The recent approval of the $2.8 billion House v. NCAA settlement marks a transformative shift in college athletics, allowing Division I schools to compensate student-athletes directly. While this development promises increased equity, it also presents unique challenges for HBCU athletics, which have historically operated with limited resources.
What the NCAA Settlement Means
Under the settlement, schools can allocate up to $20.5 million annually for athlete compensation, with the cap set to increase over time. Additionally, the agreement includes $2.7 billion in back pay for athletes who competed between 2016 and 2024. This new model effectively dismantles the NCAA’s long-standing framework of amateurism, ushering in a new era of revenue sharing in collegiate sports.
Several HBCUs, including Morgan State University, North Carolina A&T, Hampton University, and the University of Maryland Eastern Shore, have opted into the settlement. By doing so, these institutions can offer direct financial benefits to student-athletes and gain immunity from future lawsuits related to name, image, and likeness (NIL) restrictions. However, participation also entails financial obligations; for instance, Morgan State is expected to contribute approximately $231,000 to the settlement fund.
SWAC Commissioner: HBCUs Must Prepare for Financial Shifts
Southwestern Athletic Conference (SWAC) Commissioner Charles McClelland addressed the implications of the NCAA House settlement during a public appearance last December. He emphasized the financial urgency it creates for HBCU athletic programs.
“It is now allowable for institutions to directly give NIL money to their student-athletes,” McClelland said. “That means there’s going to be an influx of athletes that are looking for NIL payments. You’re going to have to have some name, image and likeness money set aside to compete.”
McClelland confirmed that the financial stakes are significant. The SWAC’s total contribution to the House settlement is $30 million. Every school in the conference will feel the impact.
“There’s going to be some challenging times from a financial standpoint,” he said.
To support member institutions, the SWAC is creating tools to help HBCUs navigate this new era. Among them is a best-practices document that will be distributed to university presidents and chancellors. This guide will help schools build sustainable NIL strategies and maintain compliance.
“We are in a good spot from a revenue standpoint; we’re going to be just fine, but it will take some additional effort,” McClelland said. “We will need NIL dollars on the inside, and we will work with you to help develop that.”
As the NIL landscape evolves, McClelland reaffirmed the conference’s commitment to ensuring that HBCUs remain competitive. “We’re going to continue to stay on top,” he said.
HBCUs Face Unique Financial Challenges
Opting in also requires adherence to new roster and scholarship regulations. Morgan State, for example, plans to reduce its football roster from 130 to 105 players and adjust other sports programs to maintain Title IX compliance.
For HBCUs that choose to opt out, the path forward remains uncertain. While they avoid immediate financial contributions, they also forgo the opportunity to directly compensate athletes, which may impact recruitment and competitiveness in the evolving landscape of college sports.
Looking ahead, the settlement presents both opportunities and challenges for HBCU institutions. On one hand, the ability to offer direct compensation could enhance recruitment and retention of talent. On the other hand, limited financial resources may hinder the implementation of these new models, potentially widening the gap between HBCUs and wealthier institutions.
As the collegiate athletic landscape continues to evolve, HBCUs must navigate these changes carefully, striking a balance between the promise of increased equity and the realities of financial constraints. Strategic planning and investment will be crucial to ensure that HBCUs can thrive in this new era of college sports.