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Game Changers: Is the NCAA Throwing in the Towel?

In December 2023, NCAA President Charlie Baker proposed a groundbreaking framework for college athletics that, if adopted, would allow member institutions with the highest resources to directly compensate student-athletes for the first time. Baker’s proposal seemingly concedes that direct compensation from schools is a looming reality, at least for some student-athletes.

Under Baker’s proposal, a new subdivision within Division I would be created that would require schools, should they opt-in, to invest into an “enhanced educational trust fund” a minimum of $30,000 per year per student-athlete for at least half of the school’s eligible student-athletes. The proposal neither caps the amount a school can invest in each student-athlete nor requires a school to pay the same amount to each designated student. However, new subdivision members would need to remain compliant with Title IX, meaning schools would be required to provide equal monetary opportunities for female and male athletes.

If the proposal is approved, schools within the new subdivision could create their own rules separate from the rest of Division I, which would give new subdivision members the ability to move more quickly to address issues and more leeway to make policy in areas such as scholarship limits, transfers, roster size, and recruitment activities. Baker also continued the NCAA’s call on Congress to pass legislation to confer a special status or carve out for student-athletes, allowing institutions to provide enhanced benefits or direct compensation without triggering an employment relationship.

Many Division I schools have 500 or more scholarship student-athletes competing in over 20 sports. Compensating just half of those student-athletes with the base annual amount of $30,000 would cost a school $7.5 million annually, a massive investment in athletics. It is unclear from the proposal whether any benefits, including tuition, could be deducted from the investment per student-athlete. Schools unable to afford such an investment or otherwise electing not to join the new subdivision would remain in “Division I” as it currently exists.

On January 11, 2024, the Division I Board of Directors formally directed the Division I Council to examine Baker’s proposal. While the Division I Council conducts its examination of the proposal’s “key elements” and offers recommendations, member institutions should, in the meantime, proactively prepare for the future by:

·         Conducting internal audits, examining each program individually to accurately determine the athletics department's current revenue and liability figures.

·         Evaluating the cost implications of compliance with a potential voluntary or mandatory system where member institutions directly compensate student-athletes.

·         Identifying necessary annual budget adjustments under Baker's proposal, considering various yearly compensation levels.

·         Evaluating strategies for distributing educational trust funds in compliance with Title IX, ensuring equal opportunities and benefits for male and female athletes.

The NCAA's reluctance to categorize athletes as employees is evident, and any approved plan within this framework would likely emphasize the absence of an employer-employee relationship. Nevertheless, Congress and the courts are still navigating this complex issue. Unless a designated status or exception is obtained from Congress or the courts, any approved plan could have swift and extensive consequences. These consequences include the immediate inclusion of numerous college athletes under various federal and state employment and labor laws and potential tax liability for benefits previously enjoyed by student-athletes. Member institutions should, relatively quickly, become well-versed in these laws and be ready to ensure compliance. 

Game Changers: Is the NCAA Throwing in the Towel?

In December 2023, NCAA President Charlie Baker proposed a groundbreaking framework for college athletics that, if adopted, would allow member institutions with the highest resources to directly compensate student-athletes for the first time. Baker’s proposal seemingly concedes that direct compensation from schools is a looming reality, at least for some student-athletes.

Under Baker’s proposal, a new subdivision within Division I would be created that would require schools, should they opt-in, to invest into an “enhanced educational trust fund” a minimum of $30,000 per year per student-athlete for at least half of the school’s eligible student-athletes. The proposal neither caps the amount a school can invest in each student-athlete nor requires a school to pay the same amount to each designated student. However, new subdivision members would need to remain compliant with Title IX, meaning schools would be required to provide equal monetary opportunities for female and male athletes.

If the proposal is approved, schools within the new subdivision could create their own rules separate from the rest of Division I, which would give new subdivision members the ability to move more quickly to address issues and more leeway to make policy in areas such as scholarship limits, transfers, roster size, and recruitment activities. Baker also continued the NCAA’s call on Congress to pass legislation to confer a special status or carve out for student-athletes, allowing institutions to provide enhanced benefits or direct compensation without triggering an employment relationship.

Many Division I schools have 500 or more scholarship student-athletes competing in over 20 sports. Compensating just half of those student-athletes with the base annual amount of $30,000 would cost a school $7.5 million annually, a massive investment in athletics. It is unclear from the proposal whether any benefits, including tuition, could be deducted from the investment per student-athlete. Schools unable to afford such an investment or otherwise electing not to join the new subdivision would remain in “Division I” as it currently exists.

On January 11, 2024, the Division I Board of Directors formally directed the Division I Council to examine Baker’s proposal. While the Division I Council conducts its examination of the proposal’s “key elements” and offers recommendations, member institutions should, in the meantime, proactively prepare for the future by:

·         Conducting internal audits, examining each program individually to accurately determine the athletics department's current revenue and liability figures.

·         Evaluating the cost implications of compliance with a potential voluntary or mandatory system where member institutions directly compensate student-athletes.

·         Identifying necessary annual budget adjustments under Baker's proposal, considering various yearly compensation levels.

·         Evaluating strategies for distributing educational trust funds in compliance with Title IX, ensuring equal opportunities and benefits for male and female athletes.

The NCAA's reluctance to categorize athletes as employees is evident, and any approved plan within this framework would likely emphasize the absence of an employer-employee relationship. Nevertheless, Congress and the courts are still navigating this complex issue. Unless a designated status or exception is obtained from Congress or the courts, any approved plan could have swift and extensive consequences. These consequences include the immediate inclusion of numerous college athletes under various federal and state employment and labor laws and potential tax liability for benefits previously enjoyed by student-athletes. Member institutions should, relatively quickly, become well-versed in these laws and be ready to ensure compliance. 

Game Changers: Is the NCAA Throwing in the Towel?

In December 2023, NCAA President Charlie Baker proposed a groundbreaking framework for college athletics that, if adopted, would allow member institutions with the highest resources to directly compensate student-athletes for the first time. Baker’s proposal seemingly concedes that direct compensation from schools is a looming reality, at least for some student-athletes.

Under Baker’s proposal, a new subdivision within Division I would be created that would require schools, should they opt-in, to invest into an “enhanced educational trust fund” a minimum of $30,000 per year per student-athlete for at least half of the school’s eligible student-athletes. The proposal neither caps the amount a school can invest in each student-athlete nor requires a school to pay the same amount to each designated student. However, new subdivision members would need to remain compliant with Title IX, meaning schools would be required to provide equal monetary opportunities for female and male athletes.

If the proposal is approved, schools within the new subdivision could create their own rules separate from the rest of Division I, which would give new subdivision members the ability to move more quickly to address issues and more leeway to make policy in areas such as scholarship limits, transfers, roster size, and recruitment activities. Baker also continued the NCAA’s call on Congress to pass legislation to confer a special status or carve out for student-athletes, allowing institutions to provide enhanced benefits or direct compensation without triggering an employment relationship.

Many Division I schools have 500 or more scholarship student-athletes competing in over 20 sports. Compensating just half of those student-athletes with the base annual amount of $30,000 would cost a school $7.5 million annually, a massive investment in athletics. It is unclear from the proposal whether any benefits, including tuition, could be deducted from the investment per student-athlete. Schools unable to afford such an investment or otherwise electing not to join the new subdivision would remain in “Division I” as it currently exists.

On January 11, 2024, the Division I Board of Directors formally directed the Division I Council to examine Baker’s proposal. While the Division I Council conducts its examination of the proposal’s “key elements” and offers recommendations, member institutions should, in the meantime, proactively prepare for the future by:

·         Conducting internal audits, examining each program individually to accurately determine the athletics department's current revenue and liability figures.

·         Evaluating the cost implications of compliance with a potential voluntary or mandatory system where member institutions directly compensate student-athletes.

·         Identifying necessary annual budget adjustments under Baker's proposal, considering various yearly compensation levels.

·         Evaluating strategies for distributing educational trust funds in compliance with Title IX, ensuring equal opportunities and benefits for male and female athletes.

The NCAA's reluctance to categorize athletes as employees is evident, and any approved plan within this framework would likely emphasize the absence of an employer-employee relationship. Nevertheless, Congress and the courts are still navigating this complex issue. Unless a designated status or exception is obtained from Congress or the courts, any approved plan could have swift and extensive consequences. These consequences include the immediate inclusion of numerous college athletes under various federal and state employment and labor laws and potential tax liability for benefits previously enjoyed by student-athletes. Member institutions should, relatively quickly, become well-versed in these laws and be ready to ensure compliance. 

Game Changers: Is the NCAA Throwing in the Towel?

In December 2023, NCAA President Charlie Baker proposed a groundbreaking framework for college athletics that, if adopted, would allow member institutions with the highest resources to directly compensate student-athletes for the first time. Baker’s proposal seemingly concedes that direct compensation from schools is a looming reality, at least for some student-athletes.

Under Baker’s proposal, a new subdivision within Division I would be created that would require schools, should they opt-in, to invest into an “enhanced educational trust fund” a minimum of $30,000 per year per student-athlete for at least half of the school’s eligible student-athletes. The proposal neither caps the amount a school can invest in each student-athlete nor requires a school to pay the same amount to each designated student. However, new subdivision members would need to remain compliant with Title IX, meaning schools would be required to provide equal monetary opportunities for female and male athletes.

If the proposal is approved, schools within the new subdivision could create their own rules separate from the rest of Division I, which would give new subdivision members the ability to move more quickly to address issues and more leeway to make policy in areas such as scholarship limits, transfers, roster size, and recruitment activities. Baker also continued the NCAA’s call on Congress to pass legislation to confer a special status or carve out for student-athletes, allowing institutions to provide enhanced benefits or direct compensation without triggering an employment relationship.

Many Division I schools have 500 or more scholarship student-athletes competing in over 20 sports. Compensating just half of those student-athletes with the base annual amount of $30,000 would cost a school $7.5 million annually, a massive investment in athletics. It is unclear from the proposal whether any benefits, including tuition, could be deducted from the investment per student-athlete. Schools unable to afford such an investment or otherwise electing not to join the new subdivision would remain in “Division I” as it currently exists.

On January 11, 2024, the Division I Board of Directors formally directed the Division I Council to examine Baker’s proposal. While the Division I Council conducts its examination of the proposal’s “key elements” and offers recommendations, member institutions should, in the meantime, proactively prepare for the future by:

·         Conducting internal audits, examining each program individually to accurately determine the athletics department's current revenue and liability figures.

·         Evaluating the cost implications of compliance with a potential voluntary or mandatory system where member institutions directly compensate student-athletes.

·         Identifying necessary annual budget adjustments under Baker's proposal, considering various yearly compensation levels.

·         Evaluating strategies for distributing educational trust funds in compliance with Title IX, ensuring equal opportunities and benefits for male and female athletes.

The NCAA's reluctance to categorize athletes as employees is evident, and any approved plan within this framework would likely emphasize the absence of an employer-employee relationship. Nevertheless, Congress and the courts are still navigating this complex issue. Unless a designated status or exception is obtained from Congress or the courts, any approved plan could have swift and extensive consequences. These consequences include the immediate inclusion of numerous college athletes under various federal and state employment and labor laws and potential tax liability for benefits previously enjoyed by student-athletes. Member institutions should, relatively quickly, become well-versed in these laws and be ready to ensure compliance. 

Game Changers: Is the NCAA Throwing in the Towel?

In December 2023, NCAA President Charlie Baker proposed a groundbreaking framework for college athletics that, if adopted, would allow member institutions with the highest resources to directly compensate student-athletes for the first time. Baker’s proposal seemingly concedes that direct compensation from schools is a looming reality, at least for some student-athletes.

Under Baker’s proposal, a new subdivision within Division I would be created that would require schools, should they opt-in, to invest into an “enhanced educational trust fund” a minimum of $30,000 per year per student-athlete for at least half of the school’s eligible student-athletes. The proposal neither caps the amount a school can invest in each student-athlete nor requires a school to pay the same amount to each designated student. However, new subdivision members would need to remain compliant with Title IX, meaning schools would be required to provide equal monetary opportunities for female and male athletes.

If the proposal is approved, schools within the new subdivision could create their own rules separate from the rest of Division I, which would give new subdivision members the ability to move more quickly to address issues and more leeway to make policy in areas such as scholarship limits, transfers, roster size, and recruitment activities. Baker also continued the NCAA’s call on Congress to pass legislation to confer a special status or carve out for student-athletes, allowing institutions to provide enhanced benefits or direct compensation without triggering an employment relationship.

Many Division I schools have 500 or more scholarship student-athletes competing in over 20 sports. Compensating just half of those student-athletes with the base annual amount of $30,000 would cost a school $7.5 million annually, a massive investment in athletics. It is unclear from the proposal whether any benefits, including tuition, could be deducted from the investment per student-athlete. Schools unable to afford such an investment or otherwise electing not to join the new subdivision would remain in “Division I” as it currently exists.

On January 11, 2024, the Division I Board of Directors formally directed the Division I Council to examine Baker’s proposal. While the Division I Council conducts its examination of the proposal’s “key elements” and offers recommendations, member institutions should, in the meantime, proactively prepare for the future by:

·         Conducting internal audits, examining each program individually to accurately determine the athletics department's current revenue and liability figures.

·         Evaluating the cost implications of compliance with a potential voluntary or mandatory system where member institutions directly compensate student-athletes.

·         Identifying necessary annual budget adjustments under Baker's proposal, considering various yearly compensation levels.

·         Evaluating strategies for distributing educational trust funds in compliance with Title IX, ensuring equal opportunities and benefits for male and female athletes.

The NCAA's reluctance to categorize athletes as employees is evident, and any approved plan within this framework would likely emphasize the absence of an employer-employee relationship. Nevertheless, Congress and the courts are still navigating this complex issue. Unless a designated status or exception is obtained from Congress or the courts, any approved plan could have swift and extensive consequences. These consequences include the immediate inclusion of numerous college athletes under various federal and state employment and labor laws and potential tax liability for benefits previously enjoyed by student-athletes. Member institutions should, relatively quickly, become well-versed in these laws and be ready to ensure compliance. 

Game Changers: Is the NCAA Throwing in the Towel?

In December 2023, NCAA President Charlie Baker proposed a groundbreaking framework for college athletics that, if adopted, would allow member institutions with the highest resources to directly compensate student-athletes for the first time. Baker’s proposal seemingly concedes that direct compensation from schools is a looming reality, at least for some student-athletes.

Under Baker’s proposal, a new subdivision within Division I would be created that would require schools, should they opt-in, to invest into an “enhanced educational trust fund” a minimum of $30,000 per year per student-athlete for at least half of the school’s eligible student-athletes. The proposal neither caps the amount a school can invest in each student-athlete nor requires a school to pay the same amount to each designated student. However, new subdivision members would need to remain compliant with Title IX, meaning schools would be required to provide equal monetary opportunities for female and male athletes.

If the proposal is approved, schools within the new subdivision could create their own rules separate from the rest of Division I, which would give new subdivision members the ability to move more quickly to address issues and more leeway to make policy in areas such as scholarship limits, transfers, roster size, and recruitment activities. Baker also continued the NCAA’s call on Congress to pass legislation to confer a special status or carve out for student-athletes, allowing institutions to provide enhanced benefits or direct compensation without triggering an employment relationship.

Many Division I schools have 500 or more scholarship student-athletes competing in over 20 sports. Compensating just half of those student-athletes with the base annual amount of $30,000 would cost a school $7.5 million annually, a massive investment in athletics. It is unclear from the proposal whether any benefits, including tuition, could be deducted from the investment per student-athlete. Schools unable to afford such an investment or otherwise electing not to join the new subdivision would remain in “Division I” as it currently exists.

On January 11, 2024, the Division I Board of Directors formally directed the Division I Council to examine Baker’s proposal. While the Division I Council conducts its examination of the proposal’s “key elements” and offers recommendations, member institutions should, in the meantime, proactively prepare for the future by:

·         Conducting internal audits, examining each program individually to accurately determine the athletics department's current revenue and liability figures.

·         Evaluating the cost implications of compliance with a potential voluntary or mandatory system where member institutions directly compensate student-athletes.

·         Identifying necessary annual budget adjustments under Baker's proposal, considering various yearly compensation levels.

·         Evaluating strategies for distributing educational trust funds in compliance with Title IX, ensuring equal opportunities and benefits for male and female athletes.

The NCAA's reluctance to categorize athletes as employees is evident, and any approved plan within this framework would likely emphasize the absence of an employer-employee relationship. Nevertheless, Congress and the courts are still navigating this complex issue. Unless a designated status or exception is obtained from Congress or the courts, any approved plan could have swift and extensive consequences. These consequences include the immediate inclusion of numerous college athletes under various federal and state employment and labor laws and potential tax liability for benefits previously enjoyed by student-athletes. Member institutions should, relatively quickly, become well-versed in these laws and be ready to ensure compliance.