NCAA NIL hearing to highlight revenue, compensation debate - Sports Illustrated

'We’re Not Running Sports to Primarily Make Money': NIL Hearing to Put Collegiate Revenues in Spotlight

The subjects of program profits and athlete benefits will be under scrutiny at Tuesday's NCAA name, image and likeness Congressional hearing.
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One of the nation’s most respected university presidents plans to tell Congressional lawmakers on Tuesday that college programs do not sponsor athletics with the purpose of generating revenue.

“The business model for college athletics is greatly misunderstood by the public,” Wisconsin chancellor Rebecca Blank says in written testimony. “We’re not running sports to primarily make money.”

Sports Illustrated obtained the 1,700-word testimony that Blank submitted ahead of a hearing Tuesday on name, image and likeness before the U.S. Senate Committee on Health, Education, Labor and Pensions. While she agrees that NIL reform is needed, Blank plans to tell senators that an unchecked athlete-compensation model could adversely impact Olympic sports and that athletes are already given a “generous package” of benefits that includes thousands of dollars in education, unlimited meals, state-of-the-art medical care and other on-campus resources—many of which normal students do not receive, she notes in the testimony. According to her written testimony, a full scholarship package at Wisconsin is nearly $87,000 for out-of-state students and more than $59,000 for those in state.

Her testimony focuses on the financial inner-workings of college athletic departments. Despite sponsoring 15-plus sports, most schools only generate profit from football and men’s basketball and use that revenue to fund Olympic sports that lose money.

MORE: NCAA NIL Proposal Bans Athletes From Using School Logo

“If college sports followed the business model used by private companies, we would compete in the sports that generate positive cash flow and eliminate all others,” she says. “For instance, at the University of Wisconsin, only football, men’s basketball and men’s hockey are revenue-generating sports. Our other 20 sports cost more money than they generate—and that is true almost everywhere, with very few exceptions.

“If we had to spend all of our revenue only within our three revenue-producing sports, there would be no Olympic sport opportunities and a relatively small number of student-athletes. Under these circumstances, I’m not sure we would choose to run an athletic program at UW-Madison.”

Blank is one of four witnesses expected to appear virtually at Tuesday’s hearing, the latest step in Congress’s involvement in the raging debate over NIL, a hot-button issue that has captivated the country. The NCAA, seeking a friendly federal NIL bill from Congress, has agreed to permit athletes to profit from their NIL, but only after the debate found its way to state capitals across the nation. Several of them, namely Florida and California, have passed NIL bills. Florida’s bill takes effect July 2021, putting somewhat of a 10-month deadline on a potential Congressional NIL bill that would preempt state laws and prevent what NCAA leaders say would be “chaos” in recruiting.

Tuesday’s event marks the fourth NIL hearing on Capitol Hill in front of a third different senate committee. The Senate HELP Committee membership includes a number of notable names, such as former presidential candidates Bernie Sanders (D-Vt.), Rand Paul (R-Ky.), Elizabeth Warren (D-Mass.) and Mitt Romeny (R-Utah), as well as Chris Murphy (D-Conn.), who has been at the center of the debate over NIL and who spearheaded the HELP hosting Tuesday’s hearing.

Blank’s appearance before the committee is one of the more noteworthy witnesses of the three previous hearings. Recently appointed to the NCAA’s top governing body, the Board of Directors, Blank is an internationally respected economist who also has spent time on Capitol Hill working in three different presidential administrations. In her testimony, Blank says it is “imperative” that Congress craft a federal NIL bill and do it before July 2021. “Time is of the essence,” she writes.

Blank says federal NIL legislation should (1) preempt state laws through a “very narrowly-tailored antitrust exemption;" (2) protect recruiting with guardrails to prevent NIL-related inducements; (3) forbid any pay-for-play to preserve the collegiate model; and (4) make clear that athletes are not university employees. While several lawmakers are in the midst of crafting NIL legislation, the pandemic has slowed movement on the issue. Most believe any NIL bill won’t begin to seriously work its way through the Senate Commerce Committee until late this year or next year, when a new Congress arrives.

Blank reveals in her testimony that each of the NCAA’s three divisions are finalizing NIL legislation that should be completed by “the end of next month.” However, the legislation will not be officially approved until January. Blank is firm in her testimony in that she does not want Congress to wait on the NCAA to complete its NIL process before taking action of its own.

Joining Blank as witnesses are Utah State athletic director John Hartwell, Ohio State track & cross country director Karen Dennis and National College Players Association director Ramogi Huma, an athlete advocate who has been one of the NCAA’s harshest critics.

The testimony of Blank, Hartwell and Dennis is built around arguing for federal NIL legislation with enough guardrails and restrictions to keep intact the current collegiate model of amateurism. All three focus somewhat on the financial side of an athletic department, describing how a small number of revenue-generating sports keep afloat Olympic sports. Part of Hartwell’s testimony highlights Title IX. “Revenues from football and men’s basketball help fund scholarships and operations for female student-athletes which are required for Title IX compliance,” he writes.

In his testimony, Huma argues that NIL compensation and equitable revenue sharing can take place without Olympic sports being cut or violating Title IX. The testimony includes data and information to back up his message. Huma is encouraging Congress to not only adopt federal NIL legislation but create broader reform that includes “third party enforcement of uniform health and safety standards, protections to increase graduation rates, medical expenses, revenue sharing and other key protections for college athletes.”

Already, some lawmakers are pursuing this. Last month, several U.S. Senators announced an athletes bill of rights that is expected to be introduced later this fall.

Similar to Blank’s testimony, Hartwell outlines the value of athletic scholarships at his institution. At Utah State, a five-year scholarship is worth $108,000 for an in-state student and $181,000 for an out-of-state athlete, he says. If you add stipend cash value ($57,500) and pell grants ($31,725), a value of the five-year scholarship could exceed $270,000. Meanwhile, Hartwell believes less than 1% of college athletes will generate “significant money” from NIL ventures.

In her testimony, Dennis voices concerns over NIL’s impact on Olympic sports, which are already on the chopping block. More than 80 Division I athletic teams have been discontinued this summer in light of financial strains tied to the pandemic.

“The possibility of non-revenue sports being canceled due to lack of funding is frightening,” she writes. “The effects of COVID-19 have given us a jarring reality check on our athletic community that now threatens our survival. In fact, just last week a Big Ten institution dropped its men’s track and field program. As you craft legislation to increase student opportunities, I ask that you do so with an eye not just toward revenue-generating sports, but also to sports like those I am privileged to coach.”