Transcript

Host: Hello, and welcome to Prevention and Protection, the United Educators Risk Management Podcast. Today, Karen Weaver, Adjunct Assistant Professor and Academic Director of the College Athletics for Senior Campus Leader Certificate Program at the University of Pennsylvania, will speak with Melanie Bennett, Senior Risk Management Counsel at United Educators.

A reminder to listeners that you can find other podcasts, as well as UE risk management resources, on our website, ue.org. Our podcasts are also available on Apple Podcasts and Spotify. Now here’s Melanie.

Melanie Bennett: Thank you. Karen, welcome to the podcast.

Karen Weaver: I am so thrilled to be with you, Melanie. Thanks for the invitation.

Bennett: I’m so glad to have you here. Your certificate program is not one that I’ve seen before. Can you tell me about the program and why you started it?

Weaver: I launched the program in the middle of COVID, and it was all online. It took place over a series of months with senior leaders who either had direct responsibility for athletics or were moving into positions where they might have to oversee athletics, whether in the president’s office, the dean of students’ office, or as chief financial officer. The goal was to give them an understanding.

This year, we are reimagining what that certificate can look like, and we’re strongly considering an in-person option, which will allow people to network better. Zoom is wonderful for some things, but not for everything. It would also allow us to have some of our guest speakers in person with these participants.

Again, it will be for campus leaders who want to understand what the new world of college athletics is like, how to make some of those transitions more successful on their campuses, and how athletics fits into their mission.

Bennett: When we’re talking about athletics, the landscape is more unusual at this moment than it has been in the past. You recently co-wrote an Inside Higher Ed article about higher education boards keeping up with these athletics changes. Why is it particularly important for boards and campus leadership to maintain deep knowledge of athletics issues at this point? How can they continue to do that when there are so many competing campus risks they should be tracking?

Weaver: That’s a great question, and thanks for recognizing the article that my colleague Peter Eckel and I co-authored for Inside Higher Ed. We’ve come to understand that this landscape is changing very quickly. With boards meeting sometimes four times a year and sometimes six times a year, a lot can change between January and June.

We’re encouraging boards and leaders to have more conversations outside the agenda about the changes that are taking place. They can bring in educators, leaders, and industry experts to help their boards navigate the path forward — not to tell them what to do, but to inform them about what these changes might mean for their institutions and how they are affecting college sports as a whole.

We think presidents are now fully immersed in the fact that they have to adapt to this new era, but we don’t know that boards have had the same opportunity. In a chapter I wrote for my upcoming book, Understanding College Athletics, I strongly encourage boards to take an active role in understanding this ecosystem. They can’t fulfill their fiduciary responsibilities effectively unless they understand how it is functioning, and that creates risk for the institution.

Bennett: When we’re talking about athletics and NIL — name, image, and likeness — there’s a lot within that. What’s happening with that landscape right now? What do we mean by NIL? Will it stay like this for a few years? Are we at a holding point?

Weaver: I wish I could answer yes, but I would say a strong no. It’s going to continue to evolve.

What NIL was originally supposed to provide was an opportunity for players to get, for example, a local sponsorship from a soda manufacturer and say on their Instagram page, “I endorse this product,” in exchange for money from the sponsor. If you think about Tom Brady or Caitlin Clark and all the endorsements they do, the same kind of opportunity was being offered to college athletes. It was never envisioned as the massive, almost pay-for-play system it has become.

What people need to understand about NIL is who oversees it: the states. It’s not the federal government, and it’s not the NCAA. It’s important for each state legislature to understand the intended outcome. I recently read an incredible article in The Wall Street Journal about how the Florida state legislature allowed high school athletes to monetize their NIL.

We now have athletes transferring four, five, or six times in high school while chasing NIL dollars because the next coach says, “He’s an agent. He can get me a million bucks here.” It is causing local fans who have always supported their high school teams to lose interest. They say, “I don’t know anybody on the team. Every year, it’s a whole new team.”

That’s also what colleges are facing, especially in the higher-profile sports. Fans liked being able to name the roster every year because they had watched the athletes play every year. With the transfer portal and the opportunity for unlimited transfers — which is academically problematic to begin with — fans are starting to feel disengaged.

To control this NIL craziness, the NCAA has encouraged schools to roll it into revenue sharing within the institution. If you opt in to a separate settlement called the House settlement, you are given certain parameters for how much revenue sharing you can do. I’ll call these guardrails, although they are not really guardrails. This past year, the ceiling was supposed to be $20.5 million for the entire athletics program.

Most schools said they would give 75% to 80% to the football team, 10% to 15% to the men’s basketball team, approximately the same amount to the women’s basketball team, and whatever was left to everyone else or another revenue-generating sport.

What has happened is that because there has been differentiation from one Big Ten school to another — Ohio State is giving $20 million to these athletes, while Michigan State decided to spread it out more equitably — that ceiling has not been enforced. We are now seeing larger and larger offers of revenue sharing in the programs, and there seems to be no accountability for how schools are doing that.

The College Sports Commission was supposed to regulate NIL deals to make sure they reflected fair market value. It is keeping up with approximately 85% to 90% of the deals, which are fine, but it’s the other 10% that attract attention and cause people to stop and say, “If that school isn’t playing by the rules, why should we?”

This is compounded by the fact that six or seven state attorneys general have filed legal action against the College Sports Commission, saying it has no right to do what it does. We have this mess, for lack of a better word, about who is providing oversight and whether there really is a ceiling.

The not-so-good news is that the amount is going up by 4% next year for the revenue cap, and it will go up 4% every year for the next 10 years. This is not going to get cheaper or less confusing.

Bennett: You’ve been talking a lot about responsibility. We’ve discussed why it is helpful for boards to pay attention to all this. Do trustees or others have a specific fiduciary responsibility when it comes to athletics oversight?

Weaver: Every board is different. Whether an institution is public or private, states have different guidelines, and even the way trustees are selected differs from school to school. Inevitably, some trustees are very passionate about college athletics, while others have no interest in it.

But boards have to develop a common understanding and a common skill set. That’s where I think the fiduciary responsibility comes in: What is in the school’s best interest for the long term?

There was a very good example this past fall with the Big Ten Conference. It was approached by the University of California pension system, which is a massive retirement system for employees of the University of California system. You can imagine how many people’s retirement money is in those portfolios. [Unclear 00:10:11] came to the Big Ten and said, “We’d like to buy a share of the Big Ten Conference.” The Big Ten asked, “How much do you want?” They said, “10%.” The conference said, “Okay, we’ll take it to our board.”

In the Big Ten Conference, the presidents are the board, not the boards of trustees. That needs to be discussed more widely, including why trustees aren’t involved unless their president chooses to involve them.

When trustees heard about this and their presidents brought it to them, they didn’t feel they were getting enough information to fulfill their fiduciary responsibilities, so they asked for more. The conference balked and said, “No, we’re not going to give it to you,” or required them to sign a nondisclosure agreement.

That caused more trustees to balk because, they said, they were only trying to do their jobs. They wanted to understand how this 20-year partnership would work. It involved $2.8 billion, of which 10% of the money would go back to the University of California.

After several weeks of angst, trustees from the University of Michigan, the University of Southern California, and other institutions spoke publicly about their concerns regarding the deal and the fact that they had not been consulted. The deal was tabled.

It brought up the very real risk associated with outside partnerships involving LLCs and multimedia rights. We are no longer talking about hundreds of thousands of dollars; we’re talking about hundreds of millions of dollars.

I recently hosted two Michigan State University board members on my podcast, Trustees and Presidents: Managing Intercollegiate Athletics. They had written a widely read op-ed in The Detroit News saying, “You’re asking us to approve a $100 million deal that lasts for 20 years, at a time when the president likely won’t be here in 20 years. We likely won’t be here in 20 years. Yet the institution will have to live with the decision, and we’re not getting enough information.”

Do I think this could be a risk for the institution? Yes, and it is worth discussing.

Bennett: Should schools reevaluate how athletes receive medical care, including mental health care, now that the athletics landscape is shifting?

Weaver: I think that’s an important point for schools to focus on because the attention has clearly been on money and trying to close revenue gaps.

Division I membership now requires comprehensive physical and mental health care for all athletes — not just football and basketball players, but all athletes. Some athletes receive more attention than others for a variety of reasons, but schools will have to improve how they care for all athletes because it affects NCAA membership status.

Here’s the other thing: I really admire [unclear 00:13:25]. The organization published a study based on a survey of member institutions, athletic trainers, and health care administrators across all divisions. Fifty-six percent reported that they had not created an emergency action plan for a medical emergency on their field or court, and they did not have an AED nearby.

These are relatively low-hanging-fruit issues we should consider, not only for athlete care, but for anyone who comes to our facilities.

Performance management also involves physical health care. As more people become aware of different treatments, limiting athletes to what has always been done might not be the best solution. Schools may need to invest in new personnel, new approaches to strength and fitness training, and new technology to measure an athlete’s growth and transition.

We know we need to do it, and we know it is important. I’m also reading stories about athletes and their families coming to campus looking not only for good facilities and coaches, but also asking whether they will be taken care of and who will pay for it.

Bennett: That’s an important issue to watch. We’ve covered many important topics at a high level: athletics generally, how boards and leadership should respond, what they should monitor, NIL, how to pay for things, and what may be concerning about some of the ways schools are trying to pay for them.

Is there anything else schools should be paying attention to that we haven’t discussed today?

Weaver: I think one issue — not so much for the Power Four schools, although some in those conferences might say the same thing, but for institutions trying to remain relevant by opting in to revenue sharing in Division I — is staff burnout.

Many people have been asked to do more year after year. While they are willing to do it, we’re all human. We all have days of fatigue or days when we don’t feel well and can’t go to work. I don’t know that we have enough overlapping coverage for those situations, whether in coaching, medical care, or academic support.

We haven’t even talked about academic support with all the transferring that is taking place. Those staff members are integral to how a department runs, but we take them for granted. Institutions should be aware of their workloads, their need for time off, and their ability to do their jobs the way everyone would like.

Bennett: That’s very important. Thank you for highlighting it. That’s it for today’s podcast. Thank you, Karen, for joining me today.

Weaver: Glad to be with you.

Host: From United Educators Insurance, this is the Prevention and Protection Podcast. For additional episodes and other risk management resources, please visit our website at ue.org.