As college athletics moves toward a potential landscape-shifting new financial model — in which schools for the first time can share their revenue with athletes — the unmistakable elephant in the room remains the 53-year-old federal law known as Title IX.
If the landmark House v. NCAA settlement is approved in the coming months, schools that opt in to the new model can share up to $20.5 million annually with athletes, with more than 75 percent of the dollars expected to fill the pockets of football and men’s basketball players. But no consensus exists among legal experts over how Title IX — which stipulates that schools that receive federal money must provide male and female athletes with equal treatment and benefits — would apply in a revenue-sharing world.
The question behind that question is whether the money that will flow to the athletes is qualified as pure market-based business revenue or financial assistance akin to scholarships. At long last, the U.S. Department of Education’s Office for Civil Rights (OCR) last week weighed in with guidance — a nine-page “fact sheet” — declaring that the revenue schools share with athletes is indeed the type of athletic financial assistance that falls under Title IX. That means, in the eyes of the OCR, dollars must be shared proportionately with male and female athletes, a conclusion that could dramatically disrupt schools’ plans.
But here’s reality: The OCR memo is not binding law. Issued notably in the final days of then-President Joe Biden’s administration, it could also be rescinded at any time by President Donald Trump’s administration, which could hold an entirely different view on how, if at all, Title IX applies.
On the heels of the headline-grabbing OCR memo, here are the important questions that will continue to hover over the industry regarding Title IX for some time:
How will this declaration influence the way schools distribute the money?
As a potential new paradigm looms, schools at the high end of the college sports food chain face this dilemma:
Pay the majority of dollars in a revenue-sharing model to football and men’s basketball players and risk being out of step with federal law. Or, attempt to align with current OCR guidance — paying male and female athletes proportionately — and risk litigation from football and men’s basketball players who may contend they deserve more dollars because they are the ones who generate millions in revenue.
“Schools are sort of in a Catch-22 situation,” Mit Winter, a college sports attorney at Kansas City-based Kennyhertz Perry, told Hoops HQ. “They (schools) know they may be subject to Title IX litigation based on how they pay out NIL compensation. But they also know they might be subject to litigation if they don’t pay the vast majority of that NIL compensation to the athletes generating the revenue that funds those payments — football and men’s basketball players. So they’d rather err on the side of distributing the NIL compensation in a manner that will make them competitive in those two sports, instead of distributing that compensation in a way that will make them less competitive and still subject them to potential litigation.”
The OCR fact sheet is unlikely to change the plans of many schools on how they pay out the $20 million in NIL compensation, legal and NIL experts say. What’s more, there are several end-arounds, including relying on third-party NIL collectives — which do not formally operate under a university’s umbrella — to provide football and men’s basketball players additional compensation, sources said.
To be clear, the OCR memo noted that schools would be responsible if third-party entities compensate athletes in a fashion not aligned with Title IX. But it is an open question as to how schools can be held accountable for actions taken by their affiliated NIL collectives.
How will the new guidelines be enforced?
Actually, they may not be, even if the memo isn’t rescinded.
Sam Ehrlich is a Boise State sports law professor who last year wrote an essay titled “The Inherent Bad Faith of the NCAA’s Use of Title IX to Shield its Illegal Business Practices.” Though he believes the OCR memo carries significance, he notes that the Department of Education has a toothless track record of enforcing Title IX requirements in college sports.
Title IX has always been enforced in college athletics by private litigation, he said, adding that the OCR fact sheet could “fuel that when schools’ revenue sharing plans are challenged. It may be ignored by a judge — especially if it is rescinded — but it provides something of a roadmap of how to argue that case. That is significant in its own right.”
How will this decision impact the anticipated approval of the House settlement?
If you’re expecting the OCR memo to derail the anticipated decision of U.S. District Judge Claudia Wilken to approve the House settlement in the coming months, don’t hold your breath. Legal experts have said for months that the monumental, multibillion-dollar settlement is not expected to address how revenue is shared with athletes. Those decisions will be left up to schools.
When I asked Steve Berman, co-lead counsel for the plaintiffs in House, to weigh in on the Title IX question in a phone interview last year, Berman only said, “I think there’s been inequity in the way they’ve treated female athletes. So I’m hoping, going forward, they do a better job.” That doesn’t sound like someone who’s willing to blow up the whole deal over this important but singular question.
For well over a year, scores of leading stakeholders have expressed growing urgency about the need for formal clarity from either the courts of the Department of Education regarding how Title IX fits into a revenue-sharing world. The OCR memo was written to provide that clarity, but in fact it has left these questions as murky as ever.
“The growth of women’s sports in this country right now is exciting,” Tim Pernetti, commissioner of the American Athletic Conference, told me last year. “This is not a moment in time anymore. This is a movement. Women’s sports are going to be important in this conference, and in order to make sure we set ourselves up for success, we need a little more transparency about Title IX and how we should all be approaching it as an industry.”
Did the Office of Civil Rights get it right?
Revenue shared with athletes, the OCR stated, equates to “athletic financial assistance which, under Title IX, must be made available to male and female student-athletes in a manner that is substantially proportionate to the number of students of each sex participating in interscholastic or intercollegiate athletics at that school.”
Winter called the interpretation “nonsensical,” adding that determining that payments for a license to use someone’s NIL, “which is what the school-athlete agreements contemplate, are ‘financial assistance’ like athletic scholarships instead of market-based payments, which is what they are, does not reflect the reality of the situation.”
Asked if the OCR is on point with its conclusion, Ehrlich acknowledged that when one considers NIL compensation in a vacuum, it is absolutely not education-based compensation. But he noted that a lot of schools seem to be pairing the compensation alongside grant-in-aid, which at least supports an argument that they can and should be considered “financial assistance” as defined under Title IX.
In the eyes of Bay Area-based attorney Arthur Bryant – who has represented more female athletes in Title IX litigation against schools and universities than any lawyer nationwide – the answer is clear cut. Bryant has repeatedly told me that institutions, conferences and the NCAA need to be aware that when and if a revenue-sharing model is implemented, Title IX requires that female and male student-athletes receive equal treatment and benefits. Full stop.
“If 60 percent of the student-athletes are women and Title IX applies, they basically need to receive 60 percent of the revenue-sharing dollars shared,” said Bryant, who is currently representing current and former Oregon beach volleyball players and club team rowers in a first-of-its-kind Title IX lawsuit. The complaint addresses gender disparities in NIL opportunities and also names Oregon’s affiliated collective, Division Street.
Is Title IX litigation in a revenue-sharing world inevitable?
Spoiler: Absolutely.
The aforementioned Schroeder v. Oregon case addresses the question of whether Title IX covers NIL generally, as well as the formal objection of six current and former women rowers prior to the House settlement’s preliminary approval. Here’s a safe bet: More such cases are on the way.
“This (OCR) letter will kickstart litigation (elsewhere),” Ehrlich said. “I am willing to bet that there are several Title IX attorneys out there who already have rough drafts of complaints at the ready for if and when the House settlement gets approved.
Many stakeholders have long known that Title IX will apply to the NIL payments schools make to athletes. The question that existed was how it would apply to direct revenue sharing. “That question will ultimately have to be answered by a court, because the Title IX legislation does not address that question,” Winter said. “Litigation on the question is inevitable. And if I had to make a wager, I’d bet a court will not give the same answer that the outgoing DOE just gave in its fact sheet.”
Wouldn’t all this be solved if the NCAA declared its athletes to be employees?
The NCAA remains hell-bent on preventing an employee model, continuing to appeal to Congress for a bill that would codify that athletes are not employees of their institutions.
But, yes, classifying at least some athletes as employees would at least help address the Title IX issue for schools, in addition to unlocking the conspicuously missing element — collective bargaining — in a new financial model.
While Title IX still applies to employees, the analysis for whether employee pay is discriminatory under Title IX is clearly different from the analysis for how “financial assistance” must be distributed to non-employee athletes, Winter said.
“The Title IX analysis for employees allows market-based factors such as revenue generation to be used to justify differences in pay for male and female employees,” Winter added. “This is one reason why you generally see male basketball coaches making more than female basketball coaches, even though they’re performing the same job.”
An employment model would help not totally resolve the Title IX issue. Ehrlich noted that there is some case law finding that medical residents, i.e., university hospital workers who are both students and employees of the hospital, are covered under Title IX even for the employment portion.
“Who knows whether a court will apply Title IX similarly to employee-athletes, but it’s a risk given that they would presumably continue to be students,” Ehrlich said. “But I would argue that the less revenue sharing looks like educational assistance — and is not part of a scholarship package — the more likely a court is to not find it part of Title IX. So just calling it a salary could help.”
For so long, leaders and athletes — not to mention lawyers — in college athletics were eagerly awaiting an answer to the Title IX question.
When it came last week, it only raised more questions. For those getting their first look at the Category 5 storm that has engulfed the industry: Welcome to the strange new world of college sports, where the money is flowing and the waves of uncertainty are still crashing.