Revenue Sharing

Revenue sharing is a system where colleges directly pay athletes a portion of the money generated from athletics, such as TV deals, ticket sales, conference payouts, and donor money. It treats players as contributors rather than unpaid amateurs since they are the ones who help produce this revenue.

Years of court cases argued the NCAA was violating antitrust law. The turning point was House v. NCAA, which opened the door for NIL to come into play. When NIL became legal, it exposed the imbalance in college sports as athletes could make money from endorsements and outside deals, but not take home a portion of the billions they help produce. This raised the question: If players can be paid for NIL, why not for the revenue they directly produce?

The House settlement required the NCAA to allow schools to share revenue with athletes. It ended the old “amateurism” model and officially recognized athletes’ economic value. Schools can now allocate up to $20 million per year directly to athletes.

Insane TV contracts and conference realignment has given schools tons of revenue. Programs with wealthier and more bought-in donors were outspending others through collectives. Revenue sharing became the only way to create a more regulated and fair system.

Early NIL was chaotic as collectives overspent, fake promises were made, and there just weren't many rules. Revenue sharing gives schools more control over athlete compensation, and gives them a frame of rules to abide by.

 Schools can share up to $20.5 million per year with athletes. Schools are not restricted to specific revenue sources. Money can come from ANY legally allowed revenue source which includes TV contracts, ticket sales, donor funds, sponsorship revenue, conference payouts, and much more.

Payments must be made directly by the school, not collectives.
Revenue sharing is a university-to-athlete payment, not a booster-led payment.

This shifts more power back to the athletic department.

While collectives are allowed, they must be giving out true NIL deals and not pay-to-play deals. This will be ensured by the Deloitte system that is being set up.

Payments have to abide by Title IX rules AND compensation must be gender-equitable across all sports. Schools will have to carefully distribute in order to avoid legal issues.

Contracts must be standardized and documented. This includes written agreements, clear deliverables, payment schedules, buyout clauses, and potential incentives. This is all done to keep things fair to the athletes and eliminate fake promises.

Most collectives are just being folded into the athletics department, which shifts the contracts into school-controlled systems. This gives schools more control and reduces the risk of potential violations. Athletes also become more like independent contractors of the university in this model.

Football and Men's Basketball will be used as an anchor in this era of rev sharing. Most schools plan something close to this: 

75% → Football, 10% → Men’s Basketball, 5% → Women’s Basketball or Baseball. 

This breakdown best reflects the revenue those sports generate schools too. The rest of the sports share the rest.

Schools also use tiered payment models instead of paying everybody the same. Here is the model that programs will prioritize when it comes to paying athletes:

Tier 1: Starters / high-impact players

Tier 2: Backups & role players

Tier 3: Developmental players
This helps avoid overpaying and creates a more predictable budget on an annual basis.

To prevent exploitation and poor choices, schools are continuing to offer athletes financial literacy resources. This includes budget training, tax education, contract literacy, and agent evaluation programs.

While Title IX is a great and fair rule, it makes it very hard for schools to totally pay revenue-generating sports their true worth without violating the law. Alabama Football annually makes the school over $140 million, but the team can't/isn't allowed to even make 14% of that.

There is all sort of administrative and legal uncertainty. The NCAA provides very vague guidance and little enforcement at this time. For instance, the $20.5 million "cap" seems to just be a recommendation. It is not enforceable for two reasons. The first is that the Deloitte system is so backed up as it will take a long time just to process the remaining $1B in current deals. There is no national standard. State laws in Texas, Florida, Missouri, Alabama, Oklahoma, and Louisiana permit schools to go over that cap, making it unenforceable for schools in those states.

Because of the rising costs due to having to directly pay for rosters, some schools may have to cut non-revenue sports in order to afford a nationally competitive revenue distribution.

A major workaround is having collectives provide additional money to schools who have already used $20M. This is critical for player retention and recruiting. While it seems within the rules, going forward these will have to be legit NIL deals and not just paying a guy $1 million for 2 autograph sessions per year.

Some schools, like Kentucky, have adopted the nonprofit LLC model. In 2025, Kentucky formally reorganized its athletic department into a separate legal entity, Champions Blue LLC.

This LLC is completely owned by the university, but it's legally distinct from the rest of the university. It is treated more like a business than a traditional university department. Becoming an LLC gives an athletic department more flexibility and protection — it can operate like a business, manage athlete payments and contracts more efficiently, shield the university from legal and tax risk, create new revenue opportunities, and adapt quickly to changing NIL and revenue-sharing rules.

Kentucky is a nonprofit LLC because athletic revenue is reinvested back into the program, not paid to owners, and the LLC structure gives the department business flexibility, tax advantages, legal protection, and the ability to create new revenue opportunities while still operating for a nonprofit mission.