A while back I got a call from a person we'll describe here as a well-connected college sports industry insider. The major Division I conferences were in the process of approving a $2.7 billion settlement in the ongoing House v. NCAA lawsuit. This was a good and necessary move, because going to trial risked a judgment perhaps as large as $20 billion, or so they told us.
The question this person posed to me was, Why are the conferences (and the schools they represent) settling this lawsuit at all? Why not heap all the burden onto the NCAA, let the NCAA go kaput, and then start a new organization with new rules and no debt?
I didn't have an answer to this person and still don't, and thus far haven't seen anyone else ask the same question.
However, on Wednesday, Joe Moglia published an op-ed in the Indianapolis Star -- the hometown newspaper of NCAA HQ -- arguing that the schools should have let the NCAA go bankrupt and the $2.7 billion settlement and the $22 million optional annual payments will only make the status quo worse for big and small schools alike.
He writes:
If the NCAA disappeared tomorrow, it might disrupt a couple seasons, but the Conferences could quickly fill the void. If one of the major banks had collapsed in 2008, the fear was that the global financial system itself would have disintegrated. That’s why the government stepped in and every step was taken to protect the banks. We’re treating the NCAA the same way now. But does anyone really believe it’s impossible to hold a basketball tournament or a bowl game without the NCAA? Why go to such lengths to protect it?
Unfortunately, too many administrators seem to prefer the status quo to leading.
Moglia is the former chairman and CEO of TD Ameritrade and a former chairman of the Fundamental Global Investors and Capital Wealth Advisors.
Moglia left the banking world in 2009 to enter full-time football coaching, taking over the UFL's Omaha Nighthawks before landing the Coastal Carolina head coaching job in 2011. He went 56-22 in six seasons leading the Chanticleers before stepping down for health reasons in 2019. Moglia is now Coastal's athletics chairman, executive director for football, and executive advisor to the president.
In his op-ed, Moglia argued that adding a $22 million "optional" salary cap will not curb the other salary cap apparatus that has sprung up over the past three years: collectives.
Indeed, this new system may make things worse, potentially allowing coaches to pay their bench from the revenue share while leaning on collectives to land superstar quarterbacks and point guards using third-party NIL deals. Effectively, rather than capping player compensation, the revenue share may give universities greater leeway to pay players while failing to rein in booster collectives. This puts smaller programs at an even greater disadvantage.
Major Power Five programs may have millions to splash out on players via revenue sharing, but for smaller schools like Coastal Carolina University, and conferences, like the Big East, this could be a significant reduction in their overall athletics budgets, forcing institutions to either eliminate other sports in favor of revenue generators like basketball or football, or making them entirely non-competitive, because they won’t be able to afford top talent. The programs with powerful booster collectives will still be able to use those resources to lure top talent.
Moglia argued for spinning the revenue-producing college sports into a new organization that is parallel but separate from the NCAA.
One potential approach is for the major Division I revenue sports — football and men’s and women’s basketball — to be spun off into Professional College Athletics (the PCA), modeled after a successful sports business like the NFL, with collective bargaining, binding contracts, direct payment of players, NIL deals, and more. Amateur College Athletics (ACA) would remain with the NCAA, where the only compensation players could receive beyond a scholarship would be through direct NIL deals with brands, eliminating booster collectives. For example, a top fencer could do an independent deal with a fencing equipment manufacturer, but they wouldn’t be paid by the school in any way.
If a player at the ACA level was a star in a revenue sport, they could transfer to a PCA program. (It’s worth remembering that 95% of college athletes do not get money, even under the current system, and they would need to be recruited by a PCA program.) Finally, D1 schools could collectively designate other sports for inclusion in the PCA if they want.
Moglia raises some interesting questions. Hopefully his op-ed inspires some convincing answeres.