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With non-football early signing period upon us, we’re about to see how messy college sports is going to get

With non-football early signing period upon us, we're about to see how messy college sports is going to get

Months ago, Arizona athletic director Desireé Reed-Francois and her administrators created 26 different models for how the university might structure its player compensation system in the new era of revenue sharing.

Twenty-six models went to 10 models, then to four models, then, finally, to one model.

This week, that model is being executed. Over the last few days, the school has distributed revenue-sharing contracts to recruits ahead of the start of the early signing period on Wednesday, when all non-football prospects can sign with schools.

“We met two weeks ago with each one of our head coaches,” Reed-Francois told Yahoo Sports in an interview last week. “We walked them through the revenue share, scholarship models and their P&L (profit and loss). This is the gap year. This year could be bumpy, but we have a pathway forward. There is light at the end of the tunnel.”

In a way, college athletics this week enters the next phase of its evolution into a more professionalized entity: signing athletes not to national letters of intent but to name, image and likeness agreements that guarantee compensation directly from school to player. The agreements, such as the seven-page NIL contracts from Arizona to its prospects, are contingent on the House settlement’s final approval in April and its full implementation at the start of the 2025-26 academic year on July 1.

Despite the caveats, these contracts are historic in nature. They kick off what is expected to be a messy transition period that will dramatically change how athletes are paid: from boosters and booster collective groups to the schools themselves.

However, uncertainty looms.

Athletes are expected to sign agreements with both NIL collectives and the schools under a promise of compensation as part of a settlement that has not even been formally approved. Many coaches are building rosters without knowing their revenue-share amounts and, in some cases, their scholarship allotment and roster spots.

(Grant Thomas/Yahoo Sports)

In the meantime, collectives are planning to “frontload” deals with athletes as a way to create more dollars for their affiliated schools next year in the settlement-related revenue-share pool. And lingering over this all are unanswered questions about the new enforcement entity and clearinghouse charged with policing booster compensation that athletes now receive.

It has all made for an interesting time in an industry that is in the midst of its greatest transformation.

“Even though there’s a lot of work being done, as of now, it’s clear as mud,” said Ohio State athletic director Ross Bjork. “We are building the plane as we fly it. We’re almost ready to land it and we’re still building it.”

Many administrators are viewing this basketball and Olympic sport signing period as a trial run before next month’s early signing period for football. While the power four leagues have socialized draft templates of NIL contracts for athletes, the schools are not required to use them. And the drafts are lengthy (one is as many as 27 pages).

Some universities are relying upon their collectives to sign players to short-term deals that either expire at the onset of school revenue sharing (scheduled to be July 1), or include a clause that assigns the contract to the school once revenue sharing is permitted. Others, like Arizona, are operating with NIL contracts featuring the aforementioned contingency clauses. Those contracts guarantee to athletes dollar amounts, most of it tethered to their eligibility on the roster.

Some schools plan to include player buyouts as part of multi-year deals while others are using single-year contracts, administrators tell Yahoo Sports.

The situation is cloudy enough that one athletic director, Florida State’s Michael Alford, half-jokingly suggested that schools are offering athletes “IOUs” because of the uncertain future. After all, a final approval hearing of the House settlement is not scheduled until April 7.

The settlement permits schools to share millions of dollars in revenue with athletes but features a cap on that revenue pool. The Year 1 cap projection is $20.5 million per school, according to a memo that institutions received from their conferences nearly two weeks ago.

“This signing period, most schools are laying out a revenue sharing number in a kind of TBD way,” said Russ White, the president of The Collective Association, a group of booster collectives operating across the country. “They are giving an overall number between the school and collective.”

Jim Cavale, the founder of a college sports players association named Athletes.Org, believes the method in which schools are using to sign athletes is not the right one. He describes these “NIL rev-share contracts” as pay-for-play deals that schools and conferences have created without input from athletes.

In a more professionalized model, like the NFL, a players association is involved in the structure of such contracts. These rev-share deals will “cause problems for everyone involved,” he said, including the schools. Because these are not employment contracts, the enforceability of certain terms — such as buyouts or payments related to playing time and performance — is murky.

“We all know the performance of an athlete is unpredictable at any age, let alone when they are first starting to play college sports,” Cavale said.

For years, college officials have pushed back against athlete employment. And yet, these new contracts and revenue-sharing concepts only makes the legal argument for employment stronger. “All of this is creating a paper trail that will make employment a reality,” Cavale said.

Many administrators are just now deeply examining their revenue-sharing budgets related to the settlement.

How to distribute the revenue among sports is one of the top questions with which school officials are grappling, said Blake Lawrence, the CEO of Opendorse, a platform used by dozens of schools and collectives.

However, things are becoming more clear. The football-generating giants of FBS plan to disburse the vast majority of their revenue, as much as or more than 90%, to football and men’s basketball — the only two profit-turning sports at many universities. The model rewards the sports that generate the most revenue, but also aligns with the formula that attorneys in the House case are using to distribute back damages: 75-80% to football; 10-15% to men’s basketball; 5-15% to other sports.

For schools offering the maximum under the rev-share cap, the formula means that football rosters would receive $13-16 million and men’s basketball rosters $2-4 million, according to estimates. Those figures anticipate a reduction in the rev-share cap. The settlement requires schools to deduct the value of new scholarships they add by as much as $2.5 million, lowering the cap from $20.5 million to $18 million

Such heavy spending on football and men’s basketball leaves uncertain other sports currently receiving booster-backed collective dollars. For instance, some baseball teams, especially in the SEC, are at $1 million or more in annual NIL cash. Some women’s basketball teams are earning the same or more. Other Olympic sports teams at certain schools — volleyball, golf, gymnastics — are receiving hundreds of thousands from their collective.

If schools do distribute 90% of their dollars to football and men’s basketball, that leaves roughly $1-2 million for all other sports. And while additional women’s scholarships could be a route to balance Title IX, many industry experts fear that the rev-share imbalance will lead to legal challenges.

There’s something else too: At least a half-dozen major college football teams are believed to be earning more than what is likely allowable under the rev-share concept. Schools that wish to remain at their current budget must find true NIL deals for their athletes that can pass the new enforcement test. Programs like Ohio State, Oregon, Miami, Texas and even Tennessee have some of the biggest football budgets this year with numbers exceeding the high end of what might be allowable in rev-share, experts say.

“The market took off and now you’re trying to reel it back in,” said Nick Garner, the executive vice president of Two Circles, a global sports marketing firm that works with schools on the transition from the NIL collective model to the revenue-sharing concept.

Jason Belzer has an idea for administrators to solve the rev-share spending issue: Don’t spend so much on football.

“That’s the biggest mistake that ADs are going to make: fully funding a sport without having the infrastructure to decide how to best deploy their dollars,” said Belzer, co-founder of SANIL (Student Athlete NIL), an organization that manages more than 50 collectives across the nation.

“Just going in and saying, ‘I’m going to fully fund the sport!’ is not going to work. Plenty of schools spent in the tens of millions this year and they are going to have sub-500 records. That’s how GMs get judged in the NFL and NBA. That’s how ADs will be judged.”

NCAA and power conference leaders are targeting one of the world’s largest professional service networks as the third-party entity charged with operating the new clearinghouse: Deloitte.

If the deal is finalized, the Deloitte-run clearinghouse is expected to police certain non-school compensation to athletes, especially those from boosters or groups of boosters. The clearinghouse presumably will use an algorithm or formula for calculating fair market value, though much of this remains unclear. Those deals not deemed as fair market value will be rejected. The athlete must end the deal or risk ineligibility, but he or she can appeal to a court-overseen arbitration process, according to settlement terms.

As the signing period arrives, school administrators and collective officials are scrambling to strike booster deals and pay their athletes before such deals are subject to the clearinghouse. All booster deals that pay athletes after the revenue share begins — July 1, 2025 — are expected to be subject to the clearinghouse.

This has led to school collective officials designing contracts for incoming freshmen and transfers that pay all or a large portion of compensation to them in the first few months of the deal, before July 1 — a concept described as “frontloading,” several school and collective officials tell Yahoo Sports.

For instance, a football early enrollee may get his entire year salary in a six-month span — from the time he arrives at campus in January through June. His compensation would, presumably, not count toward a school’s revenue-share cap, freeing up cap space for other athletes next fall.

“It’s the one year you can manipulate the cap,” acknowledged Alford, the FSU athletic director.

Scott Stricklin, the athletic director at Florida, thinks of it like this: “You’re announcing Martial Law is going into effect on this date (July 1),” he said. “You’re telling people that if you’re going to loot, do it before then.”

The more early enrollees that a program signs, the more cap space can be created by frontloading.

“Schools are getting as much money off the books as they can,” White said. “There will be some big paydays.”

But not everyone believes that the clearinghouse will pass the legal test. Steve Berman and Jeffrey Kessler, the two plaintiff attorneys who struck the settlement with the NCAA, have even expressed their doubts in the past.

“I have no idea how they are going to do this,” Kessler told Yahoo Sports earlier this fall. “Only thing they have (in the settlement) is that athletes must report deals to schools and the schools are going to send (the NCAA) what their deals are. If they think a deal is not proper, they could try to impose penalties on the athletes, which would then be subject to arbitration. They have no ability to go to an NIL and say ‘You can’t do that.’”

Brian Davis, an attorney in California who represents more than 100 football players in the NIL space, plans to file a legal objection to the settlement over the issue.

“I don’t think there is any world where you can require a submission of an NIL contract to some third-party clearinghouse to determine fair market,” said Davis, who heads the Forward Counsel law firm. “I don’t see that ever surviving a challenge in the courts without collective bargaining.

“If the NCAA thinks they’re going to put the genie back in the bottle and have the millionaires and billionaires sit on their hands, good luck!” he continued. “Those who have invested heavily in infrastructure and building legitimate businesses, to think you’re going to put all that on the sidelines, that’s not going to happen. The people involved are too powerful.”

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