Can BYU Afford $20M Annually in Athlete Revenue Share?

Casey Lundquist | May 24, 2024

Nov 19, 2022; Provo, Utah, USA; Brigham Young Cougars athletic director Tom Holmoe after a game against the Utah Tech Trailblazers at LaVell Edwards Stadium. Mandatory Credit: Rob Gray-USA TODAY Sports / Rob Gray-USA TODAY Sports

Thursday was a historical day in the world of college sports. For the first time in over 100 years, the NCAA and the Power Five conferences agreed to allow schools to directly pay players. The agreement comes as part of a settlement for a handful of antitrust cases. As reported by ESPN, "The parties a have agreed to a revenue-sharing plan allowing each school to share up to roughly $20 million per year with its athletes."

This major change will impact every Power Four team in the near future, including BYU. BYU could pay its athletes up to $20 million annually in revenue share. That's, of course, if BYU can afford it.

That significant "if" isn't unique to BYU. Schools across the country are concerned about the prospect of paying $20 million annually to their athletes. Not because they don't have enough revenue to go around - they certainly do. Over the last couple decades in college sports, however, major college athletic departments have been in an arms race to build the best facilities, hire the biggest staffs, and pay for every competitive advantage imaginable. If they've earned a dollar, they've spent that dollar. These athletic departments haven't been making a profit to pay shareholders - they've been spending everything they make in the name of winning.

Can those schools really unwind those costs to absorb $20 million annually? Some simply will not be able to afford it. Most importantly, will BYU be able to afford it?

First and foremost, we know that BYU athletics is financially independent. They say as much on their website. "BYU Athletics is self-sustaining and receives no tithing or tax dollars to run its programs." Second, while we can't look at BYU's financials to confirm, it's pretty safe to assume that BYU does not spend more than they earn. That would go directly against the church's council to spend within your means. For the purpose of this article, we will assume that BYU has been spending within its means.

In 2021, the most recent year of available data, BYU earned $106.4M annually. Since BYU doesn't spend more than they earn, we know that BYU's expenses did not exceed $106.4M annually.

There's never an easy time to absorb a $20 million increase in expenses, but now might be the best time in BYU history to do it.

BYU's revenue is going to materially increase over the next several years. BYU will receive a full share of media revenue over the next few years when the new Big 12 media deal kicks in. BYU will also receive a larger share of the College Football Payout and more money from NCAA tournament units. That combination of things, according to our rough math, could translate to an increase of $25M-$35M annually vs 2021.

That could cover it had BYU held its expenses flat, but we know that's not the case. BYU has increased its investment in coachings staffs, recruiting staffs, nutrition staffs, and other areas of the athletic department since joining the Big 12.

Again, we don't have the detail, but we can assume that those cost increases will eat into some of that incremental revenue. Either way, the gap that BYU will need to close could be closer to a couple million instead of the full $20 million that other schools are needing to come up with. If BYU is short a couple million, perhaps donors could make up the difference, or maybe the increase in ticket prices will fund the last couple million.

BYU's frugality during independence might have limited their competitiveness at the time. Ironically, that same financial discipline might be what enables BYU to be more competitive in the future. Unlike other schools, BYU's didn't announce plans to construct new facilities worth hundreds of millions and they ran a very lean department. It must have been tempting to spend more aggressively to keep up with other programs, but BYU didn't spend more than it could independently fund.

BYU has talked about projects like renovating Lavell Edwards Stadium. Perhaps projects like that will need to wait while BYU gets accustomed to athlete revenue sharing.

It's a new era of college athletics. To be competitive, BYU will need to be competitive in revenue sharing. On the surface, it appears that BYU will be able to play ball.