NIL Shake-Up: How revenue sharing is reshaping risk in college sports

In June, the House v. NCAA settlement brought the most significant change yet to the name, image, and likeness (NIL) landscape: athletic departments can now share up to $20.5 million annually in revenue directly with student-athletes.

While NIL agreements between athletes and brands have been in place since 2021—and athletes can still sign independent sponsorships—this is the first time schools themselves will have to distribute a portion of their own earnings to student athletes.

How that revenue is split will vary widely. Many universities are allocating the lion’s share to football (70-75%), followed by men’s basketball (10-15%) and women’s basketball (5-10%), with the rest distributed across other sports. Some institutions are spreading the benefits more evenly among all athletes, while others are channeling nearly all revenue to marquee programs like football.

The shift from third-party NIL deals to direct school-funded revenue sharing doesn’t just change how athletes are compensated. It fundamentally alters the risk profile of collegiate athletics.

From potential employee classification and escalating medical liabilities to Title IX disputes and budget volatility, universities now face a new set of operational, legal and financial exposures that could—if not managed proactively—derail programs, drain budgets, and redefine the business of college sports.

With the framework in place, the focus now shifts to the questions that will determine whether revenue sharing becomes a competitive advantage or an unsustainable liability for your program.

Will athletes be considered employees in the NIL era?

The House settlement stops short of classifying athletes as employees. For now, they’ll be treated as 1099 contract workers, preventing collective bargaining and limiting eligibility for traditional employee benefits.

That may not hold forever. Many experts predict that the tipping point could come in the early 2030s, when major media rights deals expire and conferences can restructure compensation models. If certain conferences begin operating like professional leagues, the case for full W-2 employee status will grow stronger.

Employee classification would open the door to collective bargaining—something many athlete groups are already pushing for—but it can’t happen without a formal W-2 relationship. That’s one reason the NCAA has lobbied Congress for antitrust exemptions, though neither political party has shown much interest.

The “Saving College Sports Act,” a recent executive order, made headlines but offered little substantive guidance on this issue.

For college risk managers and CFOs, the implications are enormous. If athletes become employees, universities could face workers’ compensation obligations far beyond the scale of their current programs.

Traditional workers’ compensation plans designed for faculty and staff aren’t built to absorb the frequency and severity of athletic injuries. Just a few football-related ACL surgeries can generate as much in workers’ compensation claims as several years’ worth of claims from employees like professors or office staff.

Without planning, that exposure could quickly overwhelm budgets.

How can we control medical liability?

The estimated annual cost of injuries in collegiate athletics is billions of dollars nationwide. Right now, most Division I programs provide at least primary or accident insurance for athletic injuries, and institutional policies often cover significant costs above NCAA-mandated deductibles (which exclude Division II and Division III schools).

Coverage typically extends to practice, play and travel—anything sport-related—and fills the gap when standard student health insurance excludes athletic injuries.

If employee status becomes reality, those costs could balloon under WC requirements. Even without that change, the pressure is mounting. High-cost surgeries, longer recovery times and increased injury awareness have driven up claim expenses year over year.

Alternative funding models like medical captives or self-insurance pools are emerging as a strategic solution. By pooling resources at the conference level, schools can spread costs, maintain greater control over coverage design and better withstand the budget volatility that comes with high-severity claims.

Insurance strategies to help stabilize budgets

In the NIL and revenue-sharing era, insurance is a strategic lever for sustaining the long-term health of an athletic program.

Today’s risks span multiple fronts: legal compliance in areas such as Title IX and employment classification; athlete welfare, encompassing medical coverage, injury management and post-career support; and financial stability, as donor contributions, collective funding and performance incentives fluctuate from season to season.

Well-structured coverage can help smooth these variables. For example, policies tied to team or individual performance can offset revenue shortfalls in a down year or help fund bonus commitments when success exceeds expectations.

Medical coverage tailored to the realities of collegiate athletics can keep injury costs predictable, even as procedures become more advanced—and more expensive. And liability protection designed with NCAA rules, conference policies, and school-specific exposures in mind can reduce the financial impact of disputes or compliance challenges.

Programs should turn to specialized coverages designed for this environment, including:

• Upside coverage to boost budgets when teams exceed expectations.
• Downside protection to safeguard roster funding in tougher years.
• Performance-based bonus coverage to incentivize athletes without massive upfront commitments.
• NIL and revenue-share protection to insulate against the financial impact if an athlete’s performance or availability changes unexpectedly.
• Athlete medical coverage tailored to the high-frequency, high-severity claims unique to competitive sports.

This is a new and unique set of risks so working with an insurance broker that specializes in NIL-related risks is essential to help build a buffer against the volatility of this new model, ensuring you remain competitive, compliant, and financially stable, regardless of how next season unfolds.