Deep Dive: College sports prepares for major overhaul

State of play: In the months until the settlement is finalized, more states are expected to sign laws that formalize NIL rules before the NCAA itself can set them in stone.

• Final approval is scheduled for April 7, the same night as the men's basketball March Madness national championship.
• State governors in Georgia and Virginia have already signed executive orders that will allow universities to pay students and prohibit the NCAA from stopping them.
• The moves from the two states establish a key aspect of the settlement: that schools can pay players directly. The direct pay concept is now enshrined in state law before it's even finalized by the NCAA.
• "People don't want to wait around," said Nick Garner, an EVP at sports marketing firm Two Circles.

Zoom in: The NIL legal framework sets up a 10-year revenue-sharing model that will allow schools to share up to 22% of athletics revenue with students.

• The exact amount will be based on the average of all power conference revenue and will increase over time.
• Most estimates put the amount at more than $20 million per school to be paid to student-athletes. Schools are not required to share all of that money, and can opt out altogether.
• Smaller schools with lower budgets and those that opt out of the revenue-sharing program will find themselves at a recruiting disadvantage for top athletes.

• "There's certain schools that are not going to have a problem finding the money, but a lot will," Garner says.

Zoom out: Colleges are already preparing for the changes.

• The University of Tennessee is adding a 10% "talent fee" for football tickets next season, with all of that additional money going toward revenue-sharing.
• Elsewhere, schools and conferences have been in talks with private equity firms about investments.
• "The range of preparedness is all over the place," says Andrew Donovan, a senior executive at NIL consulting firm Altius Sports Partners. "If you wait, you're going to be playing catch-up."

Private equity boosters

Private equity is knocking on the door of college sports.

Why it matters: The entry of investment firms into the NIL cash grab could open a floodgate of money flowing into the pockets of college athletes.

State of play: CVC Capital Partners and Sixth Street are among those seeking a role in the NCAA's new NIL game, according to sources.

• RedBird also recently launched a college sports fund.
• Some private equity players are vying to buy equity stakes in power conferences while others seek to partner with schools to build new businesses that monetize their intellectual property, sources say.

Zoom in: The Big 12 has been holding exploratory talks with multiple private equity firms that are still ongoing, one source tells Axios. Potential deal terms between them could be an investment or a commercial partnership, the source says.

• In June, the Big 12 was said to be discussing a $1 billion investment from CVC for a 15-20% stake.
• Florida State has also reportedly been in talks with Sixth Street since early 2023 about creating a new company centered around the school's commercial rights.
• CVC declined to comment on the current state of its talks with the Big 12, and a representative for Sixth Street did not respond for comment.

Friction point: The two largest conferences, Big Ten and SEC, are starting to push back on private equity's role in college sports.

• Collectively, those two conferences are well-funded, represent 34 of the biggest athletic programs in the country, and will have an outsized role in shaping college sports' future.

Between the lines: RedBird's fund, created in partnership with Weatherford Capital, is focused on schools' ancillary revenues like fan experience, food and beverage, parking and other concessions.

• The idea is to beef up those ancillary revenues from schools so they can be routed toward revenue-sharing.

The bottom line: Regardless of what role private equity ultimately plays in college sports, winning on the field will require making a lot more money off of it.

Collective angst

The heightened influence of wealthy alums, boosted by the new NIL rules, is about to be put to the test.

Why it matters: Booster-funded NIL collectives are a financial boon to athletic departments and a major concern for the NCAA.

Catch up quick: To pool NIL money, so-called collectives formed a few years ago to turbocharge student-athlete payments.

• Made up of wealthy alumni and businesses, collectives raise funds to source NIL deals for players as a way to recruit transfers and top high school athletes.
• The presence of collectives has caused angst within the NCAA because the networks have been able to operate with little to no oversight, showering money on athletes that the organization is unable to track.

Stunning stat: NIL collectives have been responsible for more than 80% of all NIL compensation, according to Opendorse, an NIL platform that tracks spending and helps athletes connect with brands.

Yes, but: As part of the revenue-sharing plan, the NCAA and the power conferences will be allowed to set up an enforcement agency to probe all third-party NIL deals from collectives and individual boosters that are worth more than $600.

• The goal is to eliminate so-called "pay for play" agreements from collectives, which essentially pay athletes to induce them to come to a school under the guise of being an NIL deal.
• Since February, the NCAA has been banned from enforcing its own rules against pay for play when it comes to NIL deals.

Between the lines: Schools will differ on how they work with their collectives going forward.

• Some will bring their collective on campus and make them athletic department employees. Some schools will seek to abolish them.

The other side: "The NCAA doesn't know what collectives are doing," says Russell White, president of The Collective Association, a trade group made up of 44 school collectives.

• The Collective Association was formed last year after the NCAA began to lobby state and federal governments on NIL laws to regulate collectives. White expects to have 60 member collectives by the end of the year.
• Over the last year, the group has been advising multiple states on their NIL laws and participated in congressional hearings.
• "Some will always resist change, but the system made possible by the pending settlement will enhance benefits for the student-athletes," the NCAA said in an emailed statement to Axios.