The revenue-sharing era of college sports is officially here.
After five years of litigation, Judge Claudia Wilken approved a settlement between the NCAA, its power conferences and lawyers representing all Division I athletes. The settlement is a long time coming.
For years, the NCAA maintained that college athletes were “amateurs,”, receiving fair compensation in the form of their academic scholarships and other benefits, despite top athletic departments producing an upward of $200 million in revenue annually, according to USA Today. The claims of “amateurism” came into question in 2021, when the Supreme Court upheld a district court ruling that prohibiting NCAA athletes from receiving non-education related compensation violated federal antitrust law. With the recent ruling, “amateurism” is now dead.
In the upcoming academic year, athletic departments nationwide are set to distribute $20.5 million to student-athletes, Michigan among them. The $20.5 million mark was created by a formula that accounts for average revenue calculations across Power Four athletic departments.
According to the ruling, universities will be able to offer revenue-sharing agreements to high school prospects starting Aug.ust 1 of their senior year. And while universities will be distributing revenue to athletes, they’ll no longer be able to profit from many of the name, image and likeness (NIL) deals that have dominated the college athletics landscape for the past few years.
All NIL deals must be approved by a newly formed NIL clearinghouse, operated by the consulting firm Deloitte, to confirm that a player is receiving fair market value for an NIL deal. While athletes receive their ample market value for some deals — like former Michigan quarterback JJ McCarthy’s Beats’ sponsorship — others, not so much. The days of pay-for-play deals, where boosters or collectives dish out large checks for athletes to come to their schools, are over. In fact, Deloitte estimates that 70% of past deals from NIL collectives would have been denied by the clearinghouse, according to an article by Yahoo! Sports’s Ross Dellenger.
Michigan will no longer have a massive NIL war chest to tap into, leveling the playing field between it and programs with less NIL support. All programs will have the same revenue sharing limits, preventing schools with an abundance of NIL funds from dominating recruiting battles for top talent.
Similar to the standard across the country, Michigan’s football players are expected to receive the bulk of the revenue, with men’s and women’s basketball following behind.
“It’s going to be 75% to football,” Michigan athletic director Warde Manuel said on a February episode of 247 Sports’s Michigan Insider show. “And then the (remaining) 25%, almost all of it is going to go between men’s basketball and women’s basketball.”
According to Manuel, these figures are proportional by the revenue generated by each respective sport. After all, the Wolverines’ football team generated over $149 million in revenue in 2023-24 fiscal year. Men’s basketball generated $20.9 million, while women’s basketball made just under $1 million.
In addition to paying out rosters, this revenue will go to keeping the Wolverines’ teams competitive in the transfer portal. To land a player via the portal, teams will have to buy a player out of their existing contract, and the buyout paid will contribute towards the $20.5 million revenue-sharing limit.
Despite the financial burden created by the $20.5 million in revenue sharing, as well as an additional $6.2 million in spending on added scholarships, the athletic department is projecting a $266.3 balanced budget in the 2025-26 fiscal year. Michigan’s athletic department received $15 million from the university to support them through the transition period, and it’s relying on new revenue streams and cost-cutting measures to maintain profitability long-term.
According to a university statement, the athletic department is expected to make $1.7 million from the Zach Bryan concert at Michigan Stadium in September, the stadium’s first-ever concert. Given the need for additional revenue, one would figure that Bryan’s performance will be the first of many at the Big House.
Alcohol sales also produced some additional revenue for the athletic department. In the 2024 calendar year, alcohol sales kicked off at Michigan Stadium, Crisler Center and Yost Ice arena, producing $2.25 million dollars according to a statement released by Manuel last week. Manuel also wrote that the department plans to reduce costs by cutting administrative staff and lowering travel expenses.
“The 2024 calendar year saw the implementation of alcohol sales at Crisler Center, Yost Ice Arena, and Michigan Stadium, which generated over $2.25 million for the department,” Manuel wrote. “We will continue to evaluate other opportunities to generate additional revenue throughout the department.”
Clearly, the Michigan athletic department has entered a new, unprecedented era of college sports. After a decades-long fight, and a few years in the wild west, college athletes are finally being compensated — with the necessary structure and regulation, to boot. The landscape of college athletics has changed for good.
