NCAA President on a New Era for College Sports

0:04Earlier this month, college sports changed forever. A major change to college sports here,$2.8 billion in a settlement now clearing the way for colleges to pay top student athletes. It's a giant moment in the history of college sports, and it's so significant because schools can now directly share revenue with athletes. A federal judge approved a settlement worth more than$2.5 billion between the National Collegiate Athletic Association, or the NCAA, and a group of current and former college athletes. Now, for the first time ever, schools can pay athletes directly. The settlement includes back pay for some former college athletes, and it'll create a new system where every Division I school can choose to pay athletes up to$20.5 million per year collectively.

0:57Schools can start paying athletes in July.

1:02But there's still a lot to iron out, from regulating payments to new issues around gender equity and ensuring fair competition. To talk about the deal and what it means for college sports, I sat down with Charlie Baker, the president of the NCAA. You know, if you do the math, it's pretty clear that somewhere in the vicinity of a billion dollars will be shared with student athletes every year, at a minimum, starting next year. So, yeah, it's huge. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Tuesday, June 24th.

1:49Coming up on the show, the president of the NCAA on how this landmark settlement changes college sports.

2:11Can you introduce yourself, please, and just tell us who you are? Sure. This is Charlie Baker. I'm the president of the National Collegiate Athletic Association. And today you're the president of the NCAA. You were previously the governor of Massachusetts. Some of the things that your predecessors have done after office was join the U.S. Senate or work in private equity. For you, why the NCAA? That's a really good question because it certainly wasn't on my radar. I got a call right around Halloween of 22, sort of 60 days before I left office from a friend of mine who said he had met with the search firm searching for the next president of the NCAA.

2:52And when he heard what they were looking for, he thought of me. So I got the job description. I showed it to my wife. And she read it and she said, this really does sound like you. I mean, the NCAA has 180 committees and it writes bylaws and it sounds a lot like a governor-type, governance-type model. Well, let's talk about this big moment for your organization, this settlement between student-athletes and the NCAA that was recently approved by a federal judge. Five years in the making, you've called this moment a new beginning, and obviously the headlines have proclaimed this the most significant change in college sports.

3:33Do you agree with that? Well, obviously the creation of the NCAA was bigger. And I would argue that I would also argue Title IX was bigger. I certainly think it's one of the biggest moments because it creates a federally approved framework for schools to directly purchase NIL rights from their student athletes. But the other thing that's really important about it is it settles a debate and a discussion and a litigation that's been going on for, you mentioned five years. It's, you know, that stuff's been going on. The discussion's been going on for probably 20. And the back damage payments that the NCAA and the membership are going to make to previous student-athletes, I think those go back eight or nine years.

4:24So it's a, yeah, it's a really big deal. And you were talking about how long this discussion and debate has been going on. This change is one that the NCAA fought against for a really long time, this idea that college athletes should be paid. You have embraced it under your tenure. Can you talk about why? Well, after I'd been at the NCAA for about six months, I put out a position paper that basically talked about this idea of having schools purchase NIL rights from their student-athletes. And the reason I did it was because it just seemed to make sense to me. I mean, things have changed a lot over the course of the past few years.

5:06And this whole issue of name, image, and likeness has too. I mean, I remember 15 years ago, maybe even 20, when the internet first became kind of a thing, there was a kid. He was probably a teenager who lived a few towns over from us who was on YouTube writing all these really hilarious original songs. And he's gone on to become pretty famous. He's a guy named Bo Burnham, and he's made a bunch of pretty interesting movies. But this is when he was young. And, you know, eventually he had like 100 ,000 followers on YouTube and people started buying ad space on his site. And I think it just took a lot longer for college sports to adopt something that was going on with young people across almost every other kind of commercial thing you could think of.

6:00And I just looked at it and said, these seem very similar to me. I don't know why we can't figure out a way to play in this space. It seemed to make sense to you already. It did. And I started talking to people around the membership about it. And thankfully, we found a way to embrace an approach to deal with these issues. And it's expensive. I mean, we're going to pay out$2.8 billion to previous student-athletes and put a whole structure in place to manage the injunction in conjunction with our colleagues in the so-called power conferences. But I do think it's a new beginning, and I think it's a good one.

6:41So you would say that this is a victory for the NCAA, despite the fact that it is a lot of money to pay out, and there was all that resistance for such a long time? I think it's more victory for the young people. I mean, I certainly think the NCAA needed to get here, and I'm glad that we did. But I also believe the whole point here was to create a way for the NIL piece to become part of the relationship between the schools and the student-athletes. It bothered me when I got this job and I discovered that, you know, we keep pretty good track of kids who go into the transfer portal. And, you know, roughly a third of them don't really appear to end up anywhere.

7:28And I chased a few of them down and I talked to a bunch of them. And almost all of them have been coaxed into the portal with false promises and misrepresentations. They gave up the scholarship at the school they were at because somebody told them there was a better deal somewhere else. and there really wasn't a better deal for them somewhere else. And I wanted that relationship to be between the school and the student-athlete because that's where it belongs. I'm glad you brought that up because his Wild West has been sort of a term that's come up when it comes to the name, image, and likeness era.

8:03And as you said, problems paying with students, deals that are super shady. Now that schools can pay student-athletes directly, Can you just talk us through how the money is going to get distributed from schools to students and how this all will be regulated? Well, the biggest thing is the four most well-known conferences, I think, the ACC, the SEC, the Big Ten and the Big 12. They are responsible for creating a process to manage, administer and enforce the rules associated with the way this works. Their representative in this is something that's newly created called the College Sports Commission.

8:46And that College Sports Commission is going to own the responsibility and the obligation for tracking the$20 million annual spend that's directly from the schools to student athletes, as well as the third-party NIL activity and the roster management stuff. And they'll probably be issuing an annual report of some kind on that stuff every year. And they've created two basic platforms for this. One is what they're calling a cap management platform, which each school, we've already done the work, working with them to download all the rosters of all the schools that have said they're going to opt into this system.

9:27And they got to submit their data, their rosters, and how they're planning to spend their up to$20 million every year. It goes up every year by 3 % or 4%, and then every four years it gets recalculated. And they're in charge of managing that platform. And then the other one is the third-party NIL platform, which is being managed by Deloitte. And again, you know, if you're going to do the deals, you got to run them through the system and get them approved. And for the first time, we're actually going to have real information on what exactly is going on out there. I mean, up until now, everything you hear is just not really believable because there's no there there to support whatever you might hear from people.

10:20Let's talk about that$20.5 million cap. It's the cap that schools can spend on paying athletes. And this has come up before. Different schools have different budgets. There are D1 schools with smaller athletic budgets like Washington State, and you've got Texas, which has a huge athletic budget and a lot more flexibility to meet that cap. Is it fair to the schools that don't have that kind of flexibility? So, you know, this is a good example of something where I think we have to wait and see how this plays out a little bit before we draw conclusions. I can tell you this, in the old system we had, when I say the old, I mean like the last three or four years, the system we had for the last three or four years was unmanaged, unaccountable and completely non-transparent.

11:04And who knows what was going on out there? At least now we actually have rules. But when people say that, you know, there's no opportunity anymore for anybody other than the richest schools to succeed, I would just point to this year's College World Series. I mean, everybody said last year when there were four ACC teams and four SEC teams in the College World Series that NIL and all the rest had ruined this for everybody else. And yet this year you have eight teams in the College World Series, none of whom were in it last year. And it's the first time since like 1957 you have a completely new slate of teams showing up.

11:50And three of them aren't in any of those power conferences. I think what's probably going to happen is conferences are going to decide which sports they want to be really good in. And if you're, you know, Ohio State and you're the Big Ten, you're going to be good in a lot of sports, right? But there's nothing to stop other schools and other conferences from saying, you know, we already have some really great basketball conferences, and I expect they will continue to be great. We have some conferences that are really terrific in Olympic sports and women's sports, and I expect they'll continue to be great.

12:31And what I've said to a number of people about this is we finally have rules. We finally have federal approval. We finally have a structure that's accountable and transparent and will be issuing reports. and it's operating underneath the watchful eyes of the judge and the plaintiff attorneys, let's give it a chance to work here and see how it goes. We can make adjustments. People do make adjustments to injunctions. We're going to take a quick break. When we come back, we'll continue our conversation with Charlie Baker about the role of Title IX in this new system and what separates a college athlete from a pro.

13:25I want to talk about Title IX. Title IX requiring schools to provide equal opportunities to male and female athletes. How do you think Title IX might affect the distribution of these payments to college students? Well, I certainly think, I mean, keep in mind that one of the places where there's going to be tremendous benefits as a result of Title IX is in scholarships. Because one of the things this settlement does is it gets rid of the limits on scholarships that have been in place historically, which have dramatically underserved a lot of college student athletes. So, I mean, almost I would expect coming out of this, there will be thousands and thousands of women playing college sports who will be scholarshiped in the future who weren't scholarshiped in the past.

14:12I think that will be true on the men's side as well. But just based on what I've heard schools talk about and what I've heard them say, there's going to be, I wouldn't call it an explosion, but there's going to be a very big increase in the number of student athletes who are scholarship. On the NIL side, the direct NIL side, the school-based stuff, I think different schools will make different choices. There are certain schools out there that are building big brands for their schools in certain women's sports. And I would expect that that would end up being a big piece of how they think about it.

14:47So, for example, UConn in men's and women's basketball. OK, South Carolina in women's basketball. Penn State in women's volleyball. Louisville in women's volleyball. Nebraska, Wisconsin. I mean, there's a bunch of schools that have really significant women's sports programs that they've already made significant investments in, and I would fully expect that they would continue to do that going forward. And one of the great things that's happened in the last few years, and I wish I could take full credit for it, but it was coming anyway, there's been a significant increase in both audiences and viewership on women's sports.

15:30And if you believe, as I do, that in many cases, a lot of the reasons schools make these investments in sports is to build brand and followership and visibility for their institutions. I think there's kind of nowhere to go but up in a lot of these sports. You and the NCAA are petitioning Congress for an exemption that would create some legal immunity for your organization. Can you just talk about why you think you need that? I'm looking for limited liability so that we can make and enforce rules around certain things like academic performance and eligibility. There are a lot of folks in Washington, when I've talked to them about this issue around eligibility and around the four years to play five, And the fact that you now have a lot of people who are looking to basically break that through the courts and to have a standard that basically says there is no limit to how long you can play, which would be, I think, a terrible thing to do for all the kids who come after the kids who are playing now.

16:38I do understand that about eligibility, but it sounds like what this exemption would do is protect the NCAA from all kinds of legal action, not just related to eligibility necessarily. No, no, but I'm talking about limited liability protection. I'm worried someone's going to come after the academic standard. And you've got to meet those standards, and those standards are tied to eligibility. Now, if we're going to have people arguing with us in court about eligibility around how many years you can play, you can bet somebody's going to come in with a case at some point around, well, why is there an academic standard?

17:16And the answer is because it matters since 99 % of you are not going to play professionally. And by the way, you know, we just put in a program that gives a core guarantee to every kid in Division I, where if they need 10 years to graduate, they get to keep their scholarship for 10 years. So the academic piece, I'm not looking for like a blanket antitrust exemption. I'm looking for an antitrust exemption to deal with a few issues that I think we can all agree are sort of universal and important to the whole idea of what it means to go to and graduate from college. So I'm glad we're kind of talking about the student part of the student-athlete.

17:56We've been talking about paying these college athletes millions of dollars. And then, yes, giving the NCAA potentially a limited exception, similar to what pro sports leagues have. Ours is much narrower. Oh, fair. But I guess what I'm trying to get at is, like, when it comes to D1 athletes in this new era, can we still call them amateurs? You know, I never really liked that word very much, to tell you the truth. I prefer thinking about them as students who play sports. And by the way, we've eliminated about 153 bylaws so far that deal with this question about amateurism, which was done contingent on the settlement being approved.

18:43And there's a bunch of others now that it's been approved that we'll be taking a look at as well. I would much rather have us focusing on what I would describe as, and I think this is where the settlement's going to take us, where we're worrying about things like, you know, having a really robust injury surveillance program, having a real robust program around mental health and health and well-being, having a really robust program around academic performance, having a, you know, robust program around sports betting, which, by the way, As a health and well-being and a mental health issue is a really big issue for kids in big-time college sports, I would much rather have us focusing on that stuff and less on this argument about what's an amateur.

19:28Is the answer refocusing and changing the terminology potentially? Well, I certainly think the students who are playing sports in D2 and D3 and in, you know, a decent swath of D1 are for all intents and purposes going to continue to be kids for whom that$4 billion in scholarships is going to matter a lot more than NIL. I mean, some of them will have NIL deals, but they'll be small and they'll be helpful and they'll be great. And we have a lot of stuff on our website that they can rely on in terms of financial literacy and how to think about negotiating a contract and all that sort of stuff. But I think this is very much going to be kind of a 90-10, maybe even a 95-5 game with respect to who's actually going to be benefiting in a really significant way from this.

20:24Charlie Baker, NCAA president, thank you so much for coming on. Well, it's been great to talk to you. And I really would like to see you all spending some time in this space and seeing how some of the stuff that you and I talked about actually plays out over time.

20:46That's all for today, Tuesday, June 24th. The Journal is a co-production of Spotify and The Wall Street Journal. Special thanks to Lane Higgins for help on this episode.

21:01Thanks for listening. See you tomorrow.