NCAA Proposes New Framework to Pay Athletes at Richest Programs

Schools would use trust funds and direct NIL payments to more directly compensate athletes.

In a letter to NCAA membership Tuesday, president Charlie Baker outlined a major new proposal to alter the association’s structure and create a new subdivision that would allow the richest programs to more directly compensate athletes through the use of “educational trust funds” and direct NIL arrangements.

Baker’s letter calls for those schools to “invest at least $30,000 per year into an enhanced educational trust fund for at least half of the institution’s eligible student-athletes.” It also would require them to “commit to work with their peer institutions in this subdivision to create rules that may differ from the rules in place for the rest of Division I. Those rules could include a wide range of policies, such as scholarship commitment and roster size, recruitment, transfers or NIL.”

Baker’s proposal represents a radical shift for the NCAA and is aimed at preserving events like the organization’s basketball tournaments. He attended the men’s semifinal between UConn and Miami this year in Houston :: Bob Donnan/USA TODAY Sports

Baker’s vision for the future of the NCAA is a bold stroke, the kind of which has rarely—if ever—been championed by the body’s president. The former governor of Massachusetts, who started his job earlier this year, has quickly established himself as a change agent in an industry that has been systemically and philosophically averse to radical revision. Along the way he’s built relationships with conference commissioners who can help carry his message to the member schools.

In broad strokes, this proposal is a balancing act between liberating the power-conference programs to conduct business as they see fit while also avoiding a breakaway from the NCAA structure by that subset. The importance of avoiding any splintering of Division I would be felt in sustaining the NCAA basketball tournaments as they currently exist, and in broad-based access to other championships.

“It kick-starts a long-overdue conversation among the membership that focuses on the differences that exist between schools, conferences and divisions and how to create more permissive and flexible rules across the NCAA that put student-athletes first,” Baker wrote. “Colleges and universities need to be more flexible, and the NCAA needs to be more flexible, too.”

Baker proposes building in-house revenue-sharing mechanism that would lessen—if not eliminate—the problematic role of third-party collectives. It also would, in theory, adhere to Title IX—thus opening unprecedented revenue streams to some women athletes.

However, a reduction in the number of Olympic sports being offered at schools willing to make this level of investment also seems to be a likely byproduct. The proposals might help stave off a financial wipeout in court via the House vs. NCAA lawsuit, but they also would lead to a further gap between haves and have-nots and a further stratification of Division I membership.

The choices would largely be left to the universities to decide what their level of commitment would be, and whether it would align with the new subdivision’s mandates. The four largest and richest conferences—the ACC, Big 12, Big Ten and SEC—will assuredly be in the new subdivision. Where the other 27 Division I conferences fall in line is to be determined.

“First, we should make it possible for all Division I colleges and universities to offer student-athletes any level of enhanced educational benefits they deem appropriate,” Baker wrote. “Second, rules should change for any Division I school, at their choice, to enter into name, image and likeness (NIL) licensing opportunities with their student-athletes.

“These two changes will enhance the financial opportunities available to all Division I student-athletes. They will also help level what is fast becoming a very unlevel playing field between men and women student-athletes because schools will be required to abide by existing gender equity regulations as they make investments in their athletics programs.”

For schools in the richest conferences, committing at least $30,000 a year to at least half their athletes is an expenditure that will run to several million dollars. There are, for instance, more than 700 scholarship athletes at the University of Texas, so the baseline cost would be roughly $10.5 million per year—except it would run much higher than that, given what football and men’s basketball players, and a select few others, could command in NIL opportunities.

Baker’s letter outlines 10 benefits the new subdivision would offer:

• First, it significantly enhances the NCAA’s ability to provide world-class educational and athletics experiences to the most elite student-athletes.

• Second, it enables the continued investment in women’s sports and women student-athletes at a level that compares with future investments in men’s sports.

•Third, it gives the educational institutions with the most visibility, the most financial resources and the biggest brands an opportunity to choose to operate with a different set of rules that more accurately reflect their scale and their operating model.

• Fourth, it gives colleges and universities that are not sure about which direction they should move in an opportunity to do more for their student-athletes than they do now, without necessarily having to perform at the financial levels required to join the subdivision.

• Fifth, it gives other schools in Division I the ability to do whatever might make sense for them and for their student-athletes within a more permissive, more supportive framework for student-athletes than the one they operate in now.

• Sixth, it provides student-athletes in the most competitive and well-resourced part of Division I with significant educational benefits that they can use to launch themselves once they either graduate or reach the end of their athletics eligibility, and it does so in a way that respects and complies with the rules concerning gender equity.

• Seventh, it gives the schools most impacted by collectives, the Transfer Portal and NIL the opportunity to create rules, programming and resources that are in the best interests of the vast majority of their student-athletes, instead of just a few.

• Eighth, it maintains the existing NCAA national championship model across all existing Division I sports, except FBS football, which continues to operate under the rubric of the College Football Playoff.

• Ninth, it provides an operating model the NCAA and its member institutions can incorporate into ongoing discussions with Congress about the future of college athletics.

• Finally, it kick-starts a long-overdue conversation among the membership that focuses on the differences that exist between schools, conferences and divisions and how to create more permissive and flexible rules across the NCAA that put student-athletes first. Colleges and universities need to be more flexible, and the NCAA needs to be more flexible, too.