Months before Federal Judge Claudia Wilken approved the House vs NCAA settlement, which allows college athletic departments like Florida State to share as much as $22.5 million annually with its student-athletes, athletic directors wondered where the money would come from.
While the House settlement gives the schools a choice of how much they will share, the reality in this highly-competitive world of athletics is that those schools who wish to compete at the highest level will have no choice but to share at the highest level possible.
Which leaves athletic directors, who have no profit to share, searching for new sources of revenue. Traditionally, the money generated by revenue-generating sports like football and basketball is used to fund all the other sports that don’t generate enough to be self-funding. In fact, most athletic departments rely on $20 million or more in annual contributions from organizations like Seminole Boosters to balance their overall athletics budget.
Seeking relief, the athletic directors of the state schools in Florida – including FSU AD Michael Alford and Board of Trustee Peter Collins -- went to the Florida Board of Governors to make their case for relief should the House settlement be approved.
“We’ve all known we were clearly at a disadvantage here in Florida,” a source with knowledge told The Osceola. “Other states have done it, so it was not a new idea.”
On June 18, the BOG passed a special amendment, specifically addressing the revenue sharing needs of state universities that would permit public universities to transfer or loan up to $22.5 million in auxiliary funds for athletics.
"Athletic departments are already currently recruiting student-athletes for fall 2025, and they need clarity on the available funding to retain and recruit the best talent for their rosters," said Alan Levine, vice chair of the board of governors, which oversees Florida's state universities. "If the universities cannot react to the settlement immediately, there will be irreparable harm to the athletic programs and to the financial welfare of our institutions."
The rule went into effect immediately and will be reassessed by the BOG in 90 days.
The revenues will come from the university auxiliaries, which FSU defines as “revenue generating business type activities that support the mission of the institution and provide essential services to the campus community.”
Auxiliary funds come from student housing, parking fees, food services, bookstore sales, telecommunications, printing, postal and computing services.
There are caveats to this quick fix, however. The amendment is temporary, sunsetting in 2028. The amendment also states that the money coming from the auxiliary could come in the form of a transfer or in the form of a loan, which is a $22.5 million difference plus interest.
And while the amendment allows public universities to use up to $22.5 million for additional scholarships and revenue sharing, it is not clear how much the auxiliaries at each school has to transfer or loan the athletics department as auxiliary revenue varies by school.
While a school’s auxiliary may not be able to transfer or loan the full $22.5 million per year – an amount expected to grow -- whatever the auxiliaries can provide will help.
The house case allows as much as $2.5 million of the $22.5 million to be used to fund additional scholarships, with as much as $20 million to share with athletes. The words “as much as” are significant as not every school will have the budget to fully fund scholarships and still share revenue.
How much each school shares with the athletes in each sport is left up to the school to decide. FSU hasn’t said yet how it will share between their sports but it is believed the percentage will be based largely on revenue generated. Football generates the lion’s share of the revenue and is expected to receive 75 percent of the revenue to be shared. Men’s basketball will receive 15 percent, with the remaining 10 percent shared by athletes in the other three revenue generating sports (women’s basketball, baseball and softball).
While Clemson indicates it will fully fund scholarships in all sports, other ACC schools may not fund the full limit in all sports. Obviously, the more scholarships FSU is able to fund in each sport, the more competitive its teams will be.
Alford told the Board of Trustees his goal is to fund scholarships and to share revenue at the highest level possible “so that FSU can continue to compete for championships.”
The operant word in the prior paragraph is possible. Alford can only make possible what his revenue sources will allow, so it may be he chooses to fully fund scholarships in sports he intends to compete for championship and not fully fund them in others if there isn’t enough revenue to spread to all sports.
The BOG’s special amendment will certainly make it possible for Alford to fund more than he otherwise would. But the FSU fan base would be wise to realize the BOG’s special amendment is not a permanent silver bullet or a get out of jail free card when it comes to funding that $22.5 million when the amendment is scheduled to end.
This is where FSU fans have a loud voice. Revenue is revenue and the more the AD has the further he can spread it. Each football ticket bought in Doak Campbell Stadium is revenue not only to football but revenue available to strengthen other sports as well. In years where Doak is sold out, FSU generates $10 million more revenue than it does when 10,000 seats go unsold, and that’s revenue that sports Alford may not otherwise be able to fund.
The BOG amendment allows FSU and other public universities the funding needed to remain competitive for prospects and to prepare for how they will be self-funding in three years when the BOG amendment is scheduled to end. Selling out Doak would help, as will any new revenue generated by the new Atlantic Coast Conference Success Initiatives, which could generate an additional $15 to $20 million per year. Should the Big 10 or SEC expand and FSU receive an invitation, the conference payout could add $40 million annually.
Other schools are also taking actions because of deficits in their athletic departments. Last week, University of Kentucky trustees approved a $31 million operating loan for the athletics department as it begins making direct payments to athletes.
Meanwhile, Louisiana is poised to hike taxes on sports betting to pump more than $24 million into athletic departments. And Arkansas this year became the first to waive state income taxes on payments made to athletes by higher education institutions.
