In this week’s column, California Sports Lawyer® CEO and Managing Attorney Jeremy M. Evans writes about potential litigation risk with colleges and Title IX related to athletic department spending.
The answer is legally clear that revenue sharing without Title IX in mind is a lawsuit and more disruption waiting to happen.
You can read the full column below. (Past columns can be found, here).
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The next phase of college sports has begun. The House settlement shifted the conversation from whether athletes will be compensated to how colleges will structure compensation. Colleges are now financial managers through their athletic departments as much as academics are a part of graduating with a degree.
Most colleges have focused on recruiting, NIL competitiveness, and revenue allocation. The less, but equally important issue to financial competitiveness is whether emerging revenue-sharing systems create new Title IX exposure and how to plan governance. The answer is legally clear that revenue sharing without Title IX in mind is a lawsuit and more disruption waiting to happen.
Colleges are moving so quickly toward implementation that they are underestimating the legal and operational risks that follow. Colleges are now giving substantially-weighted budgets to football and men’s basketball because those are the revenue producing sports. In a logical, capitalistic, and free market manner, it makes sense. The sports programs that make the money should have more access to resources.
However, Title IX requires fair treatment to male and female college sports from institutions (e.g., and their athletic programs) that receive federal funding (e.g., grants, etc.). To unhide the proverbial ball, every education institution in the United States, private or public, receives federal dollars, so colleges all are subject to Title IX requirements. Title IX became more directly implicated once colleges moved from third-party NIL structures toward direct institutional compensation through the House settlement framework. Had NIL stayed the original legislative course through market-bearing metrics for individual athletes based on their social media presence, Title IX would almost certainly not have been triggered.
Title IX does not require the athletic numbers to be exact, but how allocation decisions must be justified and documented. Colleges may face questions regarding proportional treatment, participation opportunities, and institutional support structures. The legal concern will stem less from NIL itself and more from athletic department-controlled compensation systems.
House settlement-related roster restructuring may also create unintended consequences because Title IX is generally focused on participation opportunities and if the financial math does not make sense to support a program, it could lead to eliminating or reducing roster spots. The Johnson v. NCAA case and employment-status litigation is separately working its way through the courts. The more athletes resemble employees, the more compensation systems may face broader scrutiny. Federal legislation through Congress and signed by the President for a limited antitrust exemption could be a solution to prevent the employee aspect, but Title IX would still be in effect as it is not an antitrust issue.
In response, colleges should be preparing for a Title IX lawsuit risk. Colleges should be conducting comprehensive risk audits and implementing policies that manage financial spend for athletics. Revenue-sharing models made possible by the House settlement should be analyzed broadly in the context of compensation structures, participation, rosters, scholarships, facilities, and operational soundness. In other words, proactive compliance is good policy.
Under Title IX, compensation models need clear and defensible rationales. This means documented methodology, objective business rationale, and internal consistency, semester-to-semester, and year-over-year. The issue is not necessarily whether football receives more money, but whether the decision-making process is defensible.
Governance in athletic departments now requires legal oversight, compensation planning, HR-style supervision, and integrated-smart compliance operations. Traditional NCAA oversight is no longer enough. Athletic departments are now sophisticated risk-management organizations and have been for some time. Governance discipline now may reduce future legal exposure. The colleges best positioned moving forward may not simply be the most competitive financially, but the ones most prepared structurally and legally for what comes next.
This column is for informational and educational purposes only and does not constitute legal advice. Readers should consult counsel regarding their specific circumstances.
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About Jeremy M. Evans:
Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. An award-winning attorney and industry leader, Evans is based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.
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