My best attempt to explain the new "Salary Cap" and NIL Go

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The major professional sports leagues in the U.S. all have something called a collective bargaining agreement, or CBA. This document, negotiated between labor and management, spells out how the sport is governed, touching everything from disciplinary actions to the salary cap, contract rules and much more.

The NBA CBA is over 500 pages, and each team employs accountants and lawyers whose jobs are to build strategies on how to best build a roster while complying with the complicated rules. I write about nerd stuff for a living, and I’ve struggled to read the entire NBA CBA. It’s not for the faint of heart.

College athletics does not have a CBA. It can’t, because right now, college athletes aren’t employees, and they aren’t able to enter into legally protected collective bargaining. Perhaps that changes at some point in the future, but it isn’t the reality right this second.

Instead, we have the House settlement. Beyond governing back damages, the settlement terms also permit institutions to directly pay athletes for the first time, while also governing exactly who can pay those athletes, how much they can pay them and how they can be paid. It’s an awful lot like a CBA, only without that pesky bargaining with the labor part.

In practice, there’s now something of a soft salary cap in college sports. For the 2025-26 academic year, that number is $20.5 million dollars.

But where did that number come from? What sorts of things are subject to the cap? What about payments beyond the cap? How does all of this actually work?

Great questions. I will do my very best to answer them, with the caveat that a) there’s still a shocking amount out there that nobody really knows yet, b) I do not work for the NCAA or the College Sports Commission and c) maybe none of this even matters anyway? Who knows.

Okay, why is the cap $20.5 million? That seems like a random number. Isn’t that a little low?

It isn’t completely random.

Every school in D-I, public and private, has to file an annual document with the NCAA called the Membership Financial Reporting System, or FRS Report. The FRS Report is (ideally) a standardized, itemized athletic department budget report, one that tracks major revenues and expenses, itemized by sport.

For (most) public schools, these FRS reports can be obtained by filing open records requests. A few schools even make their reports proactively open to the public by hosting them on school websites. The Extra Points Library has hundreds of these documents, which I then use for a lot of my regular reporting. The private schools don’t have to share their reports with anybody other than the NCAA, even though I personally wish those institutions would leak them to me.

Anyway, these reports show how much earned revenue each institution earns over a fiscal year. To come up with the $20.5 million figure, the parties in the lawsuit added up all the revenue the P5 schools + Notre Dame earned in a variety of categories (ticket sales minus donations tied to season tickets, input revenue from away game participation, media rights money, NCAA grants and distributions, non-media conference distributions, bowl game revenues, conference bowl revenue distribution, athletic department sponsorship revenue, licensing, MMR and royalties, etc.), divided that number by the number of institutions, then took 22 percent of that figure.

What do you get? $20.5 million. The cap will go up next year.

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