Four thoughts on the D1+ proposal from the NCAA

Good morning, and thanks for spending part of your day with Extra Points.

Last week, NCAA President Charlie Baker launched a thousand thinkpieces with his proposal to dramatically change how the NCAA, and in particular, D-I, is governed. The gist of the proposal, which called for creating a new sub-group within D-I, would allow schools to directly compensate athletes, as well as sign athletes to NIL deals. Such a deviation from the established definitions of amateurism would have been unthinkable a decade ago, but times are changing, and Baker is trying to get to NCAA to change with them.

The specific letter, I believe, can be found here.

This story is a very Extra Points kind of story, and I wanted to take a few days to text some smart folks I know in the industry, read as much as I could, and think. After taking a few days and listening to as much commentary on the proposal as I could, I have a few major takeaways.

Remember…This is only a proposal.

Before we all tie ourselves in knots about who can afford the proposed $30,000 minimum per-athlete spend in the proposal, or about what constitutes an “enhanced educational trust fund” or any of the other specifics…let us remember that this document is not meant to be a fully-formed, exhaustive blueprint for NCAA reform. This is a first draft.

I can tell you that conversations about some level of direct compensation for athletes, or about allowing schools to directly facilitate some NIL activity, have been going on almost as long as I’ve been writing this newsletter. I’ve seen white paper proposals that have been passed from AD to AD, spitballed ideas with conference commissioners, and heard other industry voices advocate, or at least consider many similar proposals. But once my recorder turned on, or it was time to quote anybody on the record about anything, almost every AD I know immediately clams up.

Part of why Baker released this proposal now is to force the issue and drag many of those conversations out of group texts and hotel bars and into the light, where they can be properly picked apart and improved.

From what I’ve heard and read, I do not expect any formal vote on any of these proposals at the NCAA Convention next month. I could be wrong, but that would be very surprising to me. I do expect there to be a zillion panels about it, which is what needs to happen before legislation that could get through the NCAA membership can be created.

I expect whatever eventually gets voted on will look different from this letter. It’s useful to discuss this paper as a document that should shift the Overton Window of college sports reform, or as a starting place for future conversations, but I don’t think it’s useful to treat this as exactly where the proverbial line in the sand will be drawn.

This proposal isn’t just for the schools…it’s for Congress.

Here’s a little secret about NCAA reform. Charlie Baker and a bunch of the smartest university presidents, athletic directors, coaches, athlete advocates, and academics can all huddle around some conference tables and create a PDF that somehow perfectly threads the needle of compromise, building a new system that everybody in D-I can agree on…and somebody else can blow it to hell in a week.

This proposal is conspicuously mum on the question of athlete employment status, and while it likely would protect the NCAA from some level of future antitrust litigation, it does nothing to address the problem of their (myriad) current litigation problems. And Congress, the National Labor Relations Board, or the federal court system could throw whatever proposal the NCAA puts together out the window.

Baker himself appeared to admit that even this allegedly radical reform effort would still require Congress to grant the NCAA an antitrust exemption. The courts will not be impressed by voluntary “educational trust funds” if they find that those athletes were improperly classified as non-employees. Fundamentally, the people who are really in charge of college sports reform at the moment are more in Washington D.C. than they are in Indianapolis (or Boston).

My read here is that this proposal is also meant to be something of a peace offering to lawmakers, indicating that they’re willing to give athletes more revenue and flexibility…perhaps in exchange for some of the legal protections the NCAA so badly wants.

I remain unconvinced that a compromise is possible with this White House and this Congress and this time on the calendar…but perhaps the NCAA is banking that a different Congress and president will be the ones who will ultimately give them what they want…before the courts can force the issue.

Who can afford this isn’t the right question

For the sake of argument, let’s pretend for a moment that NCAA membership votes to codify this proposal exactly as written, meaning that schools that want to participate in D-I+ (I like this nomenclature better than D-0 or D-IV, but we’ll workshop it) will need to fork over at least $30,000 per athlete, per year, for at least half of their athletes.

Using some back-of-napkin math, I reckon that would cost anywhere from $5-15 million a year, depending on the size of the athletic department. If $30,000/year ends up being the minimum, I also feel pretty comfortable that many schools will decide to spend more than that to be attractive in recruiting, so the cost is likely to increase even more.

There aren’t many athletic departments that could immediately absorb $10 million+ in new expenses by simply tracking down new revenues or cutting a teensy bit of fat here or there. But that isn’t how direct athlete compensation is likely to work.

I think it is more helpful to think of athletes becoming directly paid (in at least some capacity) as more an expense redistribution, rather than a completely new expense. Almost all schools that seek to meet that benchmark will have to redistribute money from other stuff to pay the athletes.

The most obvious place where I believe you’ll see resource redistribution is with coach and staff salaries. You cannot pay a defensive coordinator close to two million dollars in a world where you also need to pay players. You cannot pay the strength coach $500,000, have three ex-coaches serve as analysts who pull down $105,000 a year, have two chief-of-staff type guys making six figures, and a head coach making seven million. Salaries for coaches, assistant coaches, athletic directors, and senior staff are going to come down. Nick Saban and Kirby Smart probably don’t need to take a pay cut…but almost everybody else will.

We’re already seeing it now, but we’ll continue to see spending on new facility gold-plating slow down, spending on expensive consultants and SaaS products decline, and a contraction in parts of the College Sports Industrial Complex. You’ll also see elite athletic departments offer fewer services and support to athletes…the stuff they were providing mostly as a proxy for actual salaries.

So who can afford all of this? I legitimately believe that not only could virtually every P5 program afford to pay at least the proposal minimum in direct athlete compensation, but probably at least two dozen other programs…and maybe more.

But a more interesting question is going to be who wants to pay for this. Are there schools with the financial means who will finally decide, for ideological, theological, or political reasons, that now is the time to pull back and participate in a different model? Are there other considerations at play here besides raw finances? I’m not a higher education expert, but I’ve learned enough from this beat to think that the answer to those questions…is yes.

This proposal is also about control

You know what’s going to happen when schools can directly cut NIL deals with their athletes and can start paying some level of direct compensation?

They’re not going to need middlemen to process those payments as much. Donors will have an incentive to give directly to the athletic department again. And many, many NIL collectives are going to fold.

I don’t think every NIL collective is going to fold. Some of them conduct enough meaningful marketing activity to provide a legitimate service to athletes and brands, and will continue to operate as marketing agencies. Depending on the specifics of what the new NCAA (or legal) regulations are, some collectives may still occupy a market niche to allow schools (and boosters) to funnel more money to football and basketball players without triggering a Title IX lawsuit. A few fanbases are so large that they could still support an expansive athletic department NIL program and a private one.

But most of them? Most of them are on borrowed time. They’ll either merge with the athletic department (or official booster foundation), unsuccessfully attempt to pivot to a marketing agency model, or shut down due to a lack of donor funds.

That’s not an accident. I don’t want to sit here and paint all collectives as bad, because they aren’t. Even an imperfect system that provides money and security to athletes that they could not enjoy in the previous world is a moral improvement. Extra Points is a pro-getting-the-bag publication.

But this current system is not good governance. It doesn’t make sense for a school to outsource its payroll department to an entity it might not control. It doesn’t make sense for athlete and department fundraising to squabble over the same (limited) pool of donors and corporate partners. It doesn’t make sense to lock athletes out of the best multimedia rights activation possibilities because the MMR partner and the school can’t easily share marks or participate in a joint campaign without triggering an investigation on Croot Crimes.

A full-on employment model probably blows up a lot of the NIL and Collective Industrial Complex anyway, but significant NCAA reforms could undermine that world well before the courts (or Congress) get around do it. I’m not sure Baker’s proposal was built specifically to do that, but to athletic administrators, that would be a welcome feature of reform…not a bug.

I still have lots of follow-up questions about how all of this world would work…from what constitutes an educational trust fund, to why the NCAA believes that TV revenue sharing can’t co-exist in this world, to why Baker would want unified D-I championships with schools in the D-I+ model, and more. But those can wait because I don’t think anybody knows the answers to those questions yet.

Last month, I gave a big presentation where I argued that the time was now for college leaders to proactively seek to build a new system before the court system decided to do it for them. I’m glad to see that Baker and other senior NCAA leaders agree, and I’m glad to see somebody take that first step.

But I hope it isn’t the last one. Because if it is…the final say will still come from outside the college sports world. And it might not be the answer schools are hoping for.

Thanks to everybody who sent emails, DMs, texts, and more about my big announcement last week. To reiterate, I plan to continue to write as normal for the rest of this week, and then take three weeks off. Am I probably going to post a few times during that time off? Of course I am.

I promise to let everybody know as soon as I have something more definitive to share about the ownership future of Extra Points. But I will say that based just on who has reached out since Friday, I feel more confident in this publication’s future than I have for weeks.

Thanks for reading. I’ll see you in your inbox tomorrow.