The recent NCAA settlement, known as the House settlement, introduced a revenue-sharing model that allows Division I schools to compensate athletes directly.
The revenue-sharing model is separate from name, image and likeness (NIL) payments, as revenue sharing involves direct payments from school generated athletic revenue, not compensation from third parties. As the NCAA's revenue-sharing plan takes effect, administrators at universities faced critical decisions to either opt in or opt out. Programs that opt out will operate as usual, but many say they will have a competitive disadvantage. Programs that opt in can and will share 22% of their athletics revenue directly with athletes who may now be employees first, students second.
The final determination of employment status is still in the courts, but some rulings (e.g., in the case of Dartmouth men's basketball by the National Labor Relations Board) and state laws are pushing toward athlete-employee status. The House settlement is moving the needle dramatically. It is also going to have major financial impacts on colleges and universities around the country, and I'm surprised it has received so little attention in the academic community and press.
The new NCAA revenue-sharing model has all sorts of implications, but given my area of expertise, I'm mostly interested in two things: money and enrollment (which leads to money). The first question that came to my mind when I learned of the House settlement is, "Who's going to pay for it?" In a recent
Students Paying Students (the title of a recent headline about the University of Minnesota's new fee) isn't new. Student athletic fees are common, but increasing those fees seems out of touch with the state of the world today. In addition, funding goes way beyond student fees. Even before the settlement, at nearly every university in America, money already moved from academic budgets to fund athletics programs that are underwater. And contrary to popular belief, that happens at the smaller universities, and the big ones too. Look no farther than USA Today's periodic analyses showing schools transferring millions annually from institutional funds to athletics. Even then, the total impact of athletics on academic budgets is difficult to trace because there is direct support, and there are other indirect hidden resource exchanges too, like deferring fundraising to athletics instead of academics. On the flip side, athletics brings in some students and a return of tuition dollars to academics, and keeps alumni engaged.
This is all pretty complicated to sort out, so perhaps we can just look at the hard dollars that change hands. Colleges with mid-sized D1 athletics programs, like the one I work at, commonly spend around $5 million to $10 million from general academic funds to prop up athletics shortfalls. That might sound like peanuts to some, but that's often 10% or more of the revenue generated from tuition and fees. Across the Football Bowl Subdivision, data shows that in 2024 athletics departments spent about
Why do I care? The implications may also have ripple effects on academic programs poised to grow, like accounting programs. Over the past decade, many accounting programs, once considered secure, have experienced the lion's share of business school budget cuts driven by declining enrollments and the shrinking accounting pipeline. Now, as we are seeing a sizable turnaround in student interest in accounting degrees, many departments find themselves without the faculty capacity or infrastructure to meet rising student demand. The challenge is that as enrollments bounce back, the institutional will and budgetary slack necessary to reinvest in academic programs like accounting are lacking, and that will persist when more future funds are diverted to support athletics and other high-cost priorities. In interviews with accounting department heads across the country, one department head said, "Our accounting program has lost 30% of [the] faculty lines since 2019, and even though enrollment has rebounded, it doesn't look like resources will follow, resulting in a reduction in elective offerings and enrollment caps."
Another department leader stated, "Our alumni engagement and fundraising activities are being curtailed under fear they might divert fundraising from new priorities."
"We're watching the profession regain momentum, but the accounting academic programs are being left behind," stated another. 'We're preparing for growth with fewer resources and pretending that won't have consequences."
Another said, "We are having the same discussions here."
There is an argument that university investments in more competitive athletics result in more enrollment (and dollars) beyond just the athletes due to things like the so-called "Flutie effect". But the Flutie effect is dramatically overrated as dozens of legitimate studies show that more successful athletics teams have very little effect on enrollment and resources, only yielding modest returns in unique situations that are short-lived. To be fair, research also generally suggests that dropping athletics altogether is not beneficial and can hurt enrollment and alumni engagement, so athletics can be very helpful to a university, but enormous investments are not. The research unequivocally shows that large investments to build more competitive teams usually yield little return in terms of applications, academic profile, or long-term institutional value. The incremental ROI is arguably negative.
I'm sure the administrators at St. Francis University, for example, are seeing that, too, and they called it quits this past spring. St. Francis is moving from D1 to D3 where athletics supports academics. And while D1 schools are grappling with how to fund athletics, D3's are adding sports, adding JV teams and leveraging people's desire to compete. It's a pay-to-play model, not get paid to play. That sounds brilliant, so why don't we all do it? Inequity of course. Most families can barely afford college, let alone one that charges you extra to extend a sports career. That's a playing field for the affluent.
So, how do you find sanity and prevent D1 NCAA athletics from crippling campuses across the country with this new revenue-sharing model, while being fair to students and student athletes alike, and preserve the goodness of sports? I've long thought that large athletics departments should be separate entities that are decoupled from the university. Oh wait, they are. Or aren't they? The answer is usually, "kind of." With NIL and this new revenue-sharing model, it seems more clear that D1 athletics departments that opt-in are just for-profit, semi-pro, sports entertainment businesses. Athletes at schools that opt into revenue sharing are effectively high-paid employees first, students second, and their employer is providing tuition assistance just like other employers do. The athletics departments are businesses, so one way to clean up the college athletic funding mess might be to just treat them as such.
Sports entertainment athletics departments should probably start paying for usage of the university brand and other things, since they are officially a business. The universities and athletics departments could start paying "each other" for services. At most universities, the athletics departments generally use billion-dollar facilities and the university name at little to no charge. They use "The University of" brand at will. It is on the front of their uniforms. But university academic affairs commonly "pay" athletics departments for the rights to use things like athletics logos. Doesn't that sound bizarre? It's another hidden resource exchange. But the team isn't the brand, the university is … or at least a big part of it. Duke basketball, for example, isn't Duke basketball without "Duke". Without Duke, Duke basketball is merely a semi-pro team in Durham, NC, and semi-pro sports aren't very lucrative.
With the impacts of the House settlement coming down on universities like a hammer, perhaps universities should formally and informally decouple from these professional sports entertainment athletic departments once and for all, and form contractual relationships, just like the universities have with other businesses. Free market forces might take hold and rein in costs and dictate value. And perhaps these new businesses should pay taxes too. Where is the IRS in all of this? Don't other businesses pay taxes? And, by the way, donations to businesses are not tax deductible. It seems any tax-exempt status held by athletics departments that opt into the revenue sharing model should be in question. If this starts happening, I'm guessing more schools, like St. Frances, may ultimately cash it in to avoid this mess, or we will see major changes and sanity return to the models and ballooning budgets.
So where should academic institutions spend their (and often taxpayers') money that goes to academic institutions? How about this novel idea: academics? Investments in academics yield consistent returns for universities. We've been studying why students select a particular college for nearly a century and consistently, over time, athletics success has had little impact. In the most recent EAB (2025) study on university choice, things like the number of majors, number of student orgs, affordability, graduates' success, campus safety, the number of study abroad programs, etc., top the list. Football or basketball success didn't even make the list.
Perhaps the House settlement will provide an opportunity to revisit the entire college athletics funding model, or perhaps it will just further erode the academic programs at universities if administrators, boards of regents and legislators fail to adjust. Who knows? But what I do know is that the pie isn't getting any bigger, but a lot more people are asking for a slice.
