By: Kathryn Bird
For decades, college athletes competed inside packed stadiums while universities earned money from television agreements, ticket sales, sponsorships, and merchandise. Players could receive scholarships and, more recently, earn money from their name, image, and likeness—but schools generally did not pay them a direct share of the revenue their sports generated.
That system has now changed.
Following the approval of the House settlement in June 2025, participating Division I schools were permitted to share as much as $20.5 million with their athletes during the 2025–26 academic year. The maximum is estimated to rise to approximately $21.3 million per school for 2026–27. The settlement also includes approximately $2.78 billion in back damages to former and current college athletes, distributed over ten years. (NCAA.org)
The change represents an economic victory for athletes. However, it also introduces a much harder question: when a university has millions of dollars available, how should it determine which athletes receive the money?
What Creates an Athlete’s Economic Value?
Economists often evaluate a worker using the idea of marginal revenue product, or how much additional revenue that person’s labor helps generate.
In professional sports, teams use statistics, ticket demand, merchandise sales, television audiences, and competitive performance when deciding how much to pay players. College athletics is more complicated because the financial value of a player is connected to the athlete, the team, the university’s brand, its conference, and the popularity of the sport itself.
A star quarterback may attract viewers and sponsorships, but that player also benefits from competing for a university with decades of history and an established fan base. At the same time, the university depends on athletes to create the games that broadcasters and fans are paying to watch.
Revenue sharing recognizes that the athlete is not simply receiving an educational opportunity. The athlete is also contributing labor to a valuable entertainment product.
One Cap, Many Possible Strategies
The settlement establishes how much a participating school may share, but it does not require every school to divide the money in the same way. That gives athletic departments an important economic choice.
A university could direct more money toward athletes in its most profitable sports. It could distribute payments across many teams, reward individual performance, or use revenue-sharing offers as part of its recruiting strategy.
Each approach creates different incentives.
Concentrating money in a few sports might help a school attract athletes who can strengthen its largest revenue sources. A broader distribution could support more athletes and reinforce the idea that every team contributes to the university’s athletic community.
The disagreement is ultimately about how value should be measured. Should athletes be paid according to the revenue their specific team produces, the attention they individually attract, the hours they work, or the broader value of representing the university?
There is no simple calculation.
Will Wealthier Schools Gain Another Advantage?
Revenue sharing may also influence competitive balance.
The maximum payment is the same under the settlement formula, but universities do not have identical financial resources. Schools with major media agreements, large donor networks, and consistently full stadiums may find it easier to approach the cap. Programs with smaller budgets may be unable to offer comparable payments.
This could create a cycle. Successful programs generate more money, use that money to attract talented athletes, win more games, and then generate even more revenue.
The cap may prevent the wealthiest universities from spending without limits, but it does not guarantee that every participating school can afford the maximum. Therefore, revenue sharing could make the financial differences among athletic programs even more visible.
The Opportunity Cost for Athletic Departments
Money paid to athletes must come from somewhere.
In economics, opportunity cost is the value of the best alternative that must be given up when a choice is made. A university that directs millions of dollars toward athlete payments may have less money available for facilities, coaching salaries, travel, administrative costs, or other athletic programs.
The House settlement also replaced sport-specific scholarship limits with roster limits at participating Division I schools. These schools may now offer scholarships to any or all athletes within the new roster limits, potentially expanding the number of scholarships available across college sports. (NCAA.org)
That creates another budgeting decision. Athletic departments must determine how to balance direct payments, scholarships, team resources, and long-term financial stability.
A school could generate additional revenue through sponsorships, donations, premium seating, or higher ticket prices. However, fans and donors have limits on how much they are willing to spend. Universities cannot assume that every new expense can simply be passed on to consumers.
Revenue Sharing Is Not the Same as NIL
Revenue sharing and name, image, and likeness compensation are related, but they are not identical.
Revenue-sharing payments come directly from universities. NIL compensation generally comes from third parties that pay athletes for activities such as advertisements, appearances, social media promotions, or licensing agreements.
Under the new system, third-party NIL agreements worth at least $600 must be reported through NIL Go within five business days. The review process is intended to determine whether agreements represent legitimate commercial compensation rather than disguised recruiting payments. (College Sports Commission)
A highly marketable athlete could therefore receive university revenue-sharing payments while also earning separate compensation through endorsements.
For athletes with large audiences, that combination could create significant earning opportunities before they ever enter a professional league.
A New Economic Model for College Sports
Revenue sharing does not resolve every disagreement surrounding college athletics. Instead, it moves the debate into a new phase.
Athletes are now receiving a more direct share of the financial value they help create. Universities, meanwhile, must build payment systems without weakening the teams, scholarships, and resources that make their athletic programs possible.
The success of the system will not be measured only by how much money schools distribute. It will also depend on whether the model is transparent, financially sustainable, and capable of supporting athletes across different sports.
College sports once attempted to separate education from professional economics. With millions of dollars now moving directly from schools to players, that separation is becoming much harder to defend.
The question is no longer whether college athletes have economic value. It is who gets to calculate it.
Works Cited
College Sports Commission. “Student-Athlete NIL Deals.” College Sports Commission, https://www.collegesportscommission.org/nil/. Accessed 24 July 2026.
National Collegiate Athletic Association. “The History of the NCAA.” NCAA, https://www.ncaa.org/about-us/history/. Accessed 24 July 2026.
Reid, Austin, and Andrew Smalley. “What the NCAA Settlement Means for Colleges and State Legislatures.” State Legislatures News, National Conference of State Legislatures, 9 June 2025, https://www.ncsl.org/state-legislatures-news/details/what-the-ncaa-settlement-means-for-colleges-and-state-legislatures.
Wright, Meghan Durham. “DI Board of Directors Formally Adopts Changes to Roster Limits.” NCAA, 23 June 2025,https://www.ncaa.org/media-center-di-board-of-directors-formally-adopts-changes-to-roster-limits/.For decades, college athletes competed inside packed stadiums while universities earned money from television agreements, ticket sales, sponsorships, and merchandise. Players could receive scholarships and, more recently, earn money from their name, image, and likeness—but schools generally did not pay them a direct share of the revenue their sports generated.
