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NCAA’s settlement proposal facing ‘strong objection’ from Big East

NCAA's settlement proposal facing 'strong objection' from Big East

On the brink of a historic settlement decision, the NCAA is facing pushback from one of its most prestigious basketball conferences.

In an email Saturday to her members, Big East commissioner Val Ackerman expressed “strong objection” to the NCAA’s proposal on how it is determining back damages related to the consolidated settlement in the House, Hubbard and Carter antitrust cases. And she is seeking ways to “alter the plan that the NCAA and A5 have orchestrated,” she writes in the letter, a copy of which was obtained by Yahoo Sports.

The settlement, in the final stages of adoption, consists of three main concepts: back damages owed to former athletes ($2.77 billion); revenue-sharing for current and future athletes (upward of $22 million annually per school); and an overhaul of a variety of NCAA elements, including scholarship and roster limits, governance structure and enforcement arm.

Over a 10-year payback period, the NCAA is responsible for paying 40% of the $2.77 billion with the other 60% coming from a reduction in school distributions. To determine how much each of the 32 Division I conferences contribute, the association created a formula based on the amount of distribution that a league earned over a nine-year period starting in 2016, according to separate documents shared with commissioners. Most of the distribution that the NCAA divides among leagues— more than $700 million annually — is derived from revenues of the NCAA men’s basketball tournament.

Under the formula, the Big East will be responsible for about $5 million to $7 million annually, or as much as $70 million over the next decade — a figure that works out to about $600,000-$700,000 per school per year.

“Based on the numbers we have reviewed, the liability of the 22 non-FBS conferences under the proposed formula appears disproportionately high, particularly because the primary beneficiaries of the NIL ‘back pay’ amounts are expected to be FBS football players,” Ackerman wrote. “I have voiced the Big East's strong objections to the proposed damages framework through recent emails to [NCAA president] Charlie Baker and his counsel and through comments during commissioner calls over the past two weeks.”

While Ackerman and other non-FBS leaders plan to fight for a change in the formula, she is “unclear how much time or leverage” they have in such a battle with the leading defendants in the case: the high-revenue generating football powers in the Big Ten, Big 12, SEC, ACC and remaining and former members of the Pac-12.

Power conference leaders are planning to vote and, in all likelihood, adopt terms of the settlement in independent meetings of their board of presidents and chancellors this week. Decisions are expected starting as soon as Tuesday and running through Thursday.

The NCAA Board of Governors plans to meet Thursday when they are expected to review and potentially authorize the settlement as well, according to Ackerman’s letter. Big East leaders are expected to further discuss the matter Tuesday from their league meetings in Florida.

College sports insiders describe this week as the most consequential in college sports history, as leaders not only approve the massive back-pay terms but also agree on a framework around a new model that will topple amateurism once and for all.

“This is a seismic shift in college athletics. It’s not a matter of if it is going to happen,” ACC commissioner Jim Phillips said this past week.

The settlement framework is another stresser between the power conferences and all other Division I members. Exacerbated by disparities in football revenue and the new CFP distribution model, the power leagues are slowly separating themselves from the lot. The marriage between the two entities, all together under the NCAA umbrella, is nearing a complete collapse.

Though the new model may bind them together for the 10-year settlement duration, the new framework will include a separate governance structure for power conference-only rule-making and enforcing, according to those with knowledge of the plans — a similar structure to what was proposed in December by NCAA president Charlie Baker.

The new model, expected to be implemented in fall 2025, will permit schools to directly compensate athletes for their name, image and likeness (NIL) in a revenue-sharing concept that includes a quasi-salary cap. The cap could start as high as $22 million annually per school. The revenue-sharing element is permissive. While schools are not required to do so, those in the power leagues are expected to at least aggressively work to hit a cap amid a competitive recruiting landscape.

In the Group of Five conferences and the non-FBS leagues sharing revenue is more difficult. At that level, athletic departments do not normally turn a profit, rely heavily on university and state funding and often struggle, in this NIL era, to offer athletes much in third-party benefits. The average G5 collective is believed to have on hand around $1 million compared to the $5-$15 million in the power conferences. At the non-FBS leagues, the numbers are believed to be far lower than even those in the G5.

For those conferences, such as the Big East, the back damages loom as a significant expense compared to their athletic budget. Because the NCAA’s formula is calculated on basketball-related distribution and not total athletic budget, the Big East is at a financial disadvantage.

Its success in basketball is actually a hindrance. The league routinely earns more in distribution than even some power conference leagues. But its athletic budgets, without FBS football programs, are often significantly lower than the power or G5 conferences.

The breakdown of total damages payments offers more clarity.

The power conferences are responsible for about 40% of the school reductions for damages and the other 27 conferences are responsible for the rest. Power league schools, with a median athletic budget of about $130 million, are expecting to see a reduction of $1-$2 million in distribution annually for 10 years — potentially as low as less than 1% of a school’s budget.

In the Big East, a reduction of $600,000 annually for a decade is a much higher percentage of a school’s total budget. UConn, the only public school member of the Big East with an FBS football program, has a reported budget of $90 million. The school, winner of the past two men’s basketball national championships, is believed to be the highest-grossing athletic department in the league by far.

“While we support the goal of a settlement, which would be to avoid a trial [and the risk of a treble judgment] and allow for a flexible payment schedule for the damages penalty, we have taken issue with the manner in which the settlement amount would be paid,” Ackerman writes in her letter.

Collectively, Ackerman writes, the NCAA’s national office, Group of Five conferences and the non-FBS leagues will pay 60% of the $2.77 billion. To pay for its portion, the NCAA national office will use reserves and insurance, as well as reducing operating expenses by $18 million a year, according to separate documents obtained by Yahoo Sports.

The damages are shared among all parties for one obvious reason: They are all part of the NCAA.

Though the lawsuit specifically names as defendants each power five conference, it also names the “NCAA” and targets the NCAA’s rule around athlete compensation prohibitions. Over the years, the leagues outside of the power conferences voted in favor of, maintained support of and upheld such rules.

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