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O'Bannon, Autonomy, and USF

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We try to make sense of it all by highlighting the one piece of information that will determine what kind of future USF Athletics will have.

Streeter Lecka

Last week was a historic week for NCAA governance.

On Thursday, the NCAA announced that the new structure of Division I, including the initiative commonly known as "autonomy", was formally approved. It could still be defeated if enough schools object -- and some do -- but it doesn't look like that will happen. This new governance structure has evolved over an 18-month process, and the current version is probably palatable enough not to be overturned by Division I as a whole.

Autonomy gives the five most powerful conferences (aka the "Power 5" or "P5") the ability to establish rules in certain areas which they all must adhere to, but which other Division I conferences may optionally implement. Most of these areas relate to spending more money on student-athlete support services, and defraying their cost of attending college. It stops well short of a pay-for-play model.

But that notion barely lasted a day. Late Friday, judge Claudia Wilken ruled in favor of the plaintiffs in the Ed O'Bannon case. The NCAA may no longer forbid schools from paying football and men's basketball players for the use of their name, image, and likeness (NIL) in television broadcasts, video games, and promotional materials.

These two new paradigms have some similarities. They permit Division I schools to spend money on student-athletes in ways that the NCAA previously forbade. At the same time, they do not obligate any schools to spend any new money. But as any observer of college sports knows, the schools with the financial means to spend more on their student-athletes have been chomping at the bit to do so.

First, let's talk about these two items individually. I'm not going to cover them at length, since there are plenty of news articles out there about the two decisions, and many nuances that will have to be worked out. For a primer, see SBNation's "4 Things To Know About Autonomy", and "NCAA Loses Massive O'Bannon Trial, But Not By Much."

Autonomy: There are some misconceptions about what autonomy is, and what it isn't. It's doesn't "let the big schools set their own rules", as ESPN's alarmist tweet declared. Any rules established by the P5 would become "permissive legislation", which any Division I conference may implement, but is not obligated to.

Nor would autonomy allow them to pay student-athletes directly. It does allow for stipends tied to the true cost of attendance, and more liberal spending on perks. But it's not paying players per se. As we shall see later, this distinction matters.

Autonomy gives the five most powerful conferences (commonly called the "Power 5" or "P5") the ability to set rules in eleven narrowly-defined areas. Most of these areas are about benefits for student athletes, such as: raising the value of scholarships to cover the true cost of attendance; providing tickets and travel for family members; more academic support; and more flexibility to provide meals. This last one has already become a news item, as Oklahoma commissioned a food truck for its student athletes. (Technically, that was in response to a different NCAA rule change allowing schools to provide unlimited snacks. But the P5 schools will now have the power to permit this sort of thing.)

It is worth noting that the autonomy movement has its roots in the NCAA's failed attempt two years ago to implement $2,000 stipends for student-athletes. The power schools wanted it, but so many rank-and-file Division I schools objected to the additional expense that the rule was forcibly suspended. So autonomy is something of an end run around the voting power of the 300 or so other Division I schools... but at the same time, it's a long-overdue acknowledgment that very different levels of financial commitment exist within Division I.

O'Bannon Ruling: This ruling just came in Friday afternoon, so the world is still parsing the details, but here's the main bullet point: judge Claudia Wilken ruled that the NCAA's practices violate anti-trust laws. The NCAA was unfairly controlling the market by setting a compensation cap for student-athletes, which all schools had to adhere to. Judge Wilken ruled:

The injunction will also prohibit the NCAA from enforcing any rules to prevent its member schools and conferences from offering to deposit a limited share of licensing revenue in trust for their FBS football and Division I basketball recruits, payable when they leave school or their eligibility expires.

In other words; if schools want to share licensing revenue with student-athletes, the NCAA can't stop them. Mind you, this isn't quite pay-for-play either; it's compensating athletes for the use of their name, image, and likeness in a media product. But it's a lot closer to pay-for-play than anything under autonomy.

This ruling comes with a lot of caveats, and the NCAA will have to create rules on some of them. For example, the judge gave the NCAA this power:

the NCAA may enact and enforce rules ensuring that no school may offer a recruit a greater share of licensing revenue than it offers any other recruit in the same class on the same team

I've seen this reported as "schools have to pay all their players the same amount." This is not true, at least not yet. The ruling gives the NCAA the right to require that schools pay all their players the same amount. The NCAA may or may not wish to establish such a rule.

Similarly:

Although the injunction will permit the NCAA to set a cap on the amount of money that may be held in trust, it will prohibit the NCAA from setting a cap of less than five thousand dollars (in 2014 dollars) for every year that the student-athlete remains academically.

This doesn't mean the cap is $5,000. It means that if the NCAA sets a hard cap on how much players may earn from licensing fees, that cap must be at least $5,000. The NCAA may choose not to set a cap at all.

And this is where we wrap around back to autonomy, and the new governance structure.

Autonomy gives the P5 conferences only a small, narrow set of powers. Paying licensing fees to student-athletes is very much not one of those powers. So whatever rules the NCAA implements in the wake of the O'Bannon ruling, they will have to go through the "shared governance" process, meaning the set of rules all Division I schools must adhere to, and the set of rules where schools other than the P5 have the most say. (Such a power could later be added to the powers the P5 have under autonomy, but that process would require shared governance.)

Which in turn is where a different aspect of the new governance structure becomes important. Namely, the new makeup of the NCAA Council and Board of Directors.

In addition to autonomy, the nature of the NCAA Board of Directors and Council will change. The Council, which replaces the existing Leadership and Legislative Councils, will be the main body creating new legislation. Conferences have weighted voting power, which breaks down like this:

  • 37.5% for the P5 conferences
  • 18.8% for the five remaining FBS conferences
  • 37.5% for the FCS and non-football playing Division I conferences
  • 3.1% for student-athlete representatives
  • 3.1% for designated faculty athletics representatives

The P5 conferences do not have the voting clout to force their wishes regarding licensing fee payments on the rest of Division I. It appears that the "group of five" schools -- the AAC, Mountain West, MAC, Sun Belt, and C-USA -- will have a powerful swing vote.

Also, the P5 leagues are now a smaller percentage of the expanded NCAA Board of Directors. (Technically, the AAC and other G5 conferences are also a smaller percentage of the board than they were before. But anything that weakens the power of the P5 leagues is probably a net positive for us.)

By the way, earlier drafts gave P5 leagues a larger voting share on the Council, and a larger percentage of the Board of Directors (because the BoD had fewer members overall). For the new governance model to pass, more schools had to be given a voice, and the voting powers of the P5 had to be curtailed. Also, some powers the P5 wanted were taken away, such as having their own rules regarding student transfers. So for cynics like me, it's nice to know there is some democracy in action here.

What does it all mean for USF?

Autonomy and the O'Bannon ruling each represent a new way that schools can spend money on student-athletes. The next few years will be a war over how much money they can spend. This war will be fought on two fronts: first, autonomous legislation, which the P5 schools can pass with their new powers, but only for certain narrow items. Second, the NCAA must establish rules regarding the payment of NIL fees to student-athletes. Those rules will be subject to shared governance, where schools outside the P5 must be appeased.

But it all boils down to new expenses. How much more money will USF have to spend to keep up with the P5 leagues? It's too early to tell. We won't know until we begin to see how the P5 leagues use their new autonomy powers, and how the NIL payment issue gets sorted out. But we can identify the factor that will decide this.

Let's look at some athletics expense numbers for 2012 academic year, the most recent year for which data is available at the U.S. Department of Education lookup tool.

Smallest expenditures
among "Power 5" schools
Largest expenditures
among non-"Power 5" schools
Wake Forest, $48M
Washington State, $50M
Utah, $51M
Texas Tech, $53.6M
Mississippi State, $53.9M
Connecticut, $63M
Southern Methodist, $52M
Brigham Young, $49.5M
USF, $45M
Cincinnati, $45M


As you can see, there is not much space (and even some overlap) between the lowest-spending P5 schools, and the highest-spending non-P5 schools. If this status quo were to remain, USF could probably afford to implement any new expenses, since anything that would be too rich for our blood would start to become unaffordable for P5 schools with similar budgets.

But this status quo is not going to remain. The gap between haves and have-nots is about to get wider, due to the new set of TV contracts that's now kicking in. For example, the SEC will distribute $10-$15 million more to each school than they did in 2012 (the year reflected in the above chart). And the figure in 2012 was about $20M per team for the big five conferences, so it's now going to be $30-$35 million. To put that into perspective, TV deals for the AAC and Mountain West are worth about $2 million per school. (Which, oddly, is not that much worse than USF's last Big East TV contract.)

Add $10 million to each of the figures in the left column, and UConn will be the only school able to spend at even the minimum P5 level. Everyone else would be at least $6M behind, many schools much more so. It would then be possible for the P5 schools, under autonomy, to set spending at a level that everyone in their leagues could afford, but no one else could. Which is the grain of truth in statements like "autonomy gives the big schools power to make own rules." It could be true in a de facto sense, if it turns out the finances support it.

And that's going to be our slogan for tracking all this over the next few years: Mind The Gap. That is, the financial gap between the bottom P5 schools and everyone else. The wider the gap becomes, the more power the P5 has to distance themselves from everyone else, permanently. We need the gap to be as narrow as possible, so that we can offer the same things P5 schools can.

Our conference commissioner Mike Aresco has boldly declared that the AAC will keep up with the Joneses. But the financial realities of a $2M TV deal versus a $30M TV deal may make that promise difficult to keep.

Mind the gap.

ADDENDUM: In the comments, esteemed reader @JimUSFSig asked about Title IX implications. I didn't address Title IX in the original article because I felt it was too far down the road to predict. But now that the dust has settled a little, I'll take a shot at it.

There's an important difference between autonomy and the O'Bannon ruling that needs to be stressed. Everything the P5 schools can do under autonomy boils down to financial aid, or perks for student-athletes. If football players get a new academic support system, or stipends to defray the cost of attending college, it's easy to make the argument that Title IX requires universities to provide these things to all student-athletes.

On the other hand, the O'Bannon ruling is not financial aid. It is a cash payment to the student-athlete for something of value: the use of their name, image and likeness (NIL). I think it is very difficult to make the case that this is subject to Title IX (though I'm sure someone will try). For several reasons:

  • The O'Bannon ruling only authorizes payments to football and men's basketball players. This limits the scope of the ruling to only those sports. If schools tried to make NIL payments to athletes in other sports, the NCAA is not forbidden from stopping it.
  • Some student-athletes' NIL isn't even being used. Forcing schools to pay NIL fees would be forcing them to pay a usage fee for something they're not using.
  • Where the NIL of student-athletes in sports other than basketball and football is used, its value is set by the open market. You cannot compel universities to pay the same fees for usage of NIL any more than you can force ESPN to pay the same amount to televise football and field hockey.
    • This is even a problem within a sport. Let's say USF announces that they will pay $5,000 to all football players for use of their NIL. Is that fair to Andre Davis, whose image is on a billboard in Tampa while no other players's is? Should student-athletes be paid more in NIL fees if their NIL is used more? The basic realities of capitalism say yes.
  • Payments for use of NIL are not part of the student experience. Let's say, theoretically, that you could play for the USF football team without being a student. Would you be entitled to NIL fees? Yes, because your NIL is being used in college football-related media. Would you be entitled to financial aid and academic support? Of course not.

In my opinion, they're just not same the thing. I'm sure people will try to apply Title IX to O'Bannon, but I think that's a very spurious argument.

And if you want to get all conspiracy theory about it: I think the ones making this argument will be the P5 schools. Look at your quote from the Nebraska chancellor: OMG WE HAVE TO START PAYING ALL OUR ATHLETES NOW. Why would they do this? Because they can jolly well afford to pay it, while no one else can. Division I revolted over a $2,000 stipend; how much daylight would this notion put between them and everyone else? That may end up being the very thing that ruins us permanently.