The Joel Klatt Show: A College Football Podcast - Schools will start paying their players directly: what does it mean for College Football?

Episode Date: May 27, 2024

FOX Sports’ lead college football analyst Joel Klatt reacts to the groundbreaking agreement between the NCAA and the Power 5 Conferences that will allow schools to pay athletes directly in the future. He breaks down why this happened and why it is such a positive thing for the future of college football. He also lays out why it is just the first domino in a series of next steps. Klatt also discusses whether this agreement will get rid of NIL and Collectives in collegiate sports. He wraps up by considering which programs will benefit most from this ruling and whether this will shift the balance of power in the sport. Learn more about your ad choices. Visit podcastchoices.com/adchoices

And this settlement is the first piece in achieving that goal. What is that goal? We've got to stop getting sued. College football has never been better. Interest has never been higher. Believe that we are at the dawn of the golden age of college football. It was an epic day of college football. It was one of those days where you fall in love with the sport all over again.

Hey, what's up everybody? Welcome into a Joel Clatt show. I am Joel Clad, and I'm super excited about this episode. So we have got a doozy of a topic today. But before we get into that, just want to remind everybody, make sure that you go to YouTube and subscribe to the YouTube channel. We've got a lot of content there. It's awesome.

Make sure to throw a comment down below. I like to jump in those comments from time to time and hash it out with you guys right there in the YouTube comments. By the way, we are close to $150,000. I will be doing a giveaway at $150,000. As soon as we hit $150,000 subscribers, I'm going to give away 150 custom hats. Your lifting custom hats are coming.

I've got the design all ready to go. So those are going to be made here shortly and be sent out before the season. And then we're going to do another custom logo. And 150 of you, Joel Clatt listeners will be getting a hat once we hit 150,000 subscribers. That's all coming up hopefully before the season as we launch into big noon conversations, which is coming up, by the way, as we've been recording those all spring long. Let's dive into this topic, though, because it's been a big one.

As you know, if you're listening to this show, you knew that last week, the NCAA basically, and the Power 5 conferences, came to an agreement that and settled a lawsuit that was pending. House versus the NCAA. Now, what it all means, listen, there are a million ways that you can talk about this. And if anyone talks about definitively and tells you definitively that they know exactly how this is all going to play out, then they're lying to you. because nobody knows exactly how this is all going to play out. But broad strokes, if you're able to just kind of take a 30,000 foot view, here's what happened. First and foremost, the NCAA settled instead of risking losing yet another lawsuit.

And this lawsuit in particular was of the size that would have crippled the enterprise, not just the NCAA, but all of intercollegiate athletics. So for the first time, there was a real, galvanizing attempt to try to make this go away, not only from the NCAA, but also from the stakeholders within intercollegiate athletics, like the universities, like the athletic directors, like the conferences and the commissioners. So for the first time in the last, I would say, 10 to 15 years, there was a more unified approach towards this lawsuit. Now, it should be noted, was this lawsuit any different than, you know, the many that came before,

it or the others that are pending as well? Not entirely. This is what you should know about that. Amateurism in intercollegiate athletics is a flawed model. Anytime you've got a flawed model where there's some questionable legality in terms of the rights of the people within that enterprise, if you want to call it that, guess what? You are right for litigation. So the NCAA has been sued a number of times. guess what? Up to this point, they have fought it. Now, they haven't had a ton of unified backing. They've fought it as an organization. And because of that, they have fought and appealed and fought and appealed and lost almost anywhere. Why? Because it's an indefensible model. We all know that. We all knew that for the last, you know, five, 10, 15, 20 years, that this model as the revenue was

increasing and the players were staying at a certain level and not being shared in the revenue, that this was inevitable in a lot of ways. Okay. So the NCAA had fought and lost a lot of different lawsuits. And then now for the first time they've got this unified backing with the stakeholders within their collegiate athletics. And there is some real momentum to be like, hey, we need to do something about this. So what does House versus the NCAA, the settlement, do? Well, there's a back payment of a few billion dollars to players going all the way back to 2016. But the main point is that we're going to have now a revenue sharing model in college football and really all of college sports, but more specifically in college football. Okay, so that's what it is.

We're going to have revenue sharing now. It's starting to change the structure of where the money is coming from. So you have to ask yourself, well, like, why was there this unified backing? Why was there the stakeholders on the same page with the NCAA? Well, because the stakeholders were the ones that are out there in the marketplace trying to operate right now in what is a messy environment. They're trying to operate in the name image and likeness space and the transfer space and everything that has been created through those lawsuits that I was talking about that the NCAA lost. Remember, they have been sued and lost and sued and lost and appealed and lost and all those different things.

So what did they do? They had to react. And then they said, hey, NIL is legal all of a sudden. And we got abruptly thrown into this blender that was change in college football and intercollegiate athletics. We weren't ready for it. And so guess what? It's messy. So now all the stakeholders are like, okay, time for everyone to get to the table and actually start to make this right.

Okay. So what does House v. the NCAA settlement actually do for NILs, for the collectives, What is it change? Let's talk about that for a moment. This lawsuit and the settlement of that lawsuit is going to change the structure in which each university operates their NIL and collective operation. Okay. Here's what's happening currently. University goes out and they raise a lot of money, lots of money, between, I would say, some are five or six million dollar collectives. others are $18 to $20 million collectives. And they're raising that from boosters on an annual basis so that they can, in turn around and promise that money to their athletes,

most of which are football players, some of which are other revenue sports like men's basketball and in some cases women's basketball as well. So they promised that money. What are they doing? They are paying for play. Nick Saban has said it this way. I have said it this way. the schools are raising funds in order to pay players. It's not in the true heartbeat of what NIL was ever supposed to be,

which was name, image, and likeness value. What you have here is, let's raise a bunch of money and let's pay players to wear our uniform and play for our team. Okay, so it's not the model that anyone likes. And it's totally unsustainable, and the stakeholders knew that. Every athletic director knows that. So they knew that it had to change. So guess what?

They started coming to the table. So now what you're going to have is a little bit of a shift in what an NIL and a collective will do. So that's what was taking place, just a straight pay for play. Also on top of that, you have some players that have true market value that can sell their name, image and likeness to a company and get paid for it. And that's what this was always supposed to be. So this settlement now allows that model to change into a structure that I believe is more sustainable. So now the money that the schools are just going to pay the players will come from a revenue share.

It can be on the books of the university's athletic department budget, which is, I think, a good thing. And it also, by the way, increases that budget for almost every school involved. So now they can go upwards and you hear different numbers, but it's somewhere between $19 and $25 million annually, that a school can, if they want, a lot to the players. in a true pay-for-play. So now they can say, hey, you're going to be the starting quarterback at our school, and you're going to make however many hundreds of thousands of dollars because of that, and it's pay-for-play.

That revenue-sharing model, I believe, is good. It is a good thing because it brings what was in the shadows into the light. Now, with that money being on the books, players and their third-party agents can't just pit two schools against one another and say, well, this school offered me a million dollars. Well, there's no way to know if that's actually happening right now. Okay, so not only are the players going to get a bigger bite at the apple, because it's not just based on what they can raise from boosters, the collectives can raise from boosters,

so they can go from a $6 million budget to a $20 million budget, which is all allocated towards the players, but now the schools themselves can actually operate in a space where you know what a player is getting offered and paid from a different school. Why? Because it's on the books. so a true pay for play and a revenue-sharing model. I believe that is a good thing. We already have it right now.

Why not bring it from the shadows and in the light? A very good thing. Now, what happens to collectives? Bear with me for a moment. Rather than just being a collective for NIL, now a collective is going to have to work as a true marketing arm of the university and of those student athletes.

This is an important piece now, because what's not going to go away is a player's ability to go enter into an agreement with you name the company and do a deal for their true market value for their name, image, and likeness. So when you have Caleb Williams and he can go get a Dr. Pepper deal, then he can go do that. And they can do that through the marketing arm of the university. Now the university can help them with that. And the collective is a marketing arm. And the reason that is better is because now those dollars are, one, more trackable. And two, I think,

you get away from one school's ability to just buy players over another school. So now you're starting to even out the budget that every school is going to compete with. And more on this later as it relates to the competitive balance of what I think this is going to actually do to college football specifically. But just think about it for a moment. Now, every school has a section of money and a revenue share that they can share with the players and they're going to have a collective that is a true marketing arm that a player can go out there and enter into a deal with a certain company. The reason I don't think that you're going to get just a random booster that says, I want to go buy a player.

Well, you can't really do that now in this new model that's moving forward. And the reason is, is because it would have to actually be a company that would have to answer to, in some cases, a board or their investors. that's tracked dollars. You know, Under Armour and Nike can't just go buy every basketball player that they want. Why? They have shareholders.

Okay, so in true name, image, and likeness, as in what happens in professional sports, those companies have to answer for the dollars that they spend. So they have to become valuable. So they're being spent on actual value. So they're being spent on players that actually derive a high value in name image and likeness. So it's more a true model of what was intended in the first place.

Okay, so this is just a long way to get to that spot. So that's what's happened in terms of the settlement, and that's kind of what it means for the NIL and collective space as I talk with athletic directors, you know, what I would consider in the short and intermediate term. I think that the bigger question, though, And the reason I've rushed through the other parts is because the bigger question is like, well, like, why? What is the impact on the greater landscape?

What does this mean moving forward for specifically college football? Why, Joel, were the stakeholders in the enterprise more inclined to settle? And what is their benefit moving forward? Well, let's talk about that. Let me touch on something that I referred to to to begin. The NCAA has been fighting lawsuits for a long time. There's been very little differences in all of these lawsuits. They have a flawed amateurism model.

It is ripe for litigation because they will lose. So people that want to litigate that and want to sue them and win settlements are going to do that. That's going to continue to happen unless all of this changes. And I mean like in a drastic way, in a drastic way. Because every time that the NCAA tried to shift and say, okay, we lost that lawsuit, so now we have NIL, but all of our old rules about boosters and inducements are going to stand. Well, then they try to enforce those rules about boosters and inducements, like let's say, against Tennessee. And Tennessee's attorney general turns around and sues them.

And so does Virginia's attorney general. So they've been totally crippled of the ability to actually crippled of the ability to actually govern their sport. So what you have to understand is that lawsuits will continue unless something drastically changes. Those in the enterprise knew that and know that and know that they have to change in a major way. So they have one, I would say, cohesive and specific goal. And this settlement is the first piece in achieving that goal. What is that goal? We've got to stop getting sued. We've got to get out of the courtroom.

It's going to bleed them dry. The more that the NCAA or the enterprise gets sued, the more chance that it all goes away. It doesn't matter if it's House versus the NCAA in Northern California or Fontno versus NCAA in Colorado or what used to be, like, O'Bannon versus the NCAA. It doesn't matter. It doesn't matter because all these lawsuits are similar

in the way that they tried to attack a flawed model, an indefensible model of amateurism. So it's going to continue until something drastically changes. So not getting sued, how does that happen? There's three main goals from not only this settlement, but for the enterprise. And these three are really important. Number one is that they need desperately some antitrust, protection from the federal government, from Congress. They need it desperately. Without it, I don't know if there's a real path forward, just like the NFL has antitrust exemption.

You know, antitrust laws are there for the true marketplace, the true capitalist marketplace, and protects against monopolies in our country, right? And listen, I'm no expert on all this, but I know that professional sports, the only way that they can operate as we know that they operate is with antitrust exemptions. And that's exactly the model that the NCAA or the enterprise, whatever you want to call it, needs. They need antitrust exemptions. The second thing that they need is a uniform set of rules across state lines. Again, that's where Congress comes into play. They need some sort of legislation that provides a baseline of rules across state lines so that they're not operating under one set of rules in one state and a different set of rules in a different state.

Can you imagine for a moment in the National Football League if the Seattle Seahawks were operating in a substantially different model because of laws in the state of Washington than the Arizona Cardinals, both in the NFC West, but because Arizona is in Arizona and the Cardinals have to operate based on Arizona law, and then they're at a severe disadvantage because of some set of rules and laws that were happening in the state of Washington, well, of course, that has to change, right? So they need some antitrust protection and they need some uniform set of rules that goes across state lines. Because until that happens, we will continue to have, regardless of who's trying to enforce rules and intercollegiate athletics, any rules. We will continue to have some states suing the NCAA and continued litigation, whether it's individuals or states, for the foreseeable future. And that's the exact opposite of the goal at hand, which is to stop getting sued.

Okay, so you need both of those things, antitrust, as well as uniform set of rules across state lines. The last thing that they're going for, and there are probably others, but for the sake of this podcast and this point in time, the next thing that they're going to be needing to go after is a separation, a separation between revenue sports and non-revenue sports and intercollegion athletics. All of those things are vital for a lot of different reasons. I think that the antitrust laws are much more difficult to talk about. One, I'm not an expert on them. Two, you get into the legal jargon of exactly what that means and what that

offers, but you understand that without antitrust exemptions, the lawsuits will continue. Without a set of rules that is similar across state lines, the lawsuits will continue. And without separation of revenue sports and non-revenue sports, lawsuits will continue. And that's where we get into questions about Title IX and exactly how this settlement is going to work within Title IX. And again, this settlement is not going to do anything about Title IX. But what it will do is start to pave the road towards these elements. It's not a direct tie. But let me tell you where the tie comes in. Congress has been incredibly slow to get involved. One, it's just a slow moving body.

That's how our founders built, you know, the legislator. So we understand that. It moves incredibly slow. Two, there wasn't a lot of incentive for the people in our government to get involved, in particular with everything that we've been dealing with outside of Intercollegiate Athletics for the last four, five, six, or even eight years. They've had a lot on their mind. And it's not at the forefront of anybody's mind. So what we've seen so far up to this point is we've seen congressional hearings where Mark Emerd of the NCAA is in there and he's trying to defend amateurism

and the legislator or the Congress folks, upset with their answers and so on and so forth. And there's a lot of eye rolling and some people want to blow it up and so on and so forth. So it's been very messy. The reason that this settlement is important is that it's basically a white flag from the enterprise, from the NCAA and from the stakeholders within the NCAA and intercollegiate athletics that signals to Congress, we are ready to actually have a real conversation. We are ready. We are moving in the direction, taking the steps necessary in order to do the things that we know we will have to anyways in order to achieve some sort of common ground so that we can get an antitrust exemption,

so that we can get legislation that covers us across state lines, so that we can get separation of non-revenue sports and revenue sports so that they aren't in the murky waters of Title IX. Because what I think everybody's question is right now, even athletic directors that I talk to, they're thinking to themselves, well, is part of this 20 million, for the football team and the men's beach volleyball team, or the lacrosse team, or the women's soccer team,

because that's unsustainable from the athletic director's standpoint. If they have to abide by Title IX within this revenue-sharing model, you will see massive cuts to sports across the board, because there just won't be enough resources to do it right. Now, that's not a threat. I think that that's just a reality. When you start talking about these budgets and start talking about carving out $20 million annually

to share with the student athletes on top of the money that universities are already paying to student athletes in the form of scholarship, in the form of wellness, in the form of training, and in the form of, in particular food, and all the meals that they give them, they're giving them a stipend. All of that stuff already comes out of their budget.

Now you're adding $20 million more dollars to that model, so they're going to have to cut. This is why Congress is going to have to get involved and have some separation between revenue sports and non-revenue sports. See, in my mind, revenue sports need a totally different governing body and not, or excuse me, revenue sports do it. And then non-revenue sports need to operate just like we operate basically the Olympic model. Yeah, you can still have NIL. You can have all sorts of things. But the only way that they are around, to be quite honest with you, is if they are pulled out of this revs year.

Because if you've got to pay the men's rower and the women's lacrosse captain, the same as your quarterback, this is totally unsustainable as far as a rev share. So the separation is incredibly important, incredibly important. If you start looking at the structure, once you separate out revenue sports from non-revenue sports, you basically have three revenue sports at this point. You have college football as a whole, brings in about 70 to 75 percent of the revenue in intercollegiate athletics or for any athletic department across the country. And then you have men's basketball, namely the NCAA tournament on the men's side, and now women's basketball because of the growth in women's basketball,

and more specifically the NCAA tournament on the women's side. Those are really the only three things that make money in intercollegiate athletics. Women's basketball tournament, men's basketball tournament, and college football. So those need to be stripped out and taken away from all the others. And we need some sort of entity that is over college football and over basketball and governs them in a very different way than we govern all the other sports. And trying to govern them the same way is only going to get us in the same position where we will be in a lawsuit. And that's exactly what the enterprise is trying to avoid. So that's why the separate is, I think, increasingly important.

Now, some of the things that could happen if you have antitrust and if you have uniform rules across state lines and if you have separation between revenue and non-revenue is that you can start to look towards future dominoes falling, namely a collectively bargained agreement. I've been arguing this for a long time. These are steps in that process. If you're asking me today, Joel, was last week a good or bad thing for intercollegiate Legion athletics and more specifically for college football, I would say, you know what, it is a great thing.

Why? Because this is a domino that has to fall in order for the hundred more dominoes to fall to get to a structure that is sustainable for the bright future of college football. I say it in my open and you listen to it every single time you listen to this show. We are at the dawn of the golden age of college football. But getting there is never easy. just like going west in a covered wagon wasn't easy. None of it is easy. You've got to go through the growing panes. This is a domino of a series of dominoes that are going to have to get tipped over in order to get to the end of the line to a spot where college football is in a better place,

where the structure is more sustainable, where we have a more competitive environment across landscapes and conferences and more specifically teams, where we have the ability to be able to be able to be. to protect players, pay them accordingly, share the revenue of a sport that is on an exponential growth pattern right now, both in terms of interest and in revenue. All of those things are a good thing. Remember what Chip Kelly told us last year about this time. There is no crying on the yacht. These are good problems to have. These are problems born out of interest and revenue, not lack of interest and lack of revenue. And that's an important distinction to make. We are in a good

in college football. We can be in a better spot moving forward. This lawsuit and the settlement of this lawsuit is a step in that direction because without this, we don't get congressional oversight. We don't get an antitrust exemption. We don't get rules that would govern across state lines. We don't get separation of revenue sports and non-revenue sports. All of those things have to happen so that we can get to a point where we can have a structure over college football that allows for a collectively bargained agreement so that we can protect players, we can have some sort of guardrail about when and where they can move. We have guardrails on all of it, and that's what we all want as fans of college football.

It's coming. You just have to be patient. There's two types of college football fans right now, two, only two. One that long for the past and want it to return there. And the other that just think, you know what, this is all messy and it's hard to follow. And I don't really love it. Now, you could be a third and maybe I don't want to. short change, the third that is just like, you know what, it's all awesome and I love it.

One, that last group, I'm all with you and I'm for you and I hope that's you. And if it is you, leave a comment down below on YouTube. Remember to subscribe and like the video. The second group that you know that this is messy, you know what? Sit tight. Sit tight. Because I think what you will witness in the coming years is a structure that you're really going to love. And that last group, or the first group I mentioned, I guess I should say,

if you're just longing for what was, you're going to be disappointed. It's never going to return. It's never going to return. And you know what? It's been messy forever. And it's been a system that has been so incredibly flawed and indefensible that it's a hard position to take. If that's you, I don't have anything positive to tell you.

We're not going back to the place where all we have is polls and all the bowl games are on the first. We're not. We're not going back there. And just like schools and programs and coaches and athletic directors have had to do for the entire course of history in college football, as fans, we also have to adapt to the changing environment. And the changing environment is moving in the direction of all the structure that I was just talking about.

Now, is it going to look exactly like that? I'm not totally sure. Do I know exactly what's going to happen with Title IX next year in 2025? No, I don't. and anybody that tells you they know exactly what it's going to look like is lying to you. But I do know at the end of the line of the dominoes, this is going to look better. And that's why I tell you we are at the dawn of the golden age of college football. It leads me to my last question.

Competitive balance. What do I see this doing to competitive balance in college football? Well, I'll go back to that second point I made about collectives and how they'll be more of the marketing arm of college football. And that's where you're going to get the differentiator between what players can make at one school versus another. Because if the salary cap, if you want to call it that, or the Rev Share, is whatever percentage of revenue shared with the conferences, let's call it 20 million as we get started.

We know what that is, and that's not going to grow or it grows constantly for everybody involved. What we don't know is what your opportunity is as a player at that school for true marketability and name image and likeness. And so I would just tell you, the same teams that are really good, the same teams that are on TV, constantly, the same teams that are in marketplaces where they have access to companies and markets and capital are going to continue to have a bit of differentiation from the rest. Just like every other sport, the Dallas Cowboys quarterback is more valuable than the Arizona Cardinals quarterback. They have access to the same capital via the salary cap in the National

Football League, but a far different value based on the marketability of being one quarterback versus the other. That's just the truth. It's different being a New York Yankee than it is being a Kansas City Royal. I think we all can wrap our hands around that and heads around that. So if you're a university that is in

a place geographically, that you have access to companies that can increase the market value of your players, Austin, Texas, Columbus, Ohio, Detroit, Michigan. when you're the only game in town and you're basically the pro sport in your state, Alabama Crimson Tide.

When you have a history and a track record that suggests that your fan base is large enough and that your marketability based on the television product will be there, Georgia, Tennessee. All the similar teams are going to be in a position to claim that they can provide more to a prospective athlete than the other. The difference is, is that now we're going to know, and it's going to be out in the open. This lawsuit does a lot of things. It brings things that we're in the shadows out into the light.

Good thing, number one. It allows the opportunity to change the structure of the sport via congressional legislation, as well as governing body and structure, which allows for collectively bargained agreements with a players association, good for the sport. Like I said, I believe that we're in the process of getting to a place that's really positive in college football. This is a domino in the long string of dominoes that are going to start to fall over the coming months and years.

Do I know exactly what it looks like? No, I don't. But I do know deep down in my heart, college football is more popular than it's ever been, and the brightest days of this sport are still ahead. Make sure to follow the show, comment below, like it. subscribe on YouTube and we'll see you next week