Peter Hanna
Associate Editor
Loyola University Chicago School of Law, JD 2026
The overall dynamics of the college sports world has gone through some significant changes over the last few years due to the rise of Name, Image, and Likeness (NIL), which allows student-athletes to earn payment for sponsorship deals. While this change to the college sports landscape is fairly widely praised, it has raised some significant debate about keeping a competitive balance in the world of college sports, and overall fairness to schools that cannot compete with the vast offers of other programs. This landscape may require a salary cap to alleviate the fairness concerns that arise.
However, in the recent case of House vs. NCAA, Judge Claudia Wilken granted preliminary approval of a settlement on October 7, 2024—with the final approval hearing set for April 7, 2025. This settlement, pending full approval, will institute many changes to the current state of compensation for college athletes. Most notably, NCAA institutions will now be permitted to compensate their own student athletes directly using the revenue generated by their own athletic programs. Initial estimates show that most programs will be capped around $20-23 million in the 2025-2026 academic year, with the main equation being that an institution can use 22% of their total revenue generated through sports to compensate their athletes. But athletes will still be able to earn income on their own through their NIL, through sponsorship deals and other booster payments—showing that this ruling will not completely alleviate fairness concerns by schools that cannot compete with the deep pockets of other rival conference programs.
Why is some sort of salary cap necessary?
It will become increasingly difficult for the NCAA to retain any sort of competitive balance unless each program has a certain limit on the amount they can spend to attract recruits and compensate athletes. For example, a 5-star recruit that has a choice between a mid-major school and a Power Four conference might be more inclined to choose the larger program simply because they can afford to pay them more. A salary cap could curb the dominance of wealthier programs, allowing smaller schools to compete more fairly. Under the initial NIL model, institutions with large donor bases and corporate sponsorships have an obvious competitive advantage over their competitors without such resources.
The National Football League (NFL) has a hard cap on total player salary a team can distribute to players which gives every team a similar chance to build a successful team. This puts the pressure on the general manger and his supporting staff to correctly assemble a squad and decide how the compensation should be distributed. Whereas in Major League Baseball (MLB), there is no cap on total player salary, and the effects of this lack of cap have been apparent very recently. The New York Yankees and Los Angeles Dodgers both ranked in the top three in the MLB in total player salaries, and those are the two teams that were featured in the most recent 2024 MLB World Series. Further, there were a handful of top-rated Japanese recruits making the move to the MLB over this past offseason, many of whom are joining the Dodgers with many speculating that it was simply due to their ability to pay them the most. These examples can serve to show that it is not an issue of whether or not college athletes should be paid or not—that much is already settled—but it does raise concerns that with an unregulated structure, schools will simply be able to buy championships and attract all the top prospects and recruits easily. With a set amount that each school distributes, all institutions will be on equal footing in their quest to build a successful and competitive program.
Further, college sports have long been associated with education, teamwork, and competition rather than financial gain. Critics argue that the increasing focus on money and NIL deals shifts attention away from academics and amateurism. A salary cap could help realign college athletics with its original values, ensuring financial incentives do not overshadow the broader collegiate experience. While NIL deals were designed to allow athletes to profit from their personal brand, they have also enabled booster-driven recruitment tactics. Some schools have used NIL agreements as a de facto pay-for-play system, which was not the intended purpose of the policy. A salary cap could establish a structured framework to prevent exploitation and maintain reasonable compensation limits.
The next steps
To avoid colleges with vast funding and donor resources from routinely dominating their competitors with less funds, it is crucial that a balance is found between fair compensation and maintaining competitive balance. It will soon be shown how the revenue sharing system holds up to its purported promises. Another potential avenue to assist with this balance between compensation and fair competition is simply having clearer, easy to follow NIL regulations. Instead of capping earnings, transparent guidelines on NIL contracts, booster involvement, and compliance could help maintain fairness without restricting market potential. Similar to professional sports leagues like the MLB and NBA, another idea is to impose a luxury tax on excessive spending by top-tier programs to encourage a more level playing field, and possibly discourage schools from significantly overspending to try to beat their competition.
While a cap could help address financial disparities and ensure more equitable competition, it might also limit athletes’ earning potential and lead to further legal complications. Rather than restricting athlete compensation outright, a structured regulatory system that promotes transparency, fair distribution, and long-term sustainability could provide the best solution. Ultimately, the future of college athlete compensation should prioritize fairness for all stakeholders while maintaining the integrity and values of college sports.