NCAA President Charlie Baker recently proposed rule changes that would transform how college athletics have operated since its inception. His proposal would allow Division I schools for the first time to pay their athletes in ways not tied to educational resources (in a form other than academic scholarships).

Baker’s Dec. 5, 2023, proposal to schools gives them the chance to directly opt into name, image and likeness (NIL) deals with their athletes. The new rules would also form a new subdivision of Division I schools that would create its own set of rules for recruiting, transfers, roster size and many other policies affecting the current landscape. To be a part of that subdivision, schools would have to allocate millions of dollars each year into a trust fund for athletes, with the goal of enhancing the athletic and academic experience for student-athletes who attend the highest-resourced colleges and universities.

This is the first policy to break the NCAA’s long-held business model preventing schools from providing any non-academic-based compensation to athletes. Baker’s reasoning for the proposed policy is that the revenue generated by top colleges is poised to grow significantly and the legal pressure to compensate athletes continues to mount.

Schools in the new, highest-paying subdivision would be required to set aside a minimum of $30,000 per athlete for at least half of their athletes on an annual basis. That money, in large part, is to assist athletes’ continuing educational pursuits during the summer or after their careers, but there would be no requirements for how they spend it.

Schools could also choose to provide more money for each athlete or provide money to more of their athletes. It would be left up to individual schools to decide when they share that money with athletes. Additionally, the NCAA does not intend to require that an athlete finish his or her degree before they obtain access to that money.

The proposed policy also would help gender equity because the newly adopted trust fund would be required to follow Title IX law by equally distributing money to men and women. Likewise, any NIL payments made directly from schools to their athletes would also be subject to Title IX rules.

Top schools, which, according to Baker’s proposal, are more impacted by “collectives, the Transfer Portal and NIL,” would be permitted to create their own unique set of rules to help police those areas of the market for college athletes. The letter also states these new rules will help provide a model to show Congress in the NCAA’s ongoing quest for federal guidance of college sports.

Baker and other NCAA leaders have been asking Congress for three years to create laws that would allow them to keep college athletes from becoming employees, create uniform rules for NIL deals and avoid future antitrust lawsuits. However, those efforts have failed to gain momentum, with several lawmakers telling institutions they need to make efforts of their own to solve these problems before the government intervenes.

This proposal kick-starts a long-overdue conversation among the membership that focuses on the differences existing between schools, conferences and divisions and how to create more permissive and flexible rules across the NCAA that put student-athletes first. Baker himself stated that “colleges and universities need to be more flexible, and the NCAA needs to be more flexible, too.”

Baker’s letter to schools did not provide a time frame for when these proposals would be fleshed out, but the process for changing major NCAA rules typically takes more than a year. NCAA schools would first have to vote to adopt the changes, and those stakeholders next meet in January at the annual convention.

Harris Beach’s Higher Education Industry Team is following this and related matters. To review your school’s NIL policy or approach, or if you have any NIL related questions, please contact attorney Michael W. Perlo at (585) 419-8751 and mperlo@harrisbeach.com, or the Harris Beach attorney with whom you most frequently work.

This alert is not a substitute for advice of counsel on specific legal issues.

Harris Beach has offices throughout New York state, including Albany, Buffalo, Ithaca, Long Island, New York City, Rochester, Saratoga Springs, Syracuse and White Plains, as well as Washington D.C., New Haven, Connecticut and Newark, New Jersey.