By: Dustin Lennon-Jones
The introduction of name, image, and likeness deals has resulted in massive amounts of money being paid to college athletes. In its first year, Opendorse, the leading NIL marketplace, valued the total market for deals at around $917 million. This number could reach a staggering $2.5 billion with the introduction of revenue sharing next year. As schools prepare for a new revenue sharing model, the applicability of Title IX raises important questions on how this money will be distributed.
Title IX and College Athletics
Under Title IX, codified as 20 U.S.C. §§ 1681-88, educational programs that receive federal funding are prohibited from discriminating on the basis of sex. In higher education, Title IX applies broadly across numerous areas, including intercollegiate athletics. Department of Education regulations, enforced by the Office of Civil Rights (OCR), require that schools offer equal benefits, opportunities, and treatment to its men’s and women’s sports programs. Equal opportunity does not require a school to offer the same sports to both men and women, or even the same number of sports. Rather, opportunities should be proportional to the school’s enrollment. This means that if a school’s undergraduate enrollment is 55% women, then approximately 55% of its athletic opportunities should go to women. This is also true for financial assistance, so scholarships must be available on a proportional basis to the number of participants in men’s and women’s athletics. Equal benefits and treatment means that men’s and women’s sports teams are treated equally in terms of equipment and supplies, scheduling, facilities, recruitment, and much more.
The Current NIL Landscape
Though the National Collegiate Athletic Association (NCAA) began allowing student-athletes to profit off of their own name, image, and likeness (NIL) in 2021, schools were forbidden from paying their athletes themselves. Instead, student-athletes signed deals with third parties, often facilitated or funded by NIL “collectives.” These are independent organizations not officially affiliated with a given university and are typically funded through donations. However, this characterization is largely in name only. Collectives are often founded by wealthy fans and alumni of a school, utilized explicitly to recruit athletes to their school. For example, the top ranked high school football prospect in the country, Bryce Underwood, flipped his commitment from Louisiana State University to the University of Michigan after he was reportedly offered an NIL deal of $12 million. The NIL collective “Champions Circle” issued a statement following this, welcoming Underwood and thanking “our Founding Members and others associated with Champions Circle who have worked tirelessly behind the scenes to make it possible to continue our work building championship teams at Michigan.” Nonetheless, NIL collectives are officially independent from schools and do not receive federal funding, making them currently beyond the reach of the requirements of Title IX.
Proposed Settlement in House v. NCAA
On October 7, 2024, a federal judge in California granted preliminary approval to a settlement agreement in House v. NCAA, which would allow schools to share 22% of their annual revenue with student-athletes, capped at $22 million. While this doesn’t seem to fit into the traditional idea of “financial assistance” discussed in Title IX, it is not entirely distinct either. The settlement would also remove scholarship caps, and any money spent on scholarships would count toward the $22 million revenue sharing limit. Which begs the question; since schools will be paying student-athletes directly through revenue sharing, and this money is, whether directly or indirectly, funding scholarships, should it be subject to the requirements of Title IX? Or, since athletic revenue is not brought in equally across the various teams, should it be distributed proportionally to the individual teams?
The Biden Administration OCR Fact Sheet
On January 16, the Biden Administration provided some guidance on this financial assistance question. The OCR issued a fact sheet announcing that NIL payments are “financial assistance” within the meaning of Title IX and must therefore be made proportionately to male and female athletes. It is worth noting that a fact sheet is not legally binding, but instead are signals to members of an industry on how a department intends to interpret the law in the future. When leadership changes, these interpretations are easily changed as well. And, sure enough, the Trump Administration reversed course on February 11 and rescinded the fact sheet. In a statement, acting assistant secretary for civil rights Chris Trainor said that Title IX “says nothing about how revenue-generating athletics programs should allocate compensation among student athletes” and would require clear legal authority to support it, which “does not exist.”
What Happens Next?
Regardless of who you agree with, Trainor is right about one thing: there is no clear legal authority. Title IX and the resulting regulations were written when the debate was whether or not providing cream cheese with bagels was an improper benefit. Now, we are asking questions with million-dollar answers. How it shakes out will have immense consequences for schools and their student-athletes. For example, Texas Tech University announced their plans to share 74% of the revenue with the football team, with men’s basketball receiving around 18%. Women’s basketball, baseball, and women’s volleyball would combine to share the remaining 8%. While not exact, this is approximately tracking the revenue attributable to each of those teams. If revenue sharing payments were subject to Title IX, such a distribution would be unlawful, as Texas Tech’s undergraduate enrollment is approximately 50% women. Regardless of how schools choose to make these payments, distributions like Texas Tech’s seem primed for a Title IX lawsuit, especially while Congress remains on the sidelines.
#NIL #TitleIX