Does Title IX Apply to Revenue Sharing for Student Athletes?
While details of the arrangement are still under legal dispute, it seems clear that the settlement proposed to end the antitrust cases against the NCAA and conferences regarding compensation of student athletes will allow revenue sharing and other forms of compensation not previously a part of college athletic programs. It wasn’t that long ago that college athletes were strenuously held to an amateur status that made it scandalous for them to receive recruitment gifts or anything else that gave the appearance that they were financially profiting from their campus experience.
Recently, athletes were allowed to receive revenue for the use of their name, image, and likeness (NIL), but the arrangements proposed in settlement of these lawsuits would open the floodgates and officially end the amateur status of college athletics, acknowledging that because student athletes make money for the schools, those athletes are entitled to benefit from their labor.
But schools and athletes will now need to consider a host of new questions. Chief among these is whether Title IX requirements apply to revenue sharing and if so, how? Student athletes will also need to know how to protect themselves from practices that could potentially violate Title IX.
Revenue Sharing Potentially Starting in 2025
Part of the settlement agreement proposed to resolve the antitrust lawsuits filed against the NCAA would have provided for colleges to share as much as $20 million annually with student athletes starting in 2025. A federal judge recently ordered attorneys brokering the settlement to revise their language regarding certain issues pertaining to money provided through booster collectives. It is possible that the settlement will be scrapped, but even if this particular arrangement is not approved, it is highly likely that revenue sharing will become a reality at some point in the near future, either as a result of a different settlement or the outcome of one or more lawsuits.
The proposed settlement called for approximately $2.7 billion to be paid to current and former athletes as damages. It also created a system enabling colleges and universities to make NIL deals with athletes and pay the athletes directly for the use of their NIL. The agreement set an annual limit in the $20-23 million range, and that limit would rise each year.
Where Does Title IX Fit In?
Title IX of the Education Amendments of 1972, as interpreted and expanded by more than 50 years of regulations, administrative guidance, and court opinions, is a scheme designed to establish equal rights for women in academics, including college sports programs. For a college to satisfy Title IX requirements with regard to athletic programs, the school must meet the equality standards for three specific elements:
- Opportunities
- Financial assistance
- Benefits and services
For the first element, schools need to provide adequate opportunities for female students to participate in sports. Schools can meet this standard by showing they satisfy one of three factors. With regard to the second element, financial assistance, schools are judged on whether the total amount of financial aid awarded in athletic scholarships is proportionate to participation rates in collegiate sports. The Department of Education explains as an example that “if 45% of the participants in the school’s athletic program are women, then women should receive about 45% of the available athletic financial assistance. The number of scholarships for men and women does not need to be equal. Likewise, the dollar value of individual scholarships does not need to be equal for athletes on men’s and women’s teams.” A school’s compliance with this requirement is measured based on overall numbers.
When determining whether a school has met the third requirement, the Department of Education looks at a long list of factors to see how the provisions offered to women’s teams compare with those offered to men’s teams. This includes considering whether teams receive equivalent gear, have access to facilities at comparable times, enjoy similarly comfortable accommodations while traveling, and have access to coaches with equivalent qualifications.
Assuming Title IX is applicable to revenue sharing, a school’s revenue sharing plan would be evaluated under the second element of the Title IX requirements because it relates to financial assistance provided to student athletes.
Department of Education Says Title IX is Applicable to Revenue Sharing
When the settlement and revenue sharing agreement was first proposed, analysts wondered whether schools would need to structure arrangements to ensure compliance with the Title IX requirements for equality in funding. The next—and more complex question is how compliance would be measured.
The U.S. Department of Education provided an unofficial answer to the first question and no guidance on the second. In a statement provided to sports media company ESPN, the Assistant Secretary of the Department’s Office for Civil Rights, Catherine Lhamon, is reported to have explained that the requirements of Title IX will apply to NIL revenue-sharing arrangements. However, neither she nor anyone else in the Department has provided guidance on how schools will need to distribute revenue to comply with the somewhat vague financial equality requirements of Title IX.
Courts Have Held that Even Funds from Outside Sources Must Comply with Title IX
It is quite possible that some schools will treat revenue sharing as compensation for a service provided by athletes rather than financial assistance equivalent to a scholarship. The latter is subject to Title IX, while the former is not. On the surface, this might seem a reasonable approach, but it goes against some judicial opinions. Courts have held that various types of payments from outside sources must still comply with Title IX, even though such payments appear to be far removed from the concept of a scholarship or educational financial aid. This has even extended to donations and support provided by college booster programs.
Without clear guidance from the Department of Education about how revenue sharing must be structured to comply with Title IX, it is likely that revenue sharing at many schools will skew heavily toward star football and basketball players, putting female athletes at a disadvantage and potentially triggering lawsuits as a result. Because of the risk of lawsuits and other potential problems, student athletes need to have a good understanding of the legal requirements as well as the details regarding payments and benefits before agreeing to a school’s proposal. Consulting a knowledgeable attorney would be a good way to protect interests in the short and long-term.
Experienced Guidance on Title IX Issues
The Title IX attorneys at Nesenoff & Miltenberg have extensive experience protecting the rights of students, faculty, and staff in all matters connected with the intricate requirements of the Title IX regulatory scheme and judicial interpretations all around the country. If you have questions about a potential revenue-sharing arrangement or any other issue connected with Title IX, we invite you to contact us online or call 212-736-4500 to schedule a confidential consultation to learn how we can help safeguard your interests.