USC will opt into revenue-sharing model proposed in House v. NCAA settlement

LOS ANGELES — In late April, speaking at an event hosted by USC’s NIL collective House of Victory, Lincoln Riley told a roommate full of donors that he made the decision to come from Oklahoma to USC three years ago in part because few schools in the country were better-positioned to capitalize on the changes across the college sports landscape.

But in the three years since, Riley has often had no choice but to play fundraiser in addition to head coach, as USC’s faced an at-times rocky journey with its foray into the NIL space. This spring, sandwiched between admissions that NIL awareness at USC had taken major leaps since he’d arrived, Riley told reporters that support last year had been “OK” and “great outside of, kind of, the whole collective world.”

“I mean, our guys were able to, obviously being in L.A., our guys probably get more outside deals than anybody in the country,” Riley said in March. “Which is awesome, but we need the support to be right there with it too, from our donors and from our collectives.”

The grand elevation of USC as a true NIL powerhouse, however, could come with May’s settlement in the House v. NCAA case, which will establish an optional model for schools to share a sizable percentage of their annual revenue with athletes. Suddenly, rather than relying on tax-deductible donations through House of Victory to entice recruits, USC could streamline donations through the athletic department and distribute a piece of total revenue – about 22% in the first year of the settlement, projected to be more than $20 million – directly among its athletes.

On Friday, a spokesperson confirmed to the Southern California News Group that USC would adopt the revenue-sharing model, assuming the settlement is approved in district court and proceeds as proposed.

“We’re exploring all options regarding revenue sharing, and there are many questions to answer,” the spokesperson wrote, “but it’s safe to say under the current landscape that we will opt in to revenue sharing.”

It would be a monumental development in USC’s athletic future, establishing a foundation of primary income for athletes while allowing the school’s collectives to focus on brokering sponsorship deals as supplementary NIL earnings. But as the spokesperson indicated, USC’s decision to opt in would bring just as many questions as answers.

Here’s a breakdown of the major topics that will arise with USC’s adoption of revenue-sharing, a host of conversations that will continue to position the university squarely at the center of the widespread national change within collegiate sports.

How, exactly, would revenue sharing work for USC?

The goal for the revenue-sharing model put forth in the settlement, as explained by lawyer Steve Berman – part of the prosecution in the House case and other antitrust suits against the NCAA – would be to establish a free market of competition among athletic departments. No rules. No regulations.

“It’s really up to each school and how they want to compete for athletes,” Berman told the Southern California News Group. “So, maybe some school thinks that they want to have the best football program and they’re going to spend all their 22% on football. Maybe some other school thinks, wants to spend more on football, less on golf.”

Essentially, as presently constructed, it would be up to USC to decide how to distribute that 22% revenue share among its athletic programs. There are two directions of thought that schools could fall under within that system, as professed by Jim Cavale, founder of Athletes.com, a collegiate athletics players’ association. A department could decide to focus revenue-sharing payments primarily to athletes in revenue-generating sports: football, men’s basketball, women’s basketball. Or, mindful of Title IX-related issues that could arise by prioritizing certain sports, a school could decide to distribute the revenue evenly across athletes in each of its NCAA programs.

USC had roughly 550 athletes participate in NCAA sports in 2023. According to the most recent publicly available data compiled by USA Today, the average Big Ten school made $157 million in revenue in 2022; a 22% share of that would be about $34.5 million. For simplicity’s sake, if USC made $157 million in the first year of the revenue-sharing model and decided to split it perfectly evenly among its 550 athletes, each athlete would receive about $63,000.

It’s unlikely, of course, that USC would split payments perfectly evenly. Regardless, athletes could expect sizable payments under the revenue-sharing system.

Caught in the crossfire of student-athlete employment

At the same time, USC would opt into this revenue-sharing plan, the university has been fighting a case against the National Labor Relations Board for months, the NLRB arguing USC athletes – and those within the Pac-12 and the NCAA, by proxy – should be classified as employees.

It’s a massive piece in a continued conversation over athlete employment, which could completely shatter the NCAA’s longstanding definition of amateurism and allow athletes to organize unions and collectively bargain with their universities. And within hearings held intermittently since December, the NLRB’s argument has often centered around the “payment” athletes receive for their services in the form of scholarships, similar to how employees are compensated for their services. Lawyers for USC, conversely, have countered with the overarching argument that payment is structured around educational pursuits.

The hearings are over. The House settlement can’t be entered into record in the case. But from a broader lens, experts that spoke with the Southern California News Group agree the revenue-sharing model only strengthens the argument that student-athletes should be deemed employees. And USC opting into the revenue-sharing model – establishing a direct form of payment to players for their athletic endeavors – would stand as a direct counter to much of the university’s argument through the proceedings.

“Assuming that the settlement, similar to what has been leaked in the media, does come about, I think some of the arguments we heard in the NLRB case are further exposed as just false,” said Ramogi Huma, founder of the National College Players Association, the charging party in the NLRB-USC case.

So, what happens to House of Victory and USC’s NIL collectives?

The revenue-sharing model doesn’t mean university donor collectives are a thing of the past. For universities with the funding to support both revenue-sharing and a collective, Cavale said, that donor money could simply become the “icing on the cake.”

As such, House of Victory could simply continue to operate in its current form, a nonprofit that solicits donor funds through tax-deductible donations and distributes them to athletes in the form of deals with the collective. However, it’s also possible USC could begin encouraging donors to donate directly to the athletic department to fund revenue-sharing. In that scenario, House of Victory could shift into a for-profit model, hired by USC to operate like a marketing agency that could solicit third-party deals around USC athletes’ names, images and likenesses.

“We’re moving forward with our current process, our current structure,” executive director Spencer Harris told the Southern California News Group this spring, “but with the understanding that we have to be prepared to evolve and change.”