As the old saying goes, “You get what you pay for.”
While that axiom is certainly true when it comes to tires, tools and shoes, it’s also the guiding principle of the modern era of college football.
Last year’s College Football Playoff, a cute little four-team affair, featured football teams from three of the four biggest spending athletic departments – Texas, Alabama and eventual-national-champion Michigan, in that order. The fourth participant, Washington, checked in at No. 18, mostly because the Pac-12 TV contract wasn’t as lucrative as the Big Ten. If you can’t beat ‘em, join ‘em.
This year’s CFP, now whittled from 12 to four teams, looks much the same. Ohio State, Texas and Penn State all rank among the top 10 spenders in college athletics, with the Buckeyes and Longhorns ranking first and second, based on publicly available data. Notre Dame, a private university, doesn’t have to make its finances public, so it, of course, does not.
As you may have heard, however, TV, ticket sales, concessions and sponsorship revenue don’t tell the whole story of how money moves through the system any more, particularly in football. Athletic departments are increasingly reliant on NIL collectives to pay players. These collectives, mostly nonprofits, though their tax status is certainly up for debate, use donations to pay players directly, with top stars and blue-chip recruits raking in millions of dollars per season. Allegedly.
You see, the vast majority of collectives hide behind 501(c)(3) status, a designation most used by charities and foundations “organized and operated” exclusively for “exempt purposes,” such as religious, charitable, scientific, literary, or educational purposes, per the IRS. While I would argue that college football does serve all these purposes, that argument stretches both the bounds of the English language and the U.S. tax code.
As tax-exempt entities, NIL collectives aren’t required to report line-item spending, only overall expenses. But, the numbers we do have tell the story.
Ohio State, the betting favorite to win the CFP Championship, has a “$20 million roster,” as OSU AD Ross Bjork famously told Yahoo Sports this summer. In fact, Ohio State’s collective, The Foundation, reportedly paid 10 players more than $1 million this season.
The Texas One Fund, through which Longhorn donors funnel their money, spent $13.3 million in 2023, based on their most recent tax filing. Penn State’s collective, Happy Valley United, only recently consolidated and doesn’t yet have numbers available, but I’ll bet their expenditures approach $10 million for football.
And what about Notre Dame? Well, their athletics budget is off-limits due to private-school status, but their NIL budget is not, and their primary collective, Friends of Notre Dame, generated $20.5 million according to its 2023 tax filing.
All this to say, it costs a lot to field a winning football team. Mississippi State, by comparison, ranks 40th in athletic expenditures, while Ole Miss ranks 30th. MSU’s primary collective, The Bulldog Initiative, has an estimated annual budget of $6.8 million, while Ole Miss’ The Grove Collective reportedly brings in more than $10 million annually, enough to pay half of Ohio State’s roster.
Now that you’ve got a handle on that, throw it out the window. Next year, everything changes, as revenue sharing comes to college football, putting an end to the “NIL Era.” How many Power 4 schools can comfortably afford the recommended $20.5 million per year distribution among its student-athletes? The usual suspects at the top of the Big Ten, SEC and ACC will be fine, but for everyone else, it’s time to panic. Those donations you desperately needed to fund NIL activities now need to go back to the athletic department to pay the players.
I don’t know that anyone can accurately predict what the near future looks like for college sports, but for student-athletes at programs outside the top 20 or so revenue-generation, well, get ready to buy your own shoes. Remember: You get what you pay for.
Philip Poe is sports editor.
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