It’s a common rallying cry to claim that college athletics is no more and athletes are now employees. I would argue that they always have been and agree in the sense that if you go by the simple IRS standard definition of “employee”, they still are today. If you have great control over the worker, they are probably an employee. To help you examine control, you can use a three-part test from the IRS called common law rules. The three parts are explained below.
- Behavioral control: Do you control or have the right to control what the worker does and how the worker does their job? If so, the worker might be an employee.
- Financial control: Do you control the business aspects of the worker’s job? This includes things like how the worker is paid, whether expenses are reimbursed, and who provides tools and supplies. If you control business aspects, then the worker might be an employee.
- Type of relationship: Are there any written contracts or employee type benefits? These include things like retirement plans, insurance, and vacation and sick pay. Will your relationship with the worker continue? Is the work performed a key aspect of your business? If you answered yes to these things, then the worker might be an employee.
Rather than haggle over the definition of employee/employer, throughout the course of the next two weeks I will provide the audience with a high-level concept each day plaguing the business of college sports and provide the roadmap for its collision with collective bargaining. You will be treated to a side-by-side comparison of each major professional sports league and how they manage the same issue. At the end, you’ll discover that even though there is an employee/employer relationship, the structure to collectively bargain is far from complete and is on the horizon in college athletics.
REVENUE SHARE
Currently, The House settlement provides the initial bands and framework. Beginning in the 2025-2026 academic year, NCAA D1 Schools could share up to approximately $20.5 million per year with student-athletes from their athletic department revenues. Do not confuse this with NIL deals as revenue share comes directly from schools as opposed to 3rd party (NIL).
Compare to:
NFL (NFLPA): Players receive 48% of league revenue starting in 2021, potentially rising to 48.5% depending on media revenues.
NBA (NBPA): Players receive approximately 49-51% of Basketball-Related Income (BRI).
MLB (MLBPA): Players receive 48-52% of total league revenue depending on various factors like revenue sharing and competitive balance tax.
NHL (NHLPA): Players receive exactly 50% of Hockey-Related Revenues (HRR), adjusted through escrow.
MLS (MLSPA): No fixed revenue share percentage; compensation is tied to league-defined salary budgets.
WNBA (WNBPA): The WNBA utilizes an incremental revenue sharing model. This means that players only receive a share of revenue that goes above a certain target set by the league. If the WNBA surpasses its revenue target, players may receive up to 50% of that shared revenue.
College Athletics is at the beginning stages of an inevitable collision course with Collective Bargaining. If you have interest in learning more or have a desire to be a future GM, visit us on www.peakscouts.com.
This post originally appeared on LinkedIn. View it here.
