In the wake of the NCAA and plaintiffs agreeing to a historic settlement in the House case, the reality that college sports will usher in a revenue-sharing model continues to reverberate across the landscape.
Perhaps as early as fall 2025, schools will begin sharing as much as $22 million annually with athletes, assuming the agreement is certified in the coming months by U.S. District Judge Claudia Wilken.
For institutions, their relationship with their multimedia rights partner has never been more valuable as schools seek guidance on how best to navigate these unchartered waters in unprecedented times.
Universities are grappling with how much revenue they are willing and able to share, and how best to divvy up those dollars among athletes. They are confronting an intensifying need to find new revenue streams and break down internal silos that separate in-house revenue buckets. And broadly, they need to operate more commercially – more like a media company.
On3 caught up with Christy Hedgpeth, president of Playfly Sports Properties, a sports marketing company with a portfolio of more than 25 universities and conferences, to discuss the questions immediately arising from schools and how Playfly is best positioned to assist them.
The interview has been lightly edited for context and clarity.
Q: Leave aside for a second your business expertise at the college and pro level. You’re a former athlete – a national title-winning Stanford basketball player – what is your reaction to this seismic change: A revenue-sharing model is coming to college sports?
HEDGPETH: “It’s happened at a blistering pace that no one could have expected. My personal view is – which is different because I played, and then there’s my business perspective – but I think it’s difficult on the student-athletes in a lot of ways. The limbo that they’ve been in, the pace of change, and even with the House anticipated settlement – because it’s not done – it still leaves so much up in the air.
“I feel for the student-athletes. I very much feel for all the administrators who have been working with this – their jobs were already really, really difficult and challenging – and now monumental change to the most fundamental premise of college athletics as being an amateur endeavor.”
Q: As you continue to talk with schools and campus leaders about the shifting landscape, what are some initial key points you are trying to stress?
HEDGPETH: “College sports are undervalued. They [schools] really need to be thinking more like brands and more like media companies. These changes are – and we’ve already seen it – definitely forcing them to have a more commercial mindset, because they are going to be under enormous budget pressure, not that they weren’t already. But from the damages [payments] to revenue sharing to NIL collectives, there’s much more pressure on them to drive revenue.
“That’s really where we come in because that’s our core competency. We feel like we anticipated and hoped that in some ways there would be an impetus for schools to realize their full intellectual property, the potential of that, and really build their brands. Coming from the pro side, that’s something that is sort of inherent for pro teams. And it just hasn’t been a focus [at the college level]. And more importantly, colleges today aren’t set up for that.”
Q: Schools will need to generate more revenue, cut more expenses and figure out how best to distribute revenue. Will we see a shift in what backgrounds are coveted for new athletic directors – that they will need more business acumen rather than possessing a traditional campus pedigree?
HEDGPETH: “I think potentially. You think about the backgrounds of administrators and why they got into this, and what their focus has been, that makes all the sense in the world. But there is an opportunity for maybe more traditional business experience to be a factor, a more emphasized factor maybe in hiring athletic directors.
“Or it could even be in creating new positions, whether it’s a CRO position type of thing that I know a couple of schools, in particular, are looking to do to really try to build more in-house expertise. That’s expensive. It’s hard to do. And that’s where I think we feel like we can play a really important role.”
Q: How important will it be for schools to be innovative as they look to tap into new revenue streams?
HEDGPETH: “Everything’s on the table, right? What makes the most sense for a given school to maybe try some things they haven’t tried to be more aggressive? Maybe with the categories that they may get into and confront may be various pockets of resistance within an educational institution that may have prevented them from being more aggressive in the past. I think there’s more of an impetus now for them to push back on that. And I think that’s going to be supported at the president level, which hasn’t always really been the case.
“That’s what I mean by it’s going to be a little bit of a sort of reality-driven, market-driven change in the mindset of risk tolerance, and being willing to be innovative. I think that’s exciting. That’s the world that we love, that we live in. We thrive on it. The schools that are going to come out, I think, farther ahead are going to be the ones that are thinking more commercially, more like an entrepreneur.”
Q: What can an MMR partner like Playfly do specifically to assist schools at this time of significant upheaval, with a new financial model soon to take hold?
HEDGPETH: “We are really part of the athletic department, we certainly try to be, but we have a real sense for the brand, for the assets of the school and the relationships. And what we want to do more than anything is provide a broader perspective on what may be some untapped [revenue] opportunities.
“And the other part of it is to help think more strategically about how to get more synergy between all forms of revenue, because right now for most schools they are sort of siloed. Most companies or pros teams are going to have a little bit more integration.”
Q: There’s no consensus among legal experts about how Title IX fits into a revenue-sharing world. What are you hearing from schools on the issue?
HEDGPETH: “Almost everyone I’ve spoken with, they’re very conscious of Title IX, and they recognize that the House settlement they anticipated is silent on Title IX. So I think schools are wise to assume that it will continue, and that they need to start planning for that.
“I think that that’s not something that the school should have to figure out for themselves. I think there’s going to have to be some kind of determination [by the courts or U.S. Department of Education].”
Q: In this settlement, the NCAA is also trying to get its arms around donor-driven collectives, which is easier said than done. We’re told third-party collectives aren’t going anywhere and will be a key entity to add additional compensation to athletes’ pockets beyond revenue sharing. What are your thoughts?
HEDGPETH: “It’s possible if you create an in-house collective that there could still also be an external collective. Most of the athletic directors I’ve talked to, they found external collectives problematic, because there’s just less control that they have. And to me, it makes sense for them to have more control. I mean, you can’t imagine that scenario happening on the professional [sports] side. It’s a lot to manage, and you’d have to control it with rules and guidelines.”
Q: Private equity is coming to college sports in a big way. How would you assess what the impact will be?
HEDGPETH: “It just sort of proves out what we have been saying, and why we were founded, that college sports is undervalued. They clearly see that. They’re rushing in with capital. I think anyone who takes on that capital will need to be ready for a much higher level of scrutiny on their every move. It’ll be interesting to see. There’s certainly a need for more capital.”
The post In aftermath of House settlement, schools that thrive will ‘think more like an entrepreneur’ appeared first on On3.