Knight Commission report – key implications of a FBS and NCAA split

What would happen if college football were to break away from the NCAA?

For years, there have been rumblings about a possible split between football at the Football Bowl Subdivision (FBS) level and the National Collegiate Athletic Association (NCAA) – but what if it actually happened?

In early December 2020, the Knight Commission on Intercollegiate Athletics (Knight Commission), a panel of university presidents, former athletic directors and other leaders issued a report recommending the formal separation of the FBS from the rest of the NCAA. These recommendations could have a significant impact from both a financial and reputational standpoint, and reshape the college football landscape for years to come.

Although the Knight Commission does not have the authority to decide whether or not the two separate, the report prompts the question – what would a split from the NCAA mean?

Summary of Knight Commission recommendation

In its report, the Knight Commission makes three primary recommendations:

1. Create a new entity, independent of the NCAA and funded by College Football Playoff (CFP) revenue, to oversee the sport of football in the FBS and manage all related issues (e.g., athlete education, health and safety, revenue distribution, litigation, eligibility, enforcement, etc.).
2. The NCAA should continue to govern all other sports, including football in the Football Championship Subdivision (FCS) and men’s basketball, under a reorganized governance system that would establish equal voting representation for all Division I conferences.
3. The NCAA and the new FBS football entity should adopt governing principles to “maintain college athletics as a public trust, rooted in the mission of higher education” and prioritize student athletes’ education, health, safety and success.

Even prior to the COVID-19 pandemic, the large majority of intercollegiate athletic programs had been operating at a financial deficit. In 2018-2019, only 25 Division I athletic departments out of nearly 350 generated revenue that exceeded their expenses. (All 25 of those programs participate in football at the FBS level and are members of a Power 5 conference.) Colleges and universities across the country have raised student fees to help cover costs and, in some cases, eliminated nonrevenue sports programs (e.g., gymnastics, swimming and diving, track and field, etc.) to free up budget dollars while spending large sums of money on coaching salaries and facility enhancements to “keep up” with their FBS competitors. The proposed new entity seeks to help refocus the NCAA back to its core purpose and prioritization of academics.

Additionally, no one entity is responsible for overseeing all aspects of FBS football. While the NCAA handles regulatory matters, CFP Administration, LLC manages FBS football’s national championship, including the hundreds of millions of dollars it generates in revenue. A new entity would separate FBS football and allow the NCAA to govern all other sports.

The rapid commercial growth of college athletics, particularly FBS football, has created challenges for the NCAA’s governance structure and influenced the public perception of sport, distracting from the organization's original purpose. The separation – and creation of a new entity – is intended to provide for the effective regulation of collegiate sports.

New governing entity implications

Creating a new entity may do the following:

FBS football

• Allow for FBS football to manage its own operations and provide transparency for how revenue incentives are shared among members
• Provide opportunities for populations underrepresented by the NCAA governance model (e.g., through broader player compensation laws)

Other NCAA sports

• Reorganize NCAA Division I governance around men’s basketball, the one sport that all Division I members offer
• Provide additional funding to member schools, which would benefit non-FBS programs (i.e., FCS football and all other NCAA sports) and their student athletes. The Knight Commission estimates that with the elimination of costs associated with supporting FBS football, the NCAA may be in a position to increase the total revenue distribution pool by more than $60 million per year
• Enhance geographical competition. By loosening ties associated with football interests, some programs may benefit from opportunities to compete with schools in their geographic regions, allowing for reduced travel time and expense. For example, the Big 10 conference spans 11 states. To compete with other conference schools, members of the Big 10 conference travel as far east as New Jersey and as far west to the Great Plains of Nebraska

Higher education institutions

• Keep responsibility for intercollegiate programs and their conduct with college and university presidents and chancellors regardless of whether their institutions are part of the NCAA or a new entity
• Allow institutions within the current FBS structure an opportunity to evaluate their football programs and determine whether they want to affiliate with the new entity or the NCAA. This option could allow some institutions to remain in the NCAA and potentially dial back football spending if they feel that they are spending too much to keep up with other FBS schools
• Benefit most schools via increased funds from NCAA distributions since FBS programs would be excluded from the revenue distribution formula. This, in turn, may help curb costs that have been passed along through student fees

Some questions still remain…

Before decisions can be made, there are many questions that will need to be addressed. For example:

• How would regulations governing a new entity differ from the rest of the NCAA, and how will compliance be monitored and enforced? What are the associated risks or unintended consequences of new regulations?
• Will a new entity require assurance on certain activities? For example, financial data provided by NCAA Division I member institutions are subject to annual agreed-upon procedures by a qualified independent accountant
• Will changes to the NCAA governance structure impact how Title IX is applied and enforced at member institutions?
• From what sources will players be able to directly benefit from their image and likeness? How will “pay-to-play” topics be addressed?
• How would the restructuring potentially change the average person’s experience and perception of college athletics?
• Will a new entity seek antitrust protection to cap coaching salaries or operating expenses?
• Where FBS football helped to subsidize other sports, will institutions look to continue this practice?
• Will there still be revenue opportunities for institutions that rely on funds generated from “revenue” or “cupcake” games against FBS powerhouses? Smaller institutions rely on these “mismatch-ups” for funding, while Power 5 schools use them as early season tune-ups.
• Would movement between a new entity and the NCAA be permitted? Will some FBS programs be “relegated” to the FCS? Will FCS football institutions have the option to petition to “move up” and compete at the higher level?
• How would a separation impact the National Football League (NFL) and how it drafts players? Current NFL draft eligibility rules require players to be out of high school for at least three years and use up their college eligibility. (Note: Players who graduate college before using all their college eligibility may request to enter the draft early.)

In January 2021, the Knight Commission will present its recommendations to the NCAA’s Division I Presidential Forum. The Knight Commission also intends to organize an FBS presidential summit for leaders to consider these recommendations as well as the creation of a taskforce to develop the proposed new entity.

With potential change, comes potential risk. Our team is prepared to help your institution navigate future compliance issues and manage risk. Connect with our higher education specialists to continue the conversation.