How new NCAA landmark deal to pay student-athletes will affect Michigan and Michigan State

The date May 23, 2024, will likely be remembered in college athletics circles for years, decades and perhaps the next century to come.

It was late on that Thursday evening when the old college athletics model was erased after an historic settlement was agreed upon by the NCAA and the Power Five conferences that sets the stage for universities to share revenue directly with student-athletes.

It’s at least the third seismic shift in the college athletics landscape in recent years, following the implementation of name, image and likeness earning opportunities and the new transfer regulations, which allows both immediate eligibility and unlimited transfers.

Each of these major changes will likely further separate the haves and have nots, especially in college football. But there are now more questions than answers.

Here is a discussion between Free Press Michigan State beat writer Chris Solari, Michigan beat writer Tony Garcia and Big Ten insider Rainer Sabin about what all of this may mean for the state's two Big Ten universities, and which domino may drop next.

The numbers and immediate future

Garcia: To borrow a line from Ron Burgundy: Boy, that escalated quickly. Well, I suppose it wasn’t all that quick. It was just more than nine months ago when attorneys Steven Bannon and Jeffrey Kessler first met with major conference commissioners and NCAA officials to discuss this potential move. But for it now to be agreed upon, given the way the NCAA generally moves, it all happened quickly.

There will now be a portion of the athletic department budget that will be set aside for paying players what essentially equates to a salary. According to those with knowledge of the agreement, the schools will be allowed to use approximately 22% of the Power Five conferences' average athletic department revenue, which equates to around $21 million annually.

The schools have agreed to pay $2.77 billion dollars over the next 10 years to more than 14,000 former and current college athletes, and as athletic departments' budgets rise, so will the pool of money from which to pay players.

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Obviously there are dozens of questions we could ask. But perhaps let’s start here: What does it mean in the immediate term for schools like Michigan and Michigan State?

Solari: From Michigan State’s standpoint, much like the rest of the mid- to upper-tier programs, the announcement begins another arms race to keep pace with the behemoths with bottomless budgets such as U-M, Ohio State, Alabama and others. The Spartans remain a "have" in this new landscape from a financial and visibility perspective, particularly in the decision-driving sports of football and men’s basketball, but the changes could affect the broad-based approach athletic director Alan Haller wants — and at a school that less than five years ago eliminated its nearly 100-year-old swimming and diving programs due to budgetary reasons.

Even with the massive television contract footing much of the bill, having billionaires Mat Ishbia and Greg Williams and a handful of other prominent donors is essential to athletic departments navigating the steep cost of player procurement that’s ahead. Wealthy backers are more and more becoming de facto team owners so to speak. However, the mess with MSU’s NIL collective during the 2023 football season showed that establishing those type of transactional relationships can go sideways in a hurry, and leave coaches and administrators scrambling to handle the collateral damage of spending someone else’s money.

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Trickle-down effects

Sabin: It will be interesting to see how these athletic departments structure their budgets in the coming years. For the longest time, schools poured money into facility upgrades and stadium/arena projects. MSU recently opened the $68 million Tom Izzo Football Building, a state-of-the-art hub for coach Jonathan Smith’s program. Michigan, meanwhile, is allocating an estimated total of $24 million toward the renovation of its football and basketball locker rooms. In the future, will we see the athletic departments invest their money in these kinds of projects, when they also have to set aside a significant portion of their purse to pay their athletes? And how will they also support the non-revenue sports as well as their vast rosters of staffers? The trickle-down effect of it all could lead to donor fatigue, which has already started to surface three years into the NIL era.

Michigan athletic director Warde Manuel talks during an interview with the Free Press Michigan beat writer Tony Garcia at U-M's Weidenbach Hall in Ann Arbor on Monday, April 22, 2024.
Michigan athletic director Warde Manuel talks during an interview with the Free Press Michigan beat writer Tony Garcia at U-M's Weidenbach Hall in Ann Arbor on Monday, April 22, 2024.

Garcia: For U-M, I can’t help but think this will serve as a boon moving forward. Athletic director Warde Manuel has made it clear he didn't want the university to have anything to do with “pay for play.” Instead, Michigan’s NIL missive reached alignment this past year as Michigan and Learfield combined forces with Altius Sports Partners and added an in-house NIL executive general manager position to help student-athletes maximize their potential value.

Now that Michigan will function with the same budget as other programs on the front end — it previously did not want to promise incoming athletes any financial specifics, rather coaches and recruiters would describe different avenues future athletes could make money once on campus — it should theoretically open the door to even more recruits who may have been looking for more money directly than U-M would offer.

The non-revenue sports is a very interesting question. Title IX, now more than 50 years old, prohibits sex-based discrimination in any school or any other education program that receives funding from the federal government; how does a $20 million budget get equally and fairly distributed to abide by these rules?

Oversight from whom?

Solari: This is one of the biggest and least addressed components. With almost all of the discussion centering exclusively on football, the U.S. Department of Education has had to remind universities many times over the decades that they are bound to provide equal opportunities, scholarships, facilities, travel, support, etc., for their female and male participants. After talking with one policy-maker with a higher-ed legal background, it is still unclear how this conversation of attempting to separate football from all other sports will happen. The Department of Education has been silent through all of the changes. While schools have been able to skirt the issue by working with third-party NIL collectives outside of their governance, most of which focus on football and men’s hoops, a move for universities to rein in control of paying athletes appears likely to be heading back to court to face challenges from women’s athletes — if this revenue sharing isn’t handled equitably.

Conferences and athletic programs attempting to create separation from the universities they represent also face scrutiny from using publicly funded land and facilities, and staff beyond the athletic departments to maintain those venues and other areas. And that doesn’t get into the fact that, like employees of those universities and their sports programs, these athletes’ salaries are every bit as much a matter of public concern. What happens when donors fail to meet their payment obligations or when bloated TV revenue streams dry up? Are schools on the hook to pay the athletes from their general funds that come from taxpayers and tuition-paying students? A lot of potential pitfalls exist beyond the glowing talking points the conferences and their powerful lobbyists are pushing with the rapidly changing rules in a time in which those power brokers have yet to show they have a handle on the Wild West they’ve created.

Michigan State's athletic director Alan Haller on the sideline during the football game against on Saturday, Sept. 9, 2023, at Spartan Stadium in East Lansing.
Michigan State's athletic director Alan Haller on the sideline during the football game against on Saturday, Sept. 9, 2023, at Spartan Stadium in East Lansing.

Sabin: There is still so much that is unclear. Frankly, it’s unsettling. And I think it has created a lot of anxiety among alumni and fans, the constituents of college sports who give it life. All of these changes in such a condensed period of time have made the sport virtually unrecognizable to them. They have endured conference realignment that have disrupted rivalries. They have seen once-unfathomable levels of player movement, which has made it difficult to follow their favorite teams from one year to the next. Now they must ponder what this sport will look like as they contemplate whether their rooting interests will have viable futures in this new age. You can see their frustration on social media and message boards. It’s evident to anyone — even the stakeholders who are pulling the levers.

Garcia: And what about the little guys? All of the high major conferences, previously known as the Power Five, seem to be on board with the new direction collegiate sports are heading, but what about mid-major conferences like the Mid-American Conference? What is to happen to programs like Western, Eastern and Central Michigan; none of whom are confused to be power players in the world of college athletics, but all of whom have their own pedigree, history and place within the greater landscape.

This looks like it will be much like what happened with NIL; where it was intended to be one thing — where players were finally able to land endorsement deals within their community and profit off of their own image — but has instead become, for lack of a better term, a circus, where athletes’ loyalty is only as strong as the rubber band holding the stacks of cash together. It’s not their fault: This is the system, created by the adults, and it only appears there will be more of the same moving forward.

Confusion, discontent and perhaps worst of all, the lack of resemblance the sport now has to what was once so beloved. Can it still be great? Sure. Could things end up in a better place in five or 10 years because of this? That’s also a possibility.

But anybody who says they know what’s coming or how this will truly play out … well, just be wary.

This article originally appeared on Detroit Free Press: How Michigan, MSU will be affected by NCAA settlement to pay players