[ad_1]
The University of Tennessee is preparing for a future where athletes will be compensated directly by the school, rather than by a collective name, image and likeness.
On Friday, the UT Board of Governors approved the university’s plan to create a nonprofit foundation that could quickly mobilize funds to pay athletes’ salaries if the NCAA takes the next significant step.
It would also set UT up for a spot if the superdivision of the wealthiest college sports schools splits from the rest of Division I.
“This is really an effort to be nimble and prepare for the changes that are coming,” Prime Minister Donde Plowman said.
College sports are headed for big changes, and money will determine the fault line.
Fortunately, UT Athletics is in good financial shape, reporting record revenues.
In the 2022-23 fiscal year, we experienced an incredible explosion of growth, surpassing $200 million in revenue for the first time in school history. On Friday, it reported to the board a budget of $183 million and a projected surplus of $4 million for the 2023-24 fiscal year.
Can UT pay athletes $30,000 and manage NIL payments?
Plowman told the board there are signs of coming change and UT needs to put in place the infrastructure to adapt.
In December, NCAA President Charlie Baker proposed a plan to create a new Division I subdivision that would require schools to pay at least half of their players a minimum of $30,000 annually through a trust fund.
Schools would also enter into NIL licensing agreements for their athletes, essentially replacing the current collective model funded by boosters and fans.
That could bring order to the NIL space, which the NCAA desperately needs.
The NCAA has opened NIL-related investigations into a number of schools, including UT. But on February 23, a federal judge in Greenville granted a preliminary injunction suspending the NIL rule, at least until the antitrust lawsuits brought by the attorneys general of Tennessee and Virginia are over.
Baker’s proposal has received a lot of backlash, and there is no sign that it will be adopted. But it was indicative of the general direction in which college sports were headed.
Therefore, UT must be ready to pay athletes without having to spend years organizing such operations.
“If that happens, I don’t know if it will happen, but it’s probably something similar that could happen, and we need a mechanism to make that happen,” Plowman said. “So this foundation will be an example of how revenue from an athletic department can be funneled into that foundation and used to pay student-athletes.”
What other schools have foundations like this?
This isn’t a new idea.
According to UT’s proposal, the “overwhelming majority” of SEC schools have already established similar foundations to support the financial needs of their athletic departments and student-athletes.
Chairman John Compton said that includes 11 of the SEC’s 14 schools. The University of Memphis also has a college, Plowman said.
But having the basics is another thing. Availability of funds to pay athletes’ salaries is another issue entirely.
At this time, the Board of Directors has granted UT permission to establish a new non-profit foundation. This means you can apply for tax-exempt status under state law and file organizational documents to form a corporation.
UT must return to the Board for further approval before the Foundation begins operations, finalizes its governance structure, or raises funds.
“So I’m here today to ask for permission to take the next step in establishing such a foundation,” Plowman told the board. “It’s complicated. It takes time. There are also IRS implications. It has to be carefully organized so that the university can control its foundation and control the voting.”
“But we will get back to you about that later.”
Will the SEC and Big Ten separate or will there be more conferences?
There are 133 schools in the Football Bowl Division. But only 59 schools, including UT, spend more than $100 million a year.
Therefore, the proposed split would likely separate schools from the Power 4 conferences SEC, Big Ten, ACC, and Big 12 from the rest. But each school will decide whether or not to make it happen and will pay hundreds of players at least $30,000.
Other models float the idea of only the SEC and Big Ten leaving. Either way, UT will get its cut as long as it can pay its players what they need.
UT already pays the athlete $6,000 plus a scholarship.
Of course, a school with deep resources like UT already pays its players.
In June 2021, the Supreme Court’s decision in Alston v. NCAA allows universities to provide student-athletes with educational benefits and facilities, as well as direct financial aid if they meet certain academic standards. It was approved to do so.
As part of this decision, schools can pay student-athletes up to $5,980 per year in addition to their scholarships. UT does that for all of its athletes.
This has resulted in a 45% increase in aid to university student-athletes over the past three years. The 2023-24 budget puts him at $22.9 million, up from $15.8 million in 2020-21.
UT’s attorney fees are risingHow Tennessee paid an army of lawyers to be allies and enemies of the NCAA
UT absorbed these additional costs thanks to record revenues. But Plowman knows more changes are on the way and hopes the university will be nimble enough to adapt.
“Everything is changing rapidly in athletics, and I don’t need anyone here to tell you that,” Plowman told the board. “We need to be prepared for some of these changes.”
Adam Sparks is a football beat reporter for Tennessee. Emailadam.sparks@knoxnews.com. X, formerly known as Twitter@AdamSparks. Please support strong local journalism by subscribing at . knoxnews.com/subscribe.
Get the latest SEC football news and insight by subscribing to the SEC Unfiltered newsletter delivered straight to your inbox.
[ad_2]
Source link
