The New Cost of Competing: How Athletic Departments Are Scrambling to Fund Revenue Sharing in the House Era
College athletics has officially entered a new financial era. One where schools must not only recruit and retain athletes with competitive facilities and coaching, but also now prepare to directly share revenue with them. While the headlines may be dominated by massive programs like Michigan getting hit with $25–35 million fines, the more seismic shift is how all opt-in schools - yes, even the blue bloods - are having to rewrite their business models in real-time to cover a brand new line item: athlete compensation.
And here’s the kicker: nobody has done this before.
The $20 Million Question
Most schools that opted into the House settlement are now expected to contribute around $20 million annually toward a combination of scholarship expansion and direct athlete compensation, on top of what they already spend.
That $20 million figure is being tossed around flippantly, like it’s a rounding error for schools swimming in cash. But the reality is more complex, and more urgent. As the situation at Michigan illustrates, even athletic departments with $200+ million budgets are having to consider:
Staff layoffs
Vendor cuts
Delayed hiring
Reduced capital investments
New donor pipelines and restructured fundraising goals
At Michigan, for example, Athletic Director Warde Manuel announced a 10% personnel cut in the department and is working with the university to reduce their revenue contribution from TV rights just to create fiscal breathing room, not even to cover a fine, just the new ongoing costs of doing business in the post-House world.
You Can’t Fundraise Your Way Out Forever
One might assume schools can just tap their deep-pocketed donor base. But that’s easier said than done.
Take Michigan again. In FY24, its entire athletics fundraising haul was $44 million - and that includes gifts for capital projects, facilities, operations, and other sports. Football alone got $33.6 million of that. If you suddenly need $20 million for new athlete pay each year, plus additional support staff to manage NIL logistics and compliance, and maybe another $25–35 million fine on top of that…you’re not just asking donors to do more. You’re asking them to double their contributions in a single cycle.
Donor fatigue is a real threat. Especially when donors are already being tapped for facility upgrades, academic center renovations, and NIL collectives. And unlike splashy naming opportunities or high-profile coaching hires, paying a fine or funding scholarship offsets doesn’t get your name on a building. It’s a harder sell.
The Endowment Myth and Budget Realities
What about endowments, you ask? Michigan’s sits at a staggering $17 billion. But, as the data reminds us, endowments are not ATMs. The vast majority of that money is restricted - designated for specific academic programs, scholarships, or research. Athletic departments can’t just raid those funds to plug holes in their operating budget or write a check to the NCAA.
So where will the money come from? More and more, the answer is: somewhere else in the department.
Whether it’s travel budgets, staff size, or lower-priority sports, schools are increasingly faced with hard choices. The reality is, this new $20 million revenue-sharing pool doesn’t come from nowhere.
And for many schools, especially outside the very top tier, it comes with the risk of cannibalizing resources that used to fund development staff, nutrition programs, mental health support, or even non-revenue sports.
Not Just a Blue blood Problem
Michigan’s situation is instructive not because it’s exceptional, but because it’s a canary in the coal mine.
If one of the richest, most resourced programs in college athletics has to consider cuts and strategic reallocation just to keep up, what does that mean for schools with only $60–80 million athletic budgets? What about those whose football programs don’t print money via media deals and licensing?
These schools have opted in, too. And now they’re facing real-time budget puzzles:
Should they cut a non-revenue sport to help fund football and basketball pay?
Can they shift fundraising priorities to new NIL-related collectives or direct compensation pools?
Will they need to reduce staff or scale back travel?
Can they lean on university support if their university isn’t already strapped?
This Is a Big Change, Not a Blip
It’s important to zoom out. We are no longer in an era where college athletics can count on rising TV rights deals and donor enthusiasm to cover every new cost.
Now, schools have to factor in employee-like compensation to athletes without triggering employment classification. They must create new administrative infrastructure to process payments, monitor contracts, and track compliance. Most notably, they’re doing all of this without any centralized NCAA funding mechanism to help offset the cost.
This isn’t just about a few schools getting creative. It’s about the entire model of college sports being rewritten in real time, and most athletic departments are still trying to find the pen.
The Bottom Line
Yes, $20 million per year may not bankrupt your athletic department.
But if you’re counting on a handful of boosters to write checks, or planning to absorb the cost with business as usual, you’re not paying attention.
Because here’s what’s actually happening:
Blue bloods are trimming staff and calling in favors just to stay level.
Mid-majors are sweating their next budget cycle, unsure how to fund a compliance staff and NIL pool.
Everyone is still waiting for Congress to act or the courts to offer clarity, but both may be too late.
This isn’t about whether Michigan deserved a $30 million fine. It’s about how every opt-in school now faces a completely new financial reality.
A reality where you have to pay your players, fund your sports, and keep the lights on - all at the same time. If you’re not already planning for that, you’re already behind.
