One Year After the NIL Settlement

By Andrew Allen

One year into the House v. NCAA settlement, Division I schools face a recurring revenue-sharing obligation (about $21.3 million per school in 2026-27, up from $20.5 million) and must manage three risks.

Managing the Risks of Direct Payments to Student-Athletes

Just over a year ago, revenue sharing was still a set of terms on paper. Today, it is a recurring line item for hundreds of Division I institutions that opted into the June 2025 House v. NCAA settlement and have completed a full year of paying student-athletes directly for the use of their name, image, and likeness (NIL) rights. ¹

The settlement permits participating schools to share roughly $21.3 million with athletes in 2026-27, up from $20.5 million in the first year and rising annually over the 10-year term.² Institutions decide how to allocate that pool across sports, and the College Sports Commission oversees enforcement of the cap, third-party NIL review, and roster limits.

Paying athletes directly has raised real risk management questions for institutions. Namely, how to fund the payments, how to divide them, and how to prepare athletes to manage what they receive.

Funding the Distribution

The most immediate pressure is financial. Revenue sharing added a substantial recurring obligation to budgets that were already stretched, and institutions have taken markedly different approaches to covering it. Some have raised tuition and fees, while others have restructured athletic operations into separate legal entities.³

Each approach carries its own risk profile. New entity structures raise governance, tax, and insurance questions that did not exist before the settlement, including whether existing coverage follows the athletic program into its new form. Raising tuition and fees invites scrutiny from students, families, and trustees at a time when college affordability is already under a microscope.

Then there are the funding models that depend on giving. Donor and alumni support has always risen and fallen with the economy, season, and mood of the fanbase, but NIL revenue sharing obligations are fixed and will climb annually. If giving falls short, institutions must determine how to close the gap, whether by pulling from operating funds, deferring facility and staffing investments, or scaling back support for non-revenue sports.

Risk management tip: Approach revenue distribution as a coverage question, rather than just a budget line. Insurance solutions built around revenue sharing can smooth year-over-year funding pressure, ease the burden on alumni and supporters, and give athletic departments more predictable footing as the cap escalates. It is also worth confirming how a new entity structure, if the institution has adopted one, interacts with existing coverage before a claim tests it.

Deciding Where the Money Goes

Nothing in the settlement dictates how institutions allocate the revenue-sharing pool across their athletic programs, which means every distribution model is an institutional choice that must be defensible.

The gender equity question is the big one to watch. Federal guidance on whether direct payments should be analyzed under Title IX’s proportionality framework was issued and then withdrawn in early 2025, leaving institutions to make allocation decisions without a clear standard.⁴

The lack of guidance does not lower the stakes for institutions. Athletes retain the right to sue over how the money is divided, and they can also file complaints with the Office for Civil Rights. Without a federal standard to point to, institutions carry the burden of explaining their reasoning when challenged.

Risk management tip: Document the reasoning behind your distribution model. Record which factors were weighed, what data supports them, who reviewed the model, and who approved it. Revisit that record annually as the cap rises and allocations shift, and involve Title IX coordinators and legal counsel before the model is set rather than after a complaint arrives.

Preparing Athletes for the Business Side

NIL has effectively turned student-athletes into entrepreneurs. Alongside competing and studying, many are now managing revenue-share income, endorsement deals, social media partnerships, and appearance fees, each carrying contractual obligations, tax implications, and reputational considerations that require a level of business acumen most 18-to-22-year-olds are still building. In fact, as few as 19% of college athletes receive financial education during orientation, and 65% report receiving none at all during their college experience.⁵

When that gap leads to a missed tax obligation, a contract signed without review, or a deal that runs afoul of institutional policy, the fallout can extend to institutions through eligibility challenges, retention concerns, and reputational damage.

Mental health as a product of juggling schoolwork and what is now a high-paid athletic career for some of our college athletes is another factor institutions must consider. NCAA data shows nearly half of women’s sports participants and nearly one in five men’s report feeling overwhelmed on a near-constant basis.⁶Adding business obligations to an already demanding schedule compounds that pressure. Athletes who are struggling do not perform academically, and academic issues can become eligibility problems.

Risk management tip: Ensure athletes have access to financial education resources and qualified advisors who can help them review contracts before signing, plan for tax obligations, and manage variable income. They should also have access to licensed mental health providers who understand the pressures of high-performance environments.

Heading Into Year Two

As institutions move into the second year of direct payments to student-athletes, more risk management questions will arise. Working closely with compliance teams, Title IX coordinators, and advisors who understand the shifting regulatory landscape and insurance implications can give your institution a clearer picture of potential exposure and help identify gaps before they turn into claims.

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