What does autonomy for the “Power 5” mean for the NCAA?

Published 11 February 2015 | Authored by: John Wolohan

"What's happening here today will transform football and college athletics. We just don't know what the result is going to be yet."

-- Auburn AD Jay Jacobs, over the weekend in DC, after the Power Five conferences passed a cost-of-attendance scholarship measure.

What the University of Auburn Athletic Director Jay Jacobs was referring to was the actions taken during the National Collegiate Athletic Association’s (NCAA) annual convention in January 2015.1 While traditionally most NCAA conventions are uneventful affairs, this year’s convention was considered transformational because the universities voted to approve legislation granting autonomy to the five biggest and wealthiest college-sports conferences (the Power Five): the Atlantic Coast (ACC), Big Ten, Big 12, Pacific-12 (Pac 12), and Southeastern (SEC). As a result, the Power Five conferences will now be able to enact legislation granting athletes’ financial benefits in addition the ones they already receive.

It should be noted that, up until the 2015 convention, the NCAA, which is made up of over 1,200 colleges and universities, split into three divisions, provided each of the 345 colleges and universities in Division I an equal vote on legislative changes. For example, a few years ago, when the schools from the Power-Five conferences wanted to provide a $2,000 cost of attendance benefit to scholarship athletes, the other members of the division, who did not believe that they could afford the extra benefit, voted down the proposal. Therefore, it did not matter if the school had $100 million budget, or a $10 million budget, each of the schools in the division had the same single vote. However, since the smaller schools far outnumber the 65 schools from the Power-Five conferences, these schools have traditionally been able to control the agenda. Dissatisfied with the old system, the 65 schools from the Power-Five conferences threatened to withdraw from the NCAA (and potentially take all the organization’s television and other revenue with them) if they were not granted greater autonomy and flexibility to make decisions involving athletes, finances and the running of big-time college sports.2

While it is true, no one really knows what the impact of the new legislation will be on college sports, the purpose of this article is to investigate what they are most likely to be. We will first examine what some of the changes, such as allowing schools to cover their athletes’ full cost of attendance, which will put thousands of dollars more per year into players’ pockets and cost the school’s millions of dollars a year to implement. Then we move on to explore what the long term impact of the new powers might be – with perhaps the most likely outcome being a greater split between the “haves” (the Power Five schools) and the “have nots” (everyone else).

 

The New Rules

So, why would the other colleges and universities that make up the NCAA suddenly capitulate and give the Power Five schools a free hand to create their own rules? The answer is: survival. As discussed in previous LawinSport blogs,3 during the past couple of years, with some Power Five schools generating over $100 million in revenue from athletics, the NCAA and schools have come under increasing legal pressure4 to provide their athletes additional benefits. However, since NCAA rules prevented the schools from providing their athletes any additional benefits, some of the Power Five conferences began talking about leaving the NCAA and forming their own association. If that happened, the entire NCAA would have been at risk of imploding from lack of funds, since almost all of the NCAA’s revenue is generated from the organization’s NCAA Basketball Championship, which would be worth much less money without the schools from the Power Five conferences. Therefore, in an attempt to keep the organization intact, and help the Power Five conferences answer their critics by providing more-equitable treatment to their recruited athletes, the organization agreed to allow Power Five conferences to create their own set of rules.

It should be noted, however, that Division I schools outside the Power Five can also adopt any of the new rules put in place by the Power Five schools. However, since the vast majority of the schools outside the Power Five are operating with budgets in the $20 million range, as opposed to the $70 – $100 million athletic budget for the Power Five, it is going to be increasing difficult to keep up. For example, Kent State University, which competes in one of the Non-Power Five conferences, has 18 athletic programs and a budget of $26.2 million. In order to provide the same cost of attendance stipend that the Power Five will offer next year, the university would have to spend and addition $1 million to cover its 425 athletes — a sizable expense for athletic departments that already are relying on their universities for at least 70% of their budgets.5

The first thing the Power Five schools did was to increase the amount of financial aid athletes can receive from their schools. Prior to this year, when an athlete received a scholarship to play a sport at a school, he or she generally received free tuition, room and board and books. While at some schools, like Syracuse University or Duke University, those benefits could be worth up to $65 thousand a year, they seemed to pale in comparison to the amount of revenue that the athletes were seen generating for the schools. In addition, even with free tuition, the scholarship did not cover the full cost of attending a school. Now, in addition the above benefits, the scholarship will also include expenses such as academic-related supplies, transportation and other similar items. The value of those benefits can differ from campus to campus.6

Interestingly, this was the issue that started the NCAA almost down the path of self-destruction. Four years ago, the Power Five schools introduced a proposal at the NCAA convention that would have allowed athletics programs to provide players with $2,000 stipends for miscellaneous expenses. While the proposal was approved by the NCAA’s Division I Board of Directors, those schools not in the Power Five voted it down, claiming that they could not afford the extra expense.7The new policy will take effect beginning in the 2015-16 academic year.

Besides full cost of attendance, the schools were asked to approve guaranteeing athletes their scholarships for more than the current one year the majority of Division I institutions do. While the measure passed and the Power Five schools will now be required to provide multiyear scholarships, some of the biggest critics of the proposed change were current athletes, who argued that coaches should be allowed to cut poor-performing players.In support of their rational, the athletes claimed that if athletes do not meet the expectations of coaches they should lose their scholarships, because their aid is based on athletic—not academic—performance.8

In addition to scholarships, the Power Five also considered student safety, in the form of concussion-management. The new policy requires that in the event of a head injury, a medical professional must clear athletes to return to competition. It also calls for safety protocols that include procedures for reducing exposure to head injuries, ensuring that athletes are educated about the signs and symptoms of concussion and policies that deal with returning to the classroom.9 Finally, the Power Five conferences voted to allow athletes to borrow against their future earnings potential to purchase loss-of-value insurance.10

It should also be noted that for the first time, the Power Five group has provided a significant voice for athletes. In the past, athlete representation was rather small, now legislation for the group must be voted on by representatives from each of the 65 schools plus three student-athletes from each conference. Therefore, athletes make up 15 of the 80 votes in the new governance system.11

The Long Term Impact

The NCAA claims that all the changes were made to protect and improve the athlete’s experience in colleges, in response to lawsuits, a unionization drive and the threat that the Power Five would leave or form a new, autonomous division, however, in looking at the current structure of college sports it is difficult to believe that the organization only delayed the inevitable. For example, by allowing the Power Five conferences to create their own rules, the NCAA is only confirming what its’ critics are saying: that the colleges are exploiting the athletes for their own financial gain.12

Perhaps more importantly, however, is the new legislation unfairly tips the competitive balance in favor of the Power Five schools. While colleges and universities within the Power Five Conferences have always held some advantages over smaller schools, in the past they have all played by the same basic rules. Beginning next year, however, those advantages are going to grow. For example, think of English Football. For every Manchester United or Chelsea, teams with seemingly unlimited financial resources, there are teams like Bradford City or Colchester, teams that struggle to compete on a regular basis at the same level. And while on a single day, Bradford City may beat Chelsea, in the long run, because of Chelsea’s financial resources and their ability to use it, Bradford City has no real chance of competing with the bigger wealthier clubs. By allowing the 65 biggest and wealthiest college-sports teams to create their own rules, this is basically what the NCAA is to college sports. The Power Five schools can now use their superior financial advantage (as a result of greater television, sponsorship and ticket revenues), to offer athletes benefits that the smaller schools simply cannot match. As a result, the competitive balance between the “haves” and the “have nots” will grow wider and wider.

On a micro level, the new structure also creates greater competitive imbalance within the Power Five conferences. Once again, looking at English football, but this time only the English Premier League. For every Manchester United or Chelsea, (University of Texas or Ohio State University) teams with seemingly unlimited financial resources, there is a Southampton or Queen Park Rangers (Wake Forest University or Boston College the only school in the Power Five to vote against giving athletes the full cost of attendance), private institutions whose finances are dwarfed by the big public universities.13 And while Boston College may beat Texas in a basketball game, it is difficult for the school to annually compete against these schools through the entire season.

If schools like Boston College do try to compete, the fear is that will have to cut costs in other areas, which will lead to non-revenue sports, which is almost anything that is not men’s basketball or football being cut by schools. Thereby, reducing the number of scholarship opportunities available to athletes. In fact, this issue is of such a concern that the head of the United States Olympic Committee has voiced the need to form some type of partnership with schools to guarantee that colleges still provide the opportunities for Olympic caliber athletes. While I do not think anyone wants to cut men’s track and field or swimming, if schools believe that they are falling behind, it is almost certain that those sports will be on the chopping block.

 

 

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About the Author

John Wolohan

John Wolohan

John Wolohan is an Attorney and Professor of Sports Law in the Syracuse University Sport Management program and an Adjunct Professor in the Syracuse University College of Law. In addition to being one of the lead editors of the book "Law for Recreation and Sport Managers" by Cotten and Wolohan, John has been teaching and working in the fields of doping, antitrust, gaming law, and sports media rights for over 25 years.

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