16 min read
A new NCAA revenue-sharing cap will increase by over 10%, jumping from $18 million to about $21.3 million next year. This allows major college schools to distribute more money to student-athletes from school revenue shares based on ticket sales, media rights, and overall revenue generated...
In a significant development for college athletics, a new NCAA-based plan will substantially increase the amount of money major college schools can distribute to student-athletes through revenue sharing. Under the revised proposal, schools will see an increase of over 10% to the pool of funds available to compensate athletes, adding approximately $3.3 million to most institutional budgets for athlete payments.
This expansion of athlete compensation represents another landmark moment in the evolution of college sports economics, following the introduction of Name, Image, and Likeness (NIL) rights and the landmark House v. NCAA settlement that paved the way for direct institutional payments to athletes.
To understand the significance of the new plan, we need to examine the House v. NCAA settlement that created the framework for institutional revenue sharing with student-athletes.
The House case, along with several consolidated antitrust lawsuits, challenged the NCAA's long-standing prohibition on compensating athletes beyond scholarships. Plaintiffs argued that the NCAA and its member schools violated antitrust law by colluding to suppress athlete compensation while generating billions in revenue from their labor.
In June 2024, the final settlement of these multiple antitrust suits was approved, fundamentally changing the economics of college athletics. The settlement included:
Under the original settlement terms, the revenue-sharing figure was calculated based on multiple factors including:
The initial cap was set at $20.5 million per school annually, with provisions for this amount to grow over a 10-year period based on overall revenue increases in college athletics.
However, the original plan included a provision that significantly impacted the actual amount available for distribution. Schools were allowed to reduce their $20.5 million revenue-sharing cap by up to $2.5 million for new scholarship money offered to athletes.
According to reporting by Sports Business Journal, most schools implemented this reduction to its maximum extent, effectively operating under an $18 million functional cap rather than the nominal $20.5 million figure.
Why did schools take this reduction? Several factors drove this decision:
The revised plan under consideration would make two significant changes that substantially increase athlete compensation:
Under the new proposal, schools would no longer be permitted to reduce their revenue-sharing cap for scholarship expenses. This immediately restores the full $20.5 million cap, adding $2.5 million to the pools of most schools currently operating at the $18 million level.
Additionally, the planned annual increase would jump by approximately 4%, adding roughly $800,000 to the available pool. This accelerates the growth trajectory compared to the original plan.
Combined, these changes mean that schools currently operating under the functional $18 million cap will see their available revenue-sharing pool increase to approximately $21.3 million for the upcoming year—an increase of $3.3 million or about 18%.
Over a 10-year period, with continued annual growth, the cumulative difference could reach tens of millions of dollars per school, representing a massive expansion in athlete compensation.
While schools maintain significant flexibility in determining how to distribute their revenue-sharing pools, the court-approved settlement of prior damages provides guidance on expected distributions:
For back pay to former athletes, the settlement allocated funds as follows:
For forward-looking revenue sharing, schools have more flexibility but are expected to consider factors including:
Universities must carefully balance these factors while ensuring compliance with both Title IX and the settlement terms.
The article provides a revealing case study from the University of Kentucky, illustrating how revenue sharing fits within the broader compensation landscape:
Recent reports indicate that Kentucky's men's basketball roster is being compensated at approximately $22 million—a figure that exceeds the school's entire revenue-sharing allotment.
How is this possible? The answer lies in understanding that institutional revenue sharing represents just one component of athlete compensation:
Kentucky Athletic Director Mitch Barnhart previously indicated that the university plans to split its revenue-sharing pool (initially $18.5 million) across six sports, with football presumably receiving the largest allocation.
With the new cap of approximately $21.3 million, Kentucky might adjust its distribution strategy:
The Kentucky example demonstrates that elite programs view revenue sharing as just one tool in a comprehensive compensation strategy designed to attract and retain top talent.
The increase in revenue-sharing caps affects different types of programs in distinct ways:
Advantages:
Challenges:
Opportunities:
Constraints:
Potential Benefits:
Concerns:
The increase in revenue-sharing caps is driven by the overall growth in college sports revenues:
Media Rights Explosion:
Playoff Expansion:
Enhanced Sponsorships:
Direct-to-Consumer Content:
The $21.3 million revenue-sharing cap represents roughly 22% of the total revenue of a typical Power Five athletic department generating $95-100 million annually. This percentage aligns with professional sports leagues where player compensation typically ranges from 48-51% of revenues.
The increased revenue-sharing cap creates significant opportunities for college athletes:
For athletes aspiring to business careers after sports, the evolution of college athletics compensation provides valuable lessons:
Modern college athletes must navigate:
This complexity mirrors corporate compensation structures (salary, bonuses, equity, benefits), preparing athletes for business negotiations after their playing careers.
Athletes who master financial management during college enter the business world with advantages:
Athletes receiving significant compensation can:
Despite the positive aspects, the increased compensation cap raises several concerns:
As college athletics continues evolving, several policy questions require attention:
Currently, schools have flexibility in how they distribute revenue-sharing funds. Some argue for minimum thresholds to ensure athletes actually benefit from increased caps.
The intersection of revenue sharing and Title IX gender equity requirements remains unclear. Courts and regulators will need to clarify expectations.
With football and basketball dominating distributions, athletes in other sports may receive minimal or no revenue-sharing payments despite contributing to their programs.
If college sports revenues continue growing, pressure will mount to increase caps further or remove them entirely, moving college athletics closer to professional sports models.
The increase in NCAA revenue-sharing caps from $18 million to $21.3 million represents more than just larger numbers—it signals a fundamental transformation in how college athletics operates.
For decades, college athletes generated billions in revenue while receiving minimal compensation beyond scholarships. That era is definitively over. Today's college athletes are:
The Kentucky men's basketball example—$22 million in total compensation for a single roster—would have been unthinkable just a few years ago. Today, it represents the new reality of elite college athletics.
For athletes transitioning to business careers, this evolution provides both resources and education. They're learning financial management, contract negotiation, brand building, and entrepreneurship—all while still competing at the highest levels of college sports.
As Joe Cox notes in his reporting, "the one indisputed fact is that more money should be available for school distribution to student-athletes. While how big of a piece of the overall financial pie it is may vary, the big picture is a positive for student-athletes."
The increase to $21.3 million is likely not the end of this evolution but rather another step in a continuing transformation. As college sports revenues grow and legal pressures mount, athlete compensation will continue increasing, moving college athletics ever closer to a professional model.
For aspiring athlete-moguls, the message is clear: master the business side of sports while you're still playing. The financial literacy, negotiation skills, and entrepreneurial experience you gain managing your college athletics compensation will serve you throughout your business career.
The playing field is changing, and those who understand both the athletic and business dimensions will be best positioned to succeed—whether on the field, in the boardroom, or both.
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