Revenue Sharing Questions & Answers
As we communicated earlier this month, the NCAA vs. House settlement was approved, and athletic departments across the country are able to share revenue with student-athletes and provide additional scholarships to the new roster limits. Beginning July 1, we will start sharing the maximum allowed through the agreement, $20.5 million, with the student-athletes and we are adding 82 scholarships.
We appreciate the feedback and questions many of you submitted to our department. Below are updates from Donald R. Shepherd, Director of Athletics, Warde Manuel, on some of the questions fans submitted after the settlement was approved.
Why can’t you use the university’s endowment to cover the operating budget? Endowments are integral to our department’s function as a self-sustaining arm of the university. The purpose of an endowed scholarship or title is to provide long-term financial stability in a way that matches a donor’s specific interests with the department’s need for financial health. Endowments begin with a principal gift amount, which is invested so that only a small percentage of the earnings are spent each year, allowing the gift to grow what would otherwise be a short-term influx of cash into a long-term, self-sustaining source of financial stability. The goal is to generate a return on investment that will not only preserve the principal amount but also provide a steady stream of income. This investment is not a matter of choice or convenience but a matter of obligation, as nearly all major gift agreements come with restrictions stipulated by the donor in the form of a signed binding gift agreement. This is why endowed funds are not available for the department's use to offset deficits; they are legally bound to their specific uses as stipulated by the donating party. Within Michigan Athletics, most endowments are restricted to use for athletic scholarships, most often designated to a scholarship for a student-athlete within a specific sport of the donor’s choice.
Are you considering advertising at Michigan Stadium to cover the shortfalls? Permanent advertising in Michigan Stadium has been a topic of discussion for many years, predating my tenure at Michigan. It's essential for us to assess all potential advertising opportunities to generate new revenue while respecting our traditions. Every decision we make will take into account Michigan’s traditions and values while also understanding the decisions we need to make to continue to support the success of our teams. This is an area that we are continuing to evaluate.
How does the settlement and budget shortfall affect Olympic and non-revenue sports? Michigan remains committed to all 29 varsity teams. These programs are an important part of who we are and reflect the breadth and excellence of our athletic tradition. We are not cutting any sports or reducing scholarships.
Will revenue sharing and additional scholarships be applied across all athletic programs? Is there an allocation of how much revenue sharing and how many additional scholarships are awarded to the different athletic programs? We are adding 82 scholarships across our teams this upcoming year. With respect to the distribution of the revenue share, our department is taking the approach of sharing those monies with our revenue generating sports, football and basketball, as well as providing some funding for volleyball and ice hockey. Football is the program that leads our revenue generation and carries a large portion of the weight for the financial health of our athletic department followed by basketball. Distribution models for revenue sharing will evolve over time and may include additional teams and top performers in a range of programs.
Is the revenue generated from alcohol sales worth it, especially given the number of incidents that it causes at events? Our athletic department has worked closely with university constituents, local law enforcement and the liquor control board to implement a safe and responsible alcohol program. We have seen fewer incidents at sporting events since alcohol sales began at Michigan Stadium, Crisler Center and Yost Ice Arena. We believe that fans have been less inclined to drink heavily before entering the event and are more responsible with their consumption. It has created a new revenue stream for our department and we have met a request that many of our fans have brought forward over the years. We will continue to monitor and are hopeful this continues as we enter our second full season selling alcohol at these venues.
Will NIL Collectives still be needed now that revenue sharing has been approved? Will payments be the differentiator among schools that distribute the maximum amount of funds? Revenue sharing has limits, but NIL earnings remain uncapped. Collectives will continue to play a vital role in providing athletes with third-party opportunities like endorsements, sponsorships, and brand partnerships. Among the institutions that compensate student-athletes to the maximum amount allowed through the settlement, NIL opportunities earned through collectives could be a distinguishing factor. Third parties may continue to enter into NIL agreements with student-athletes. Such agreements will be subject to review to ensure they are legitimate, fair market value agreements and not used for pay-for-play. Payments by third parties would not apply toward the revenue cap but must be disclosed to a clearinghouse for review.
What percentage of the needed increase will be passed onto ticket holders, versus what percentage of the need will be filled by re-thinking how existing revenue dollars are spent? The department will continue to look for ways to generate revenue across a variety of areas. While periodic increases in ticket prices will continue to provide added revenue for the department and our teams, the additional revenue needed as a result of the House settlement cannot be sustained with ticket increases alone.
How can we, as a fan, contribute? The most effective thing you can do to help is to continue investing in Michigan Athletics. This can be done through a variety of ways, including:
• Becoming a season ticket holder
• Donating to Michigan Athletics
• Attending athletic events on an individual game basis
• Becoming a corporate sponsor
• Giving to the Champions Circle Collective
How are you covering the cost of facilities and the maintenance required to operate them? The facilities team conducts detailed year-over-year analysis and cost reduction planning, including regular building tune-ups, lighting conversions, intentional HVAC scheduling, and utilization of energy-efficient equipment. While the total athletic building space has grown over 18 percent from 2014 to 2024, utility costs have only increased 14 percent, largely due to the inflated cost of energy over time. Over that same period, electric consumption per sq. ft decreased by over 14 percent, demonstrating the impact of energy efficiency improvements. Costs continue to increase but we make every effort to contain the cost of operations and any necessary repairs.
Do you have questions?
Michigan Athletics is committed to answering your questions and providing open communication about our priorities as a department. Please use this form to submit your feedback or questions on this topic.