Pending NCAA settlement may cost Kansas Athletics an extra $20M a year; Girod says KU doesn’t have it to spend

photo by: Journal-World photo

Fans file through the doors past the statue of Phog Allen for the 60th Anniversary celebration of Allen Fieldhouse on Monday, Oct. 27, 2014.

We know there are some national championship coaches who roam the halls of Kansas Athletics.

But, are there any championship-caliber budget cutters? Forget coaches with the clipboards and clickers. We need the accountants with calculators and cash flow sheets.

The success of the Kansas Jayhawks soon may depend on how many of those championship budget cutters can be found. Many national media outlets are reporting that the NCAA and the Power 5 Conferences — including the Big 12 — are likely to agree this week to a multi-billion dollar settlement in an antitrust case involving whether student-athletes should get a share of athletic department revenues.

The settlement will be expensive. How expensive? Look at it this way: The salary, wages, bonuses and other compensation for every head and assistant coach on the KU payroll was about $23.5 million during the last fiscal year. KU, arguably, will have to find $20 million in its budget to begin paying student-athletes, if it wants to remain competitive in the cutthroat world of student-athlete recruiting.

In other words, cut your coaching budget by about 85%, and your problem is solved.

That, of course, is not likely. What appears more likely is that KU simply will roll the dice by paying their student-athletes less and hoping that they attract top-level talent nonetheless. The way the proposed settlement is structured — according to national reports — is that schools will be allowed to share their revenue with student-athletes but won’t be required to do so. The $20 million figure, reportedly, would be the maximum amount a school could choose to share with student-athletes.

The assumption by those who cover the world of college athletics is all the major Power 5 conference schools, like KU, will pay the full $20 million, in order to remain competitive in the recruiting landscape.

University of Kansas Chancellor Douglas Girod told me in a recent interview that may be a bad assumption.

“The answer is we don’t have $20 million to spend,” Girod said last week. “It is permissive. It is not required. You may be right that everybody may be at the ($20 million) cap, but I don’t see that happening out of the gates because nobody has the revenue.”

Girod said even the schools with really big athletic department budgets “already have really big expenses.” In other words, no school has a $20 million surplus in its athletic department budget that it can simply begin using to fund student-athlete revenue sharing.

When I talked to Girod last week, the other presidents and chancellors of the Big 12 Conference had not yet met to have their key conversations about the potential settlement. However, Girod said “my sense out there is trending towards an agreement.” Reportedly, the Big 12 leaders met and agreed to the settlement today.

The national media reports have emphasized that if the NCAA and the power conferences rejected the settlement, and then lost the case at trial, the parties likely would be on the hook for about $20 billion in damages. As it stands under the proposed settlement, the NCAA and the conferences would pay a little more than $2 billion in damages, plus create the new system to share revenue with student-athletes.

Girod, though, said he is troubled by the number of questions that remain unanswered by the potential settlement. How schools would comply with Title IX — the federal requirement that male and female students be treated equally — is one of them. Would $20 million of revenue sharing have to be split equally between male and female student-athletes? Or, would Title IX be satisfied if KU gave 200 male student-athletes $15 million and 200 female student-athletes $5 million, for example?

That leads into another question that is out there. The settlement, reportedly, does not require that all student-athletes get paid, nor does it require that those who are paid receive equal amounts. How do you decide who gets what? Will somebody on the KU track and field team — which, for example, generated about $8,400 in ticket sales but had more than $5.6 million in expenses during the last fiscal year — get paid at all?

“At the highest levels, I still have concern about what this means for our non-revenue sports,” Girod said.

Maybe these questions simply get solved by more revenue flowing into athletic departments. Revenues have been rising for years, especially as media companies are willing to pay more and more for the broadcast rights of live sporting events.

That scenario, however, is unlikely to relieve the pressure that athletic departments will face. Reportedly, the $20 million cap will grow as athletic department revenues grow. The one revenue source that may be outside the cap is dollars that come directly from donors. However, that relationship is becoming trickier. Many donors are now giving their dollars to “collectives” that gather money that is used to pay Name, Image and Likeness payments to student-athletes.

That too is another question: Will this settlement bring to an end the outside spending on NIL payments? In other words, if student-athletes agree to be paid directly by the university, can they still receive NIL money from third parties? Girod mentioned uncertainty around that issue as another one of his concerns.

In researching the issue, you can find a long list of questions surrounding this case — which, for the record, is known as House v. NCAA. Some question whether the settlement itself will stand up in court. Won’t it be in violation of anti-trust laws for schools to artificially cap the amount of revenue they will share with student-athletes? Will other lawsuits that are pending against the NCAA upend this settlement? There are court cases out there that could result in ruling student-athletes are actual employees of the university, which would add an entirely new dimension to how they must be treated and paid.

Some schools already are talking pretty openly about their concerns, and making some big decisions about the future in preparation for new financial realities. Iowa State Athletic Director Jamie Pollard recently confirmed that ISU had put on indefinite hold a more than $20 million project to create a new facility for its college wrestling program. Pollard, according to media reports in Iowa, said the pending settlement of the lawsuit was a major reason why he was choosing to not to pursue the project.

“With this lawsuit getting ready to be settled, you just can’t go forward with projects like that,” Pollard said, according to a report by the website Cyclone Fanatic.

On that front, KU finds itself in a different situation, but one that also may create big questions in the future. KU already has committed to a more than $400 million renovation of David Booth Kansas Memorial Stadium. KU hopes donors cover the majority of those costs, but Kansas Athletics also is preparing to take on new debt to cover any shortfall. Any new debt would be a new expense to the budget, making even more difficult the task of finding $20 million to pay student-athletes.

My interview with Girod was short, so I didn’t get into the topic of how this lawsuit is influencing his thinking on future major building projects for Kansas Athletics. But he did make clear that the entire college athletics industry is likely to be much different in the future.

“Obviously, it is a landscape change for collegiate athletics,” Girod said. “It is a monumental landscape change.”

A look at Kansas Athletics’s budget

If Kansas Athletics had to change its budget in order to provide $20 million in revenue sharing for student-athletes, where might it look? Kansas Athletics had $124 million in expenses in fiscal year 2023 versus $128 million in revenues, according to its financial statements filed with the NCAA. Here’s a list of the largest expenditures KU Athletics had in that 2023 fiscal year.

• Administrative staff salaries: $28.3 million

• Coaching salaries: $23.5 million

• Student aid to athletes: $15.2 million

• Overhead expenses: $12.9 million

• Team travel: $9.6 million

• Game expenses: $4.1 million


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