How the Department of Education’s New Title IX Memo Disrupts NCAA Revenue Sharing: What You Need to Know

This Thursday, the U.S. Department of Education’s civil rights office released a memo about new rules regarding student-athlete payments and Title IX. These changes could significantly affect how athletes get paid in the future.

As with any policy, things could shift depending on who is in charge next year. A new administration could interpret these rules differently.

Currently, there are many questions about a new revenue-sharing model that could soon be approved. This model may allow colleges to pay athletes directly from their athletic budgets instead of relying mostly on outside third-party groups. Right now, most athlete payments come from these collectives and are not directly tied to the schools.

A key takeaway from the memo is how the Department of Education plans to classify payments to student-athletes. Going forward, any money a school pays to an athlete will be considered “financial assistance.” If these payments are not distributed fairly between male and female athletes, schools could be violating Title IX laws.

The memo emphasizes, “If a school awards athletic financial assistance, it must provide opportunities for members of each sex in proportion to the number of students participating in sports.” However, this doesn’t mean that every sport must offer the same number of scholarships or that the awards have to be equal.

Right now, under the House v. NCAA settlement, schools can allocate about $20.5 million per year for athlete payments across various programs. Many schools were planning to allocate a significant portion of this money to football, between $14 to $17 million, but the new guidance from the Department of Education could change that.

Third-Party Collectives Are Key Players

Over the past few years, third-party collectives have played a major role in funding college athletics through NIL (Name, Image, Likeness) deals. These groups pay athletes but do not directly use university funds. The Department of Education’s memo states that money from these collectives is not considered a violation of Title IX.

This means these collectives can continue paying athletes without worrying about violating federal laws. The memo clarifies that funds provided by third parties do not count as “athletic financial assistance” from the school.

A big concern is that athletic departments have aimed to allocate 70% to 75% of their funds to football. Under the new rules, if one male athlete receives a substantial payment, a similar payment may need to go to a female athlete as well. For example, if a male football player is paid $200,000, a female athlete in another sport might need to be compensated similarly.

This situation could keep third-party collectives involved to help bridge any financial gaps while schools navigate their obligations to ensure Title IX compliance.

Some institutions may try to sidestep these rules, but if they create noticeable disparities in athlete compensation, they could find themselves in trouble. A large payout for a male athlete versus much lower payments for female athletes may force schools to reconsider how they share funds.

As these changes unfold, the response from the new administration will be closely monitored. Schools will need to stay aware of how these guidelines could impact their funding approaches and compliance with Title IX.

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