Revenue sharing is coming to the NCAA: How does that effect Mizzou athletics?

NCAA Settlement

In the last decade, the NCAA has found itself embroiled in dozens of lawsuits ranging from Title IX issues to antitrust issues. The lawsuit that may ultimately flip the NCAA's amateurism model on it's head is House v. NCAA. This suit is seeking back pay for former NCAA athletes as well as a revenue-sharing agreement moving forward and could ultimately cost the NCAA as much as $4 billion in court. In an effort to reduce that amount, the NCAA may soon settle, which would result in Dellenger's reported number of about $2.9 billion over 10 years. So how does that massive number trickle down to individual schools like Mizzou? Let's take a look:

By the numbers

According to Dellenger's report, the 10-year lawsuit settlement could cost each power school, Mizzou included, as much as $300 million, or $30 million per year. This assumes each school meets estimated figures including:

• An allowable revenue distribution capped at somewhere between $17-22 million per school;
• At least $2 million per school in NCAA revenue distribution withholdings;
• As much as $10 million in additional scholarship costs related to expansion of rosters sizes of specific sports.

This addition of $30 million to power school athletic budgets is before factoring in coaching and staff salaries, facilities costs and millions of dollars worth of preexisting scholarship slots. To put that number in perspective, last year Mizzou athletics reportedly brought in $141,558,287 in revenue and spent all but $1 of that money. This proposal would increase Mizzou's expenses by as much as 21% in either 2025 or 2026, depending on how quickly (if ever) a settlement occurs.

So what, besides a massive red line added to the budget, could this new model mean for Mizzou? Let's break it down one item at a time.

Revenue Distribution

The most notable part of the proposed settlement is the creation of allowable revenue distribution to athletes, tossing the NCAA's amateurism model out lock, stock and barrel. The proposal would allow schools to directly pay athletes a total amount not to exceed some set number ranging from between $17-22 million annually.

It can be safely assumed that the top tier of NCAA schools, such as Ohio State, Texas and Alabama, are going to meet whatever the top cap is for athlete payouts. For Mizzou, who finds itself in the lower third of SEC revenue generators every year, it would require a much greater budget sacrifice to reach that high of a level. One important point is that these revenue distribution caps are voluntary, meaning a school could choose to distribute less than the max amount to its athletes (or no amount at all) each year.

As we have seen in recent years with NIL recruitment and transfers, money talks. In both football and basketball, Mizzou has enjoyed a recent boon in recruiting in large part to a healthy NIL budget. That money, however, is privately donated and separate from the Mizzou athletic department budget. If Mizzou were to choose (or be forced due to budgetary constraints) to not meet the full distribution cap, it could have potentially devastating effects on the Tigers' ability to attract and retain top-tier talent. While they could potentially hope to make up for a lack of revenue distribution funding with increased NIL payouts, it's safe to say that Mizzou would not be on the same playing field as the big dogs with whom they compete on a weekly basis.

A glaring question about revenue distribution which has not yet been answered is how does Title IX factor into how administrators choose to distribute money? Title IX was created, in part, to ensure "equal participation" among men and women in college athletics. Schools have met this requirement in the past by providing an equal number of scholarships for men's and women's sports. With this new model, would "participation" include the need to provide equal revenue distribution to male and female athletes, or could schools choose to prioritize specific sports for the majority of that distribution, namely football and men's basketball? That's something that lawyers and judges will ultimately have to decide, but it would be hard to picture Mizzou (or any other SEC school) willingly giving out paychecks to gymnasts or cross country runners in lieu of payments to athletes in the revenue-generating sports.

NCAA Withholdings

The NCAA annually pays out money to all member schools, mainly from revenue generated by the men's and women's basketball tournament. As a way to pay off the multi-billion (with a "b") settlement proposed, the NCAA would withhold $2 million per year per school from those payouts over the course of 10 years. While $2 million is very small percentage of Mizzou's annual athletics budget, that adds up to $20 million over a decade, which is quite a chunk of change.

This would ultimately be the least fiscally painful stipulation of the settlement for Mizzou, as it's money that all competing schools would be losing. However, for a program who barely balanced the budget last year, losing $2 million a year while increasing costs by close to $30 million per year will not make Laird Veatch's job any easier.

Additional Scholarships

Unlike football and basketball, many NCAA sports do not allow full scholarships for the entire roster of athletes. For example, NCAA baseball programs are only allowed 11.7 scholarships to cover a roster of 32 players. Softball is allowed 12 scholarships for a similarly sized roster. Teams can split up the scholarships among most of the players and it is rare that more than one or two players per team enjoy a full scholarship.

With the proposed settlement, the NCAA would increase the scholarship limits for many of these sports to allow schools to offer full rides to more, if not all, of their rosters. The estimated increase in total scholarships could cost schools as much as $10 million additionally each year. Like revenue distribution, these scholarship increases would be voluntary. If a baseball powerhouse like LSU wants to provide 25 full-ride athletic scholarships to their athletes, they could, while a program like SEMO with an exponentially smaller baseball budget may choose to keep their scholarships at 11.7 (or fewer.)

Like all of the proposed changes, this will allow the Haves of the NCAA world to further distance themselves from the Have-nots. For Mizzou, who is squarely in the middle of the power four athletics programs (and toward the bottom of the SEC) from a budget perspective, this could hurt.

Increasing scholarship numbers for sports that are already underfunded relative to SEC peers could devastate the existing Mizzou budget. However, not matching scholarship counts with fellow SEC members would further delegate Tiger teams to the bottom of the barrel competitively. It simply would not be tenable to field a volleyball team with 12 scholarships against a team with 20 scholarship players or a baseball team with 15 scholarships against a team with 25. While Mizzou could still attract some good athletes, the depth of the rosters would not allow success.

What can Mizzou do?

One thing for sure is that the budget deficit Mizzou currently is in relative to its peers is almost certainly going to increase. There are a few ways Mizzou might combat this, but most of them are not appealing. They could:

• Choose to not maximize the revenue distribution cap, whatever that final number might be. This might be an OK short-term fix if they can find NIL dollars to fill the gap, but long-term would hurt coaches' abilities to recruit and retain players.
• Choose not to increase the number of scholarships offered for the sports that will see limits increased. This might not hurt top-line recruiting as much as it will hurt overall competitiveness, as roster depth would be greatly depleted compared to SEC peers.
• Cut some non-revenue generating sports. This is the least desirable outcome in my opinion, but may be the only option if Mizzou wants to remain competitive in the revenue-generating sports. Cutting 24 scholarships from a men and women's team would allow redistribution of those scholarships to other sports that AD leadership may prioritize.
• Cut coach, staff and administrative salaries. This might be the most obvious move, but probably not the only one necessary. According to Dellenger's article, salaries and buyouts make up almost 40% of FBS athletic budgets, so there is quite a bit of fat to cut there. The UM Board of Curators already saw the writing on the wall in this way. According to the Columbia Daily Tribune, new Mizzou athletic director Laird Veatch's $1.3 million contract has a provision that would reduce his salary in the the event of changes to the college sports financial model. This is a provision I could see becoming a regular part of college coach and administrative contracts moving forward.

Next steps

For now, Mizzou can't do anything but wait and see what the ultimate decision is. It is still very much undecided if this proposed settlement, or another like it, will be accepted by all parties. As Laird Veatch works this week to decorate his new office in Mizzou Arena, it's clear that he has his work cut out for him in this brave new world of college athletics. Time will tell for the Tigers if he and the other leaders in Columbia can make it work.