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Good Thursday Morning. Thanks to all who have donated after last week’s post. As of writing this, we are over $3,500 raised, which will be doubled when submitted through the company portal that does matching. I will make the donation at the end of this week across three causes: Los Angeles Fire Department Foundation, California Fire Foundation, and World Central Kitchen.

Here’s the rundown of this week’s Sports Business Playbook:

• 📰 This Week’s Topic: Following the first year of the 12-team College Football Playoff, college sports enters one of its most consequential periods in history. Here are three big questions to keep your eye on.

• 🍸️ Impress Your Friends at Cocktail Party: Want to show off your sports knowledge in a public setting but don’t have time to read the deep dive? Hit the “Impress Your Friends at Cocktail Party” section at the bottom for a CliffsNotes of this week’s topic

• 🤯 “Whoa of the Week”: Live sports’ impact on Netflix’s huge Q4 earnings, and Unrivaled’s strong start

• 💪 Weekly Reminders that Sports are Awesome: A big pull for an 11-year old, and the first professional baseball player from South Sudan

Hey team,

The college football season ended on Monday night with the CFP national championship game in Atlanta. (Some team won — can’t think of who it was off the top of my head but I do seem to remember they lost to their rivals [again] during the regular season).

This effectively closes the chapter on the “NIL Era,” and we now enter arguably the most consequential series of months in college athletics’ history.

The impending House settlement, due in April, is set to reshape the landscape of college athletics, and there are a series of questions cascading off of that final agreement that will have major implications for the industry.

Here are the three biggest questions facing college sports in 2025.

What is actually going to be in the House settlement and how will it be implemented?

We did a deep dive on the House settlement when it was first announced in May of last year, and here’s a quick reminder of the key points going forward, assuming it it is approved by Judge Claudia Wilken in April:

• Revenue sharing agreement: The schools will be allowed to pay athletes from a pool of funds worth up to 22% of the average Power 5 school’s revenue per year based upon TV money, ticket sales, and sponsorships (interestingly, not donations). Most P5 schools bring in about $100 million in revenue per year under these guidelines, so the expectation for next year is that number will be about $20.5 million.

• Clearer definitions around NIL. The goal would be to delineate between the “true NIL” where brands are compensating a player for his/her endorsement at a fair market value vs. the “pay for play” model that has taken over college athletics via the collectives. The settlement proposes a high-level idea of a third-party reporting mechanism and potential enforcement concepts.

• The elimination of scholarship caps and implementation of roster limits. There are currently limits on the number of scholarships a school can provide in each sport. Football, for example, is 85, but it can keep more players as “walk-ons.” Under this new agreement, the schools will have the option to expand the number of scholarships to what they please, but there will be a total roster limit implemented. In my opinion, this is not that big of a deal in football or basketball where the teams already fund most of their rosters with full scholarships and the players the schools would want to pay are already going to be receiving a scholarship, but it could be applied to “Olympic sports.” For example, college baseball rosters have between 35-40 players on a team, but they can currently only give out 11.75 scholarships. Under this new model, that 11.75 cap is removed and the school can give out as much as they wish.

Since the announcement, we’ve seen the various involved parties begin to prepare for what the world looks like post-July 1 when the college athletics calendar officially rolls over.

Schools have begun to reallocate dollars to fund this, and, as predicted, many are building out general manager type roles to manage this new salary cap and some have even created whole departments focused on the management of salary cap, NIL, and revenue-generating activities.

In terms of hard dollars, most big time programs are expecting to spend about 90% (~$18 million) of their budgets on football and men’s basketball, with some variability.

Athletic Director U. has an excellent deep dive on how schools are thinking about this, but here are three examples: one for a major school focused on all sports — Texas Tech, one for a basketball-focused school — UConn, and one for a mid-major with no FBS football — Wichita State.

What jumps out to me outside of the obvious — wow, that’s a lot of money for football and men’s basketball! — is the opportunity for basketball-focused schools, both P4 and mid major, to compete on dollars.

In the scenario above, UConn men’s basketball would get $5 million; Wichita State would get $1.5. It’s a gap, but that’s the best program in the country vs. a mid-major, and it’s only about 40% of what another P4 — Texas Tech — would be spending (~$3.55 million) on an operating budget that’s just 25% of Texas Tech’s.

The rub is going to likely occur with the schools trapped in the middle on football.

Some may choose to stay in the middle and ride it out, but there will likely be more that get stars in their eyes thanks to restless donors and ADs wanting to make a name for themselves. The decision to go all in on football will likely result in diminished outcomes in the olympic sports because the money to go around is less, and it will likely require a sustained commitment to keep players there.

Speaking of players, we got our first look at what some of the contracts between players and schools could look like via Sportico. The MOU from a Big Ten school states:

• Schools get the players’ NIL rights

• Players are not employees (more on that later)

• Schools can be reimbursed if a player transfers

• Explicitly states that it’s not “pay for play” (LOL), which gives the schools an out should the laws change

• Payments can be adjusted based upon performance (but again, it’s definitely not pay for play)

You can form your own opinions on this approach, but this type of contract was bound to happen once the schools got formally involved on payments directly to the players, particularly on the heels of this Xavier Lucas transfer situation unfolding between Wisconsin and Miami.

On the governance front, the NCAA is preparing to help determine what is true NIL instead of pay-for-play by establishing a clearinghouse (it was made clear in every article I read that this third party entity is powered by Deloitte — well done, Uncle D marketing team!) that will review deals and if they are actually above board based upon “fair market rates.”

Because of this new development, collectives as we know them are likely going to be phased out and either brought in-house or reworked to be focused on actual marketing deals instead of funneling money to players.

Most big schools are projecting finding about $3-7 million per year in true NIL marketing deals above the $20.5 million cap, which is going to be necessary to compete in many officials’ minds. Per Yahoo:

And there will be tricks.

As an example, given the new rules with the clearinghouse do not start until July, schools are offering front loaded, mega deals to players right now, and some insiders estimate the market is inflated by as much as 40% currently.

The agreement will bring just as many questions as answers, though.

Is this really going to work?

The agreement is not without its detractors, and it’s likely going to be met with scrutiny, criticism, and litigation.

First, there is likely going to be fallout and litigation from roster cuts and potential damage to Olympic sports. Walk-on’s and players in non-revenue generating sports are already lining up with concerns, and it’s not a far stretch to see those concerns and letters turn into lawsuits.

Next, what happens with Title IX here? The Department of Education determined last week that the revenue sharing agreements need to be split equally between men’s and women’s sports in order for the school to stay Title IX compliant (deeper dive on Title IX and potential impacts in my article from last year here).

Putting aside personal feelings on this — while the intent is good and it may be the correct interpretation of Title IX, it practically doesn’t make sense — this would blow up the current plans the schools have for cap allocation and lead to a ton of litigation.

The key thing to know here is that while Title IX is federal law, this ruling is not and is not owed deference by the courts. Also, keep your eye on whether the Trump Administration decides to get involved and reverse the decision in order to clear a path. Regardless, this will likely also end up in the courts about how it will be enforced.

Speaking of enforcing things, my final point here is what exactly the NCAA is able to do now.

As we have talked about in SBP time and again, the NCAA has racked up a ton of court losses the past several years, and their enforcement mechanisms are going to be met with a legal challenge pretty much every time now under antitrust laws.

It likely serves a purpose going forward for Olympic sports and smaller schools, but its ability to make an impact in college football (and even some level of college basketball outside of March Madness) is minimal.

Which brings us to our last question.

Who is going to step in and fix this?

There is a Polynesian adage about “standing on a whale, fishing for minnows.” I can’t think of a more apt description of college sports right now.

We all agree there is a problem. Anyone who has watched the last few years play out agrees that the current state of college athletics is both not optimal and not sustainable.

House is a step in the right direction, but it’s going to come back to the same fundamental issues:

• Schools skirting the rules to pay players more in order to win

• Uneven contracts and application of the rules across the college sports landscape

• Any semblance of new enforcement rules — i.e., the clearinghouse — will get challenged as a “cap” or an unnecessary constraint on trade and likely end up in court

The question from here becomes: where does the buck stop and which interested party — players, schools/conferences, NCAA, Congress, or someone else — is going to wade into the fray first and actually try to address the real problem with a hard, but correct solution?

To me and most experts I talk with, that solution is either a law from Congress changing Title IX so football and men’s basketball can get split out as its own entity and/or some kind of collective bargaining agreement with the players.

Anything else at this point is going to be another minnow.

I have yet to see tangible progress — or even the semblance of a conversation — on either of those topics, so it’s likely we’ll be heading into the 2025 season in July with a newly remodeled Tower of Babel for college athletics.

As I have said in the past, buckle up, friends.

🍸️ Impress Your Friends at a Cocktail Party

Want to show off your sports knowledge in a public setting but don’t have time to read the deep dive? This section is the CliffsNotes of this week’s topic

• Opener: College football season is over, and we start heading towards a post-”NIL Era” in July where the agreements within the House settlement are implemented. This new world brings up three key questions for me

• Shot: House has three key areas: revenue sharing of up to $20.5 million per school across sports, NIL to go through a third party clearinghouse (powered by Deloitte), and no roster limits.

• Shot: What’s actually going to make it and be put in place? We’re already seeing schools begin to align personnel and make plans (expect most P4 schools to allocate about ~90% of the cap to football and men’s basketball), put contracts in place with the players (that explicitly state it’s not “pay for play” but they can increase or decrease payment based upon performance), and figure out ways around the NCAA to put additional money into players’ pockets.

• Shot: To this last point, is this actually going to work? There are concerns from non-revenue generating (Olympic) sports, questions about Title IX, and what the NCAA can really do at this point to enforce the rules in place given its losing streak in court.

• Chaser: When reviewing all of this, I come back to the same question: who is actually going to fix this? Everyone agrees there is a problem, but no one is truly fixing it. There is a Polynesian adage about “standing on a whale fishing for minnows.” House is a start, but college athletics feels like it is perpetually chasing minnows instead of tackling the hard problem and coming up with a solution: getting a law changed or coming up with some kind of collective bargaining agreement that sets nationwide rules.

🤯 “Whoa” of the Week

Insane, mind-blowing things constantly happen in the sports business world. Here was my favorite of the past week.

1. Netflix using live sports to push itself even higher into the stratosphere

2. Strong preliminary ratings for Unrivaled, the upstart 3×3 women’s basketball league

💪 Weekly Reminder that Sports are Awesome

This newsletter is, of course, mostly centered on the business side of sports and the things that happen off the field. That being said, it’s important to remember why we fell in love with sports in the first place, though.

This section is meant to highlight the amazing things that happened in sports this week that serve as that reminder.

1. An 11-year old’s luck of the draw

2. The Dodgers have signed the first ever baseball player from South Sudan (likely on a deferred contract)

Thanks for reading! Let me know what feedback you have.

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Until next time, sports fans!

-Alex