Starting July 1, College Sports Fans Will See These Things More Often
By David Glenn
The most well-known aspect of the House legal settlement, whose terms will officially become the college sports world’s revolutionary new framework on July 1, is that colleges and universities will be permitted to distribute to their own athletes more than $20 million per year for the first time in the 119-year history of the National Collegiate Athletic Association.
(AP Photo/Chris Seward)
Other aspects of the NCAA’s new world have been covered much less frequently and may be less obvious, but they’re definitely on the way, too.
Here are some of them:
“Fair Market Value” References.
One of the most eye-opening developments of the lengthy build-up to July 1 came when college athletic directors were informed this spring about how the Name-Image-Likeness deals of the past four years would have been treated if the new House framework had been in effect.
A major accounting firm looked at a wide variety of college athletes’ previous NIL deals and applied a fair-market-value test. Essentially, the investigators evaluated whether the fair market value of the actions performed by an individual athlete (e.g., endorsements, social media promotions, autograph signings, personal appearances) matched the compensation that same athlete received in that transaction with his or her third-party NIL partner.
Interestingly, the past NIL deals involving public companies would have been approved about 90 percent of the time. This likely reflects the fact that those companies, whose leaders must answer to their Board of Directors and/or shareholders on financial matters, overwhelmingly were simply attempting to pay a fair price for services rendered while hoping for a reasonable return on that investment.
In stark contrast, the past NIL deals sponsored by school-specific collectives would have been rejected by the same fair-market-value analysis about 70 percent of the time. In other words, the investigators found that a majority of such contracts looked a lot more like “buying players” or “pay-for-play” and a lot less like conventional seeking-similar-value business trades.
Under the new House rules, every third-party NIL deal (those coming from outside the university itself) of $600 or more will have to be approved by a clearinghouse utilizing the fair-market-value analysis. Those contracts that fail the fair-market-value test will be rejected, although they can be resubmitted at a lower dollar amount.
“Roster Cap” References.
In the past, college programs were governed by, among many other things, NCAA scholarship limits.
At the top levels of Division One, for example, the maximum numbers were 11.7 in baseball (most players received only partial athletic scholarships), 13 in men’s basketball, 15 in women’s basketball and 85 in football. Coaches typically supplemented their rosters with non-scholarship players (aka walk-ons), who were deemed important for practice purposes.
Under the terms of the House settlement, schools now must stay at or below a sport’s roster cap, regardless of the individual athletes’ scholarship/walk-on status. The new numbers are 34 for baseball (an enormous change), 15 for men’s basketball, 15 for women’s basketball (no change) and 105 for football.
These will not be “hard caps” right away, because the judge who oversaw the House case didn’t want to see players from last year’s rosters “run off” by their coaches. (In effect, there will be a grandfather clause for those returning players over the next few years, and they will not count against the roster limit.) In most sports, coaches carried a number of players last season that was higher — sometimes much higher — than this coming year’s roster cap.
Whereas the wealthiest athletic departments are expected to enable their coaches to offer full athletic scholarships all the way to the maximum number of roster spots in every sport (e.g., Clemson has committed to this, at a new cost of approximately $6 million annually), the approaches to this new reality are expected to vary greatly from school to school and from sport to sport, especially outside the so-called Power Four conferences.
International Athletes.
In the past, if there was an international athlete on your favorite team’s roster, there was a very good chance the player had attended an American high school and/or prep school prior to his or her college enrollment.
For example, former UNC basketball players Steve Bucknall (England), Rick Fox (Bahamas/Canada) and Serge Zwikker (Netherlands) attended high school in Massachusetts, Indiana and Virginia/Maryland, respectively. This enabled the Tar Heels to recruit them in a more traditional manner, rather than necessitating overseas recruiting trips.
Some combination of the players’ family circumstances and/or basketball outlook led them to seek out the traditional American basketball journey (high school-college-professional), which combines higher education with athletics. In virtually every other part of the world, a high school or academy student with a promising athletic career typically goes straight from high school to a professional organization, often under a semi-pro, apprentice-type arrangement.
Now that major American universities can compete at a brand-new level financially, with a combination of revenue-sharing cash and third-party Name-Image-Likeness money, more international prospects — including those in their early 20s — are considering NCAA basketball as a first-of-its-kind “best of both worlds” (education and compensation) option.
During the upcoming 2025-26 season, the Atlantic Coast Conference alone will include more than a dozen new direct-from-overseas signees, including Miami center Salih Altuntas (Turkey), UNC guard Luka Bogavac (Montenegro), Louisville center Sananda Fru (Germany), Virginia center Johann Grunloh (Germany), Duke guard Dame Sarr (Italy/Senegal) and Stanford forward Kristers Skrinda (Latvia). Each player had most recently competed for a high-level professional team overseas.
Bogavac and Fru, who are both expected to be immediate-impact college players, will turn 22 years old during their freshman season. Sarr, 19, is regarded as a possible 2026 first-round NBA pick.
Buyout Clauses For Players.
Sports fans at the college and professional levels have been familiar with the concept of buyout clauses for many years.
College coaches’ contracts, for example, usually have two buyout clauses. One sets the amount the school would owe the coach if he or she gets fired before the end of the deal. The other sets the amount the coach would owe the school if he or she leaves for another job before the end of the deal. These numbers are not standard but rather negotiated, just like salary, term, incentives and other aspects of the contract.
In the post-House-settlement world, buyout clauses are expected to become part of some players’ revenue-sharing agreements, too.
Again, the numbers will be negotiated on a case-by-case basis, but with universities now paying athletes tens of millions of dollars per year directly from their own athletic department revenues for the first time in history, those schools will want some measure of security in return, especially when multi-year agreements are in play.
For example, if a superstar transfer asks for a three-year, $3 million revenue-sharing deal from a university, the school may reply by agreeing to those terms only if the player agrees to a significant buyout clause. If the contract lays out $1 million per year for three years, perhaps the athlete would have to pay the school $2 million if he left with two years remaining on the deal or $1 million if he left with one year remaining.
The contract terms also could include significant or even massive reductions in compensation if an athlete decides to take a redshirt season or opts out of postseason play.
Such detailed, big-money contracts would seem to make college athletes look more and more like full-fledged employees, a status the NCAA desperately wants to avoid for financial and legal reasons, but that’s another topic for another day.
David Glenn (DavidGlennShow.com, @DavidGlennShow) is an award-winning author, broadcaster, editor, entrepreneur, publisher, speaker, writer and university lecturer (now at UNC Wilmington) who has covered sports in North Carolina since 1987.
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