NCAA’s NIL Conundrum

When a Mississippi bill to make all NIL-related earnings income tax-exempt made its way to the state Senate, six years before residents would receive the same benefit on their earnings, it sent a clear signal: in the current era of college sports, bending the rules is necessary for universities to remain competitive. 

Mississippi was not the first state to attempt to introduce legislation aimed at giving  its universities a recruiting advantage, and it will not be the last. Nor are its two largest schools, Ole Miss and Mississippi State, alone in facing rising cost floors as NIL spending reshapes the economics of college athletics and raises questions about long-term sustainability. 

Although the tax exemption was ultimately struck down, it underscored a broader issue. The quick introduction of NIL has created a wild-west market with few consistent rules, uneven oversight and limited cost discipline. College athletics has, in effect, embraced elements of pay-for-play without establishing the governance structure needed to support it. A collective bargaining-type agreement, once considered unnecessary, may now be urgently needed.  

The added cost burden puts middling programs without major revenue bases at risk in terms of long-term viability. The University of Louisville, which is operating at a recurring deficit, warned that the current NIL and revenue-sharing model is unsustainable. That concern is unlikely to be unique. A lack of structure is now a defining feature of the college sports landscape, especially when compared with professional leagues, where collective bargaining agreements help define revenue-sharing, set operating parameters and bring greater cost stability. 

Amazon and Duke announced a multiyear partnership that includes a three-game deal for the 2026-2027 basketball season, marking Amazon’s entrance into college sports. The deal, which enhances Duke’s financial stability, underscores the fragmented nature of college sports. Amazon Prime is taking advantage of TV contract loopholes that allow neutral site, nonconference games to be broadcast on networks outside conference TV deals.

Need for Stability and Predictability

The NCAA, made up of many conferences with their own governing bodies, lacks a central authority with the power to impose uniform rules in the manner of a professional sports league commissioner. The fragmented structure has been magnified as NIL drastically transforms the financial model of college sports.

At the same time, the demand for new capital presents both a challenge and an opportunity. Unlike professional franchises, which have clear ownership structures, colleges rely on donor contributions to help fund athletics. Donations, on their own, are no longer enough for many of the nation’s programs.

That helps explain why some schools and conferences are beginning to consider private-equity investment as a source of liquidity, something professional sports leagues have just begun to embrace themselves. The University of Utah became the first school to turn to private equity when it struck a $500 million deal in late 2025, though it remains an outlier for now. 

The University of Utah’s conference, the Big 12, also made headlines by agreeing to a five-year agreement with private equity firm RedBird Capital Partners. The first conference to agree to such a deal, RedBird Capital will provide the Big 12 with $12.5 million in liquid funds and help create more commercial revenue. The firm will not get an ownership stake or have any operational oversight.

A CBA-style arrangement could help align the interests of universities, conferences, athletes and investors. It would allow players to be compensated within a more formal structure, while also creating the guardrails needed to support stability.  Although this framework would increase guaranteed costs, it could spur PE interest as establishing predictability would make college sports even more attractive.

The concept is not unusual. The WNBA’s recent seven-year CBA skyrockets the salary cap and floor while creating a revenue sharing format between the league and players. Theoretically, the increased costs could dilute value and investment attraction. Instead, the stability of labor relations for the next seven years is a boon to investors.

The free-for-all market for player compensation ultimately muddies the long-term implications of a pay-for-play model that was introduced to help student-athletes benefit from their own commercial value. The top programs, such as Alabama, Georgia, Michigan and Ohio State, may benefit from the current structure but at the cost of competitiveness, an issue already amplified by the NCAA basketball tournament. A system that favors the best-resourced schools while offering little predictability for others is unlikely to be durable.

A more formal framework could also benefit athletes directly. Many players are already contending with tax complexity, uneven protections and unclear contractual arrangements. A CBA protects unionized labor and would build in player protections that do not currently exist.

CBA Complexity

Designing such a framework for college athletics would be more complicated than in professional sports. The many conferences in college sports, each with their own commissioners, governance model and structure, hamper the implementation of a single overarching CBA. While a conference-level arrangement is theoretically possible, it likely needs to be enacted universally to effectively outline player costs.

College sports can look to professional models for implementing a CBA. The NFL, for example, ensures equality among teams by splitting revenues equally among 32 teams, meaning a smaller market, such as Jacksonville, receives the same national TV money as New York’s teams. The MLB, by contrast, leaves teams to negotiate local TV deals individually and institutes no salary cap or floor, creating an environment where a high-spending team like the Los Angeles Dodgers can remain elite for over a decade. 

Potential Model Characteristics 

Key NFL model features include a league-wide revenue split between players and owners with equally shared national TV revenue across teams; a salary floor and hard cap, with a rookie wage scale, minimum salary for players and limited contract guarantees; governance and dispute procedures, such as arbitration for grievances and personal conduct policies.

The MLB’s model includes no salary floor or cap, with a luxury tax for high spenders; partial revenue sharing through a pooled percentage of local revenue with individual franchises benefiting from local TV money; arbitration procedures, union recognition and bargaining protocols, player benefits and minimum player salaries. 

To become a more organized entity, the NCAA will need to define a myriad of variables, such as player compensation, NIL guidelines, coaches’ salaries, workers compensation and transfer rules. Unlimited transfers and immediate eligibility, two staples of the NIL-era, have become a fixture of the wild-west-like environment.

College athletics’ variables make the valuation challenge especially difficult. Any effort to design a CBA-style arrangement would need to account for the considerable differences among institutions while still producing rules that are clear enough to support sustainability. 

Whatever form a future agreement takes, even if a comprehensive CBA is overreaching, the case for a formal governance structure is becoming unavoidable. College athletics is no longer operating under an amateur model in any meaningful economic sense. It is a large and increasingly complex commercial ecosystem shaped by media rights, sponsorships, donor funding and direct athlete compensation. 

A defined labor framework would not eliminate every tension in college sports but would provide a foundation for growth that is more predictable, more governable and more sustainable, thereby driving increased investor interest leading to better financial outcomes for universities and students. 

Kroll has extensive experience partnering with the world’s most prestigious sporting leagues and governing bodies to deliver valuations, fairness opinions and tax structuring guidance. The firm has a deep understanding of private equity investment in professional and college sports and can help advise on the fairness of these transactions.