Unlocking the Value of NIL for NCAA Athletes
The High-Revenue Era of College Sports
The High Revenue Era
The United States hosts a unique and hyper-commercialized system of college sports, unparalleled anywhere else in the world, turning it into a multi-billion dollar industry. Managed by the National Collegiate Athletic Association (NCAA), which oversees student athletics across approximately 1,100 colleges and universities, the revenue has reached $16.6 billion in 2021.
Data Source: EADA
Powerful Conferences Leading the Pack
The financial success is further highlighted within the "Power Five" conferences, elite groupings of colleges known for their athletic prowess, which collectively generated over $3.3 billion in revenue during the 2022 fiscal year.
|
CONFERENCE |
REVENUE |
AVG REVENUE PER SCHOOL |
|---|---|---|
|
Big Ten |
$845.6 million |
$58.8 million |
|
SEC |
$802 million |
$ 49.9 million |
|
ACC |
$617 million |
$41.3 million |
|
Pac-12 |
$580.9 million |
$ 37 million |
|
Big 12 |
$ 480.6 million |
$ 44.9 million |
Data Source: USA Today
Leading the financial charge among these conferences is the Big Ten, which reported an impressive $845.6 million in revenue, surpassing the Southeastern Conference (SEC) — its closest competitor — by more than $40 million. The SEC wasn't far behind, though, announcing it had generated $802 million in revenue for the same period. These figures underscore the significant economic impact and the high-revenue era of college sports in the U.S., showcasing how deeply integrated commercialization is within the American collegiate athletic system.
HOWEVER,
Student-athletes were not able to claim their share of this substantial revenue pie. At the same time, universities engage in multimillion-dollar contracts with cable networks and sports brands, all benefiting from the use of athletes' images for marketing campaigns, merchandise sales, and ticketing, among various other sources of income.
"Under NCAA regulation, compensation for student-athletes is limited to scholarships for their education."
The Truth Behind High Revenue
For years, the discussions on compensating college athletes have historically made little progress toward tangible outcomes. Some have proposed sharing revenues with student-athletes but raised strong opposition from the athlete directors.
Facts About Revenue and Expenses
1. Most Revenue from Division One Football
The rise of television sports, notably with the advent of ESPN, cable sports, and regional sports networks in the 1980s, significantly contributed to football's immense growth. This expansion continued with the introduction of video replay technology in the 1990s and 2000s, further enhancing the game's popularity and viewer experience.
Football for men is the primary source of income, contributing to 88% of Division One's revenue. This substantial financial input stems from media rights, bowl revenues, ticket sales, and various other channels.
Data Source: EADA
2. Unbalanced Budgets
According to data provided by EADA, football and basketball are taking up half of the total expenses spent in 2021. The costs of coaches and training are skyrocketing as college sports become more and more popular.
With growing scrutiny aimed at the NCAA, the Power Five conferences, and Division I institutions, the demand for clear and precise information about financial flows—how money is earned, allocated, and spent, particularly on non-revenue sports—is becoming more urgent.
Data Source: EADA
3. Low or Negative Profits
However, the spending patterns of college athletics departments suggest that, apart from a few exceptions, the majority of Division I programs see their athletic expenditures exceed their revenues.
For Football
In 2019, just 25 out of the 130 schools in the lucrative Football Bowl Subdivision (FBS) — which consists mainly of large, predominantly public universities. The middle 50% of football programs only have a profit rate of 0-5%.
Data Source: EADA
For Other Sports
An astonishing 71.7% of the NCAA sports programs are not profiting, a significant portion of these programs, face financial difficulties and sometimes drastic measures such as budget cuts or program discontinuation.
Stanford University's decision to cut 11 varsity programs after the 2020-2021 academic year highlighted the vulnerability of non-revenue sports, affecting over 240 student-athletes and 22 coaches in sports such as fencing, field hockey, and men’s volleyball.
Source: Generated by AI
Annual Salary of NCAA Football Coach:
$15 million.
> Annual Expenses of Women's Swimming ($ 9.4 million in 2021)
(Scroll Down!)
Data Source: EADA
71.7%
NCAA Sports Programs are Not Profiting
Legalization of NIL Deals
"This is an important day for college athletes since they all are now able to take advantage of name, image and likeness opportunities."
NIL refers to the use of an athlete’s name, image, and likeness through marketing and promotional endeavors.
In 2021, the NCAA's board of directors made a landmark decision by lifting the organization's longstanding restrictions against athletes monetizing their name, image, and likeness rights. This shift represents one of the most consequential changes in the association's 115-year history.
Although the current guidelines are relatively simplistic and vague, leaving a lot of room for interpretation, the new rules state that athletes are allowed to profit from any of the following activities:
- Monetizing Social Media Accounts;
- Signing Autographs;
- Teaching Camps or Lessons;
- Starting Their Own Business;
- Participating in Advertising Campaigns.
Walk through the history of NIL deals
Photo by Markus Spiske on Unsplash
Photo by Markus Spiske on Unsplash
2009
Former UCLA basketball student-athlete Ed O'Bannon filed a lawsuit objecting to the use of the likenesses of former and current student-athletes in archival footage, as avatars (in video games), in photographs and promotions.
Photo by Bermix Studio on Unsplash
Photo by Bermix Studio on Unsplash
2019
California enacted The Fair Play to Pay Act, which gives college student athletes in California the ability to benefit financially from their name, image and likeness.
Photo by Tingey Injury Law Firm on Unsplash
Photo by Tingey Injury Law Firm on Unsplash
2023
U.S. House Energy and Commerce subcommittee hearing titled “Taking the Buzzer Beater to the Bank: Protecting College Athletes’ NIL Dealmaking Rights,” covered multiple topics related to NIL Deals, including the lack of transparency in the data, women athletes' opportunities in college and the prospect of college athletes as employees.
Benefits of NIL Deals
Providing Financial Support
NIL deals offer a path to financial independence for athletes, reducing their reliance on scholarships or part-time jobs to cover living expenses.
The additional income from NIL deals can help cover educational expenses, reduce student loan debt, and even fund further education, such as graduate school.
Sustaining Non-Revenue Sports
NIL deals provide a platform for athletes in non-revenue sports to increase their visibility and gain recognition for their achievements, which might otherwise go unnoticed outside their immediate sporting community.
Successful NIL Deals can draw attention to and increase interest in less-followed sports, potentially boosting spectatorship, participation rates, and overall popularity.
Enhancing Reputation for Colleges
Schools that actively support NIL opportunities can attract top athletic talent, as athletes consider potential NIL earnings when choosing where to compete.
While colleges cannot directly profit from athletes' NIL deals, the increased interest and visibility can lead to higher merchandise sales, ticket sales, and potentially more lucrative broadcasting rights agreements, increased donations, and financial support for the institution.
Call to action:
Congress is still seeking to create uniform regulations across the country, weighing the existing bills of legislation addressing NIL deals. You are welcome to provide your insights and thoughts!
Click down below to participate in national snapshot polls related to NIL deals conducted by Arizona State University's Global Sport Institute.
Reference
1. Almost 90% of NCAA athletic directors surveyed oppose paying college ... (n.d.). https://www.marketwatch.com/story/almost-90-of-ncaa-athletic-directors-surveyed-oppose-paying-college-athletes-01617287978
2. California, S. of. (2021, June 22). Governor Newsom signs SB 206, taking on long-standing power imbalance in college sports. California Governor. https://www.gov.ca.gov/2019/09/30/governor-newsom-signs-sb-206-taking-on-long-standing-power-imbalance-in-college-sports/
3. CYNTHIA HU | October 22. (2020, October 22). Non-revenue sports should not be scapegoats for budget cuts. Letter. https://www.jhunewsletter.com/article/2020/10/non-revenue-sports-should-not-be-scapegoats-for-budget-cuts
4. Gannett Satellite Information Network. (n.d.). NCAA finances: Revenue & Expenses by School. USA Today. https://sports.usatoday.com/ncaa/finances
5. Innovation, data, and Commerce subcommittee hearing: “taking The buzzer beater to the bank: Protecting college athletes’ nil dealmaking rights.” House Committee on Energy and Commerce. (n.d.). https://energycommerce.house.gov/events/subcommittee-on-innovation-data-and-commerce-hearing-title-taking-the-buzzer-beater-to-the-bank-protecting-college-athletes-nil-dealmaking-rights
6. NCAA.org. (2021, December 22). Student-athlete likeness lawsuit timeline. https://www.ncaa.org/news/2013/12/12/student-athlete-likeness-lawsuit-timeline.aspx
7. NCAA.org. (2024, January 10). Division I Council approves Nil Disclosure and Transparency rules. https://www.ncaa.org/news/2024/1/10/media-center-division-i-council-approves-nil-disclosure-and-transparency-rules.aspx
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