photo by: Shawn Valverde/Special to the Journal-World

KU's Allen Fieldhouse is pictured in this Sept. 27, 2023, aerial photo.

Something has to change in college athletics, University of Kansas Chancellor Douglas Girod told me last week.

“It is clear that we need something different than what we have, or else we are going to spend our lives in court,” Girod said in a brief interview with the Journal-World.

But Girod isn’t sure a new proposal by NCAA President Charlie Baker to give university athletic departments the option to start paying student athletes through a trust fund is the right answer.

The NCAA indeed is facing multiple lawsuits over its current system that doesn’t directly pay student athletes for their performances, but rather gives them scholarships and other types of student aid.

Under Baker’s proposal, Division I schools — large schools like KU and other Power 5 Conference members — could choose to join a new subdivision of the NCAA. If schools join that subdivision, they would be required to offer at least half their athletes a payment of at least $30,000 per year through a trust fund. The payments would be required to comply with federal Title IX laws that seek to balance benefits provided to male and female student athletes. That new subdivision of universities also would be allowed to work together to create new rules — everything from transfer policies to roster sizes to name, image and likeness regulations — that could be different from the rules that would govern other NCAA universities.

In other words, it would be a special division in every way.

But this may be one of those moments to remember that special and good are not synonyms. Girod said he hasn’t reached any conclusions on Baker’s proposal, but said it creates “a ton of concern.”

For one, it could create a lot of hard feelings on campus.

“You have to pick and choose,” Girod said of which student-athletes would receive a payment and which ones would not. “That creates a lot of tension on campus.”

For another, the proposal could open another type of arms race between university athletic programs. Two words would fuel that race: At least. Baker’s proposal doesn’t cap payments to student athletes at $30,000, nor does it cap payment to only half of a school’s student athletes. The proposal says the schools must pay “at least” those amounts. It is not hard to see how some universities, looking to gain a recruiting advantage, would increase those figures.

The proposal also would likely give universities the ability to directly pay name, image and likeness money to student-athletes. Currently, private businesses and other such third parties are allowed to make NIL payments to athletes, but not universities themselves. If that were changed, an athletic department — for example — could give a student athlete a seven-figure payment to appear in season ticket ads for the school.

That potentially could open up an entire new front for university athletic departments looking to outspend their rivals in pursuit of the best recruits. Historically, those spending battles have focused on having the nicest facilities — arenas, weight rooms, student living areas — plus other amenities that will help attract recruits.

“It is just a different version of one, I think,” Girod said of a potential new arms race. “But I will say this one would be to the benefit of the student-athlete, at least. The upside is it would directly fund student-athletes, which is not a bad thing, in my mind.”

Girod said he also likes that Baker’s proposal recognizes the importance of Title IX. The trust fund payments would require equality between male and female athletes. A system that just relies on NIL payments, which is largely the case today, is free to pay male athletes way more than female athletes.

Those kinds of details have Girod wanting to study the proposal further before reaching any conclusions. Plus, Girod said he knows he agrees with Baker on one key point.

“To his credit,” Girod said of the NCAA president, “he said, “Don’t just shoot this down. Propose alternatives. Let’s get to the point of proposing real changes.'”

Girod said he doesn’t think Baker’s proposal will get a vote during the NCAA’s annual meetings in January. The timeline is just too quick for all university leaders to get comfortable with such major changes, Girod suggested. But he thinks the timing is good in another way. The topic will be on the top of everyone’s mind as the annual meeting begins.

“I suspect it will be a big topic of conversation,” Girod said.

•••

One topic that Girod and I discussed only briefly is whether this proposal is financially sustainable for many universities. Girod acknowledged “not everybody would be able to do this,” related to making such payments to students.

Would KU?

The thought is certainly yes, but the numbers won’t be a piece of cake. KU currently has a little more than 500 student-athletes, which means it would need to pay just under $8 million per year to meet the minimum trust fund payment requirements.

KU’s athletic department generated about $129 million in operating revenues last year, but that doesn’t mean it has an extra $8 million lying around. The best case scenario — based on its financial statements from fiscal year 2023, which ended June 30 — is about $2 million.

KU posted net operating income of about $2.2 million in 2023, meaning revenues exceeded expenses by that amount. (Kansas Athletics is a nonprofit entity, so the excess is not technically a profit.) But even that money is not fully available. KU has about $1.1 million in interest expense on loans that would need to be covered by the $2.2 million in operating “profit.” Plus, KU has about $5 million of depreciation expenses on facilities — which don’t require KU to make an immediate payment, but are real in the sense that if you don’t address depreciation, you’ll have facilities crumbling around you.

When you add in expenses like that, KU saw its primary assets decline by $6.4 million in 2023. That is a sign that finding an additional $8 million to pay players would require some spending reorganization. None of this accounts for NIL money KU might need to come up with to compete in that arena. The $8 million number would buy KU entry into this new division, but it may be too little for them to compete.

Of course, donors might be able to fill any gaps. But that could be risky as well. KU currently is counting on donors to pay for large amounts toward a nearly $450 million football stadium renovation. If donors simply change some of their donations from building projects to the student trust fund or NIL projects, KU would be facing a different set of problems.

With all that said, though, KU certainly is in a better position to figure this out than many other schools, which rely upon their university’s general budget to significantly fund their athletic department operations. That’s not the case at KU.