from what happens in the athletic department.

Bobinski: Absolutely. That is clearly acknowledged. And this year, yet again, blowing through the freshmen acceptance numbers, and the enrollment management team will tell you what happened in March absolutely supercharged those numbers. They no way deny that was a factor in what this freshmen class looks like in the fall of ‘24.