Alexander: In NCAA’s lawsuit settlement, the little guys get shafted

The recently proposed settlement involving three antitrust lawsuits against the NCAA, including $2.77 billion to settle the class-action “House v. NCAA” suit, seems to be a win-win for college sports at first glance.

Athletes who missed out on the NIL revolution will receive back pay, the door will open for current athletes to share in college sports’ profits legally and honestly, and – assuming plaintiffs don’t object – the association is going to avoid what would have been a far greater liability had it lost in court as expected.

But from another angle, it brings to mind the famous quote from the late Jerry Tarkanian when he was coaching at UNLV: “The N-C-two-A is so mad at Kentucky, they’re going to give Cleveland State an extra year’s probation.”

Now, as then, the little guys – i.e., the majority of the NCAA’s Division I membership – will be experiencing most of the pain, in this case footing a good portion of a bill that many of them can’t afford.

The settlement was crafted and approved by members of the five autonomous conferences (including the Pac-12 in its previous form), who rightfully feared massive damages. But the effects will be most severely felt by the non-power conference schools, and particularly by the non-football schools and conferences whose lean budgets depend heavily on disbursements from the NCAA basketball tournament.

And, may we add, those are schools and conferences who never could have recruited the former players who stand to benefit most.

To fund the settlement, those tournament money disbursements will be reduced. Big West commissioner Dan Butterly estimated that each school in his conference would receive $250,000 less per year for 10 years, given a split in which the non-power conference schools are responsible for 60% of the payout. UC Riverside athletic director Wes Mallette added the phrase “more or less,” suggesting that it might be as much as $300,000 per school per year.

At first glance, the 60/40 ratio might seem reasonable, given that we’re talking about 67 schools in what now are four power conferences (plus Washington State and Oregon State, the survivors in the stripped-for-parts Pac-12) and 269 others that belong to the Group of 5, the Football Championship Series classification or what is considered Division I-AAA (no football).

Again, look closer.

The big schools, the schools with athletic budgets like USC’s ($212 million in 2022-23, according to the most recent Equity in Athletics Data Analysis figures) or Michigan’s ($202.5 million) can better absorb the cost. But the schools with far less room for error – the vast majority of the 269 – will feel it like a gut punch.

That annual loss of revenue for the next decade will be particularly felt at UCR (a $15.792 million ’22-23 budget, according to the EADA figures) and fellow Big West programs Cal State Northridge ($19.8 million), Cal State Fullerton ($21.899 million), Long Beach State ($26.4 million) and UC Irvine ($25.2 million). And it will be felt just as significantly at Pepperdine ($28 million) and Loyola Marymount ($35 million) of the West Coast Conference and California Baptist ($32.7 million) of the WAC.

“You’re talking $250,000 to $300,000 a year projected right now without (including) those other cases, because there’s more to come,” Mallette said. “We don’t know what that’s going to look like.

“For the well-resourced programs, the issue is probably going to be more of a spending issue, in terms of what do you not spend, and how do you figure that piece out. For the lower resourced programs, primarily at the mid-major level, it’s going to be how we figure out how we’re going to make up for those losses. Because all of our costs are continuing to rise.”

Not in the room where it happened

The worst part? Schools from the 27 non-power conferences effectively had no voice in shaping this settlement.

“We found out about this proposed settlement 23 days ago,” Butterly said in a phone conversation this past week. “The rumor has been that they (the autonomous five conferences in concert with the NCAA and commissioner Charlie Baker) have been working on this behind the scenes over the last year. It just got sprung upon us.”

The Big West has had even less of a voice, because non-power conference presidents and chancellors serve on a rotating basis on the NCAA board of directors, and the Big West was out of the rotation the last four years. It will rejoin the rotation this August, with UC San Diego chancellor Pradeep Khosla representing the conference.

Too late. Talk about taxation without representation.

“Don’t get me started on my ‘Hamilton’ quotes,” Butterly quipped.

And this is absolutely worth noting: While the proceeds from men’s basketball’s March Madness will fund this settlement, media rights money from football and particularly the College Football Playoff – which is a non-NCAA event – will not be touched, according to Butterly.

All of this means that college sports are educational in more ways than you might suspect. Today’s lesson in Economics 101: The excessively wealthy have the power and the means to bend the rules in their favor.

And they’re not done yet. Southeastern Conference commissioner Greg Sankey is still on his soapbox insisting that college sports needs federal legislation to sort things out (i.e., avoid running further afoul of antitrust laws).

“I mean, talk about it like your savior is the most dysfunctional body in the country, right?” Arizona State professor and sports historian Victoria Jackson said in a phone conversation. “I don’t think that’s going to work out.”

There has been pushback. Big East commissioner Val Ackerman told her conference’s members, in an email obtained by Yahoo! Sports, that she is seeking ways to “alter the plan that the NCAA and A5 have orchestrated.” That conference’s members will be on the hook for a reported $600,000 to $700,000 per school per year.

Ackerman – whose conference is also among those not represented on the Board of Directors – suggested in the email that “the primary beneficiaries” of back pay likely will be FBS football players. If you are a non-football school, even one with as much basketball success as the Big East has had historically – which helps explain that conference’s higher tariff – being assessed the bill for someone else’s responsibilities doesn’t seem right or fair.

(Again, see: “excessively wealthy,” “power” and “bend the rules,” above.)

A line of demarcation

At the lower end of the college athletics food chain, this could be about survival, period.

Consider UCR, which came perilously close to scrapping intercollegiate athletics altogether three years ago. The university faced a $32 million university-wide shortfall coming out of the COVID-19 pandemic, and its Budget Advisory Committee put athletics at the top of the list of programs recommended for elimination.

The program received a reprieve in May 2021, but part of the arrangement was that athletics would be folded into Student Affairs and its operating budget would be pruned as far as it could be without hitting bone.

“I’m incredibly proud of what we’ve done and what we’re doing,” Mallette said. “And this is not going to stop us. We’ll figure out how to navigate through this. … We had to save a program from being eliminated. We can figure this piece out.”

The direct player compensation mechanism coming out of the NCAA’s settlement discussions is the right thing to do, particularly at universities with sufficient revenue to compensate the labor force. But it’s also a line of demarcation between the bigs and everyone else, and it leads to the obvious question: At some point, do the power conferences and schools break away?

As recently as two years ago that seemed an empty threat. But with the total revamp of the college sports map – guided, of course, by Fox and ESPN – the idea of the four remaining power conferences making up a Super League and leaving everyone else behind in a separate, lesser division seems less far-fetched.

“I don’t see a future in which the schools with the very small budgets in Division I, football team or no football team, are in the same category as the schools at the top,” said ASU’s Jackson. “We have a vision for a future of football that is stand-alone or spun off or whatever it ends up being. And I see a future for Olympic sports, or the rest of the sports that aren’t football and basketball. But basketball is a tricky one.

“I don’t know if the NBA needs to get more involved, if USA Basketball needs to get more involved … what does the basketball ecosystem look like going forward, and what is the collegiate space’s relationship with that ecosystem?”

The ultimate fear? The big schools make March Madness their own, and Cinderella is left at the side of the road surrounded by torn-up brackets.

jalexander@scng.com