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The Southeastern Conference is considering a groundbreaking policy that would impose financial penalties on member schools that surpass the athlete revenue-share cap, according to administrators familiar with the proposal. The plan, which the SEC is discussing with other conferences, would establish a league-wide cap with escalating fines for schools that spend beyond the $21.6 million limit set by the House settlement. For the highest spenders—those allocating more than $70.5 million to their rosters—the fines could exceed $10 million.
This proposal diverges significantly from the cap rules recently adopted by the Big Ten. It would classify certain school-affiliated, third-party name, image, and likeness (NIL) deals as institutional pay, enforcing provisions of the House settlement that have not been previously applied. Notably, the SEC's plan introduces a luxury-tax model reminiscent of professional sports.
The penalty structure, which has only recently been finalized, was shared with dozens of administrators over the past several days. Fines would start modestly and increase in tiers. Schools spending below $50.5 million would face a penalty of less than 1%, while those spending between $50.5 million and $60.5 million would incur a 1% fine. Spending between $60.5 million and $70.5 million would trigger a 3% penalty, and exceeding $70.5 million would result in a 10% fine. Under this model, a school spending $70.5 million could face a fine of approximately $7 million.
Moreover, the financial penalties in each tier would rise with each new cap year. For instance, next year, the penalty for spending between $60.5 million and $70.5 million would increase from 3% to 5%, and for spending above $70.5 million, it would jump from 10% to 15%. In the following year, the largest spenders could see a 20% penalty—a tax of roughly $14 million to $16 million. It remains unclear how the fine money would be distributed.
"The headline here is that the new cap would basically be $70 million," one power league athletic director said.
In a move widely supported by many college leaders, the SEC's proposal might eliminate the requirement for schools to obtain approval from the College Sports Commission's NIL Go clearinghouse for NIL agreements with associated entities that redirect revenue from the athletic department to the roster. Such deals often involve school corporate sponsors, multimedia rights partners, and possibly apparel brands, and they constitute a large portion of current submissions. This change would eliminate what officials describe as time-consuming and resource-draining measures to circumvent the existing cap by funneling revenue to athletes through fabricated marketing and endorsement agreements.
Several power conference leaders contend that many universities are paying as much as 20% to third-party entities to "wash" money, effectively passing contracts through the NIL Go clearinghouse. For now, a retroactive implementation date of October 1 is under discussion for the new fining structure. Third-party NIL deals involving redirected school revenue submitted on or after that date would be considered institutional pay. Only fully independent third-party NIL payments—such as genuine marketing and endorsement deals that athletes secure on their own with businesses and brands—would be excluded from the new cap policy.
The SEC's proposal would drastically reduce submissions to the College Sports Commission, the 18-month-old enforcement body responsible for policing third-party NIL deals. Although the commission is conducting more than a dozen active investigations and inquiries into college programs with a staff of 30, it has not yet penalized any programs for cap circumvention. However, over the past few months, the CSC's scrutiny of school-affiliated NIL deals has intensified, according to those with knowledge of recent submissions—a development that coincides with the formulation of these conference-cap policies.
The SEC's fining system is designed to close a loophole that schools are using to exceed the cap by redirecting revenue from school-affiliated entities to athletes. Yet questions remain about whether the latest proposal fully closes the circumvention loophole. For example, are all NIL deals—even those from booster-backed collectives—considered part of the SEC's cap policy? Or can schools still circumvent the system in other ways? While the proposal originates from the SEC, the four power conferences are expected to attempt to align with similar league cap rules to avoid competitive inequity while adhering to federal collusion laws. Conferences are striving to create and enforce rules around athlete compensation, player movement, and eligibility in hopes of avoiding antitrust legal challenges that toppled the NCAA's national policies.
The Big Ten last month established new compensation cap rules that fine schools spending more than $49 million on their rosters in a similarly escalating system. That system permits schools to spend the $21.6 million allowed under the House settlement plus $27 million in school-affiliated third-party NIL deals before penalties begin. However, the Big Ten's policy features a significant league fine—as much as $25 million—once a school exceeds the $60 million mark. These conference policies may put leagues at odds with both antitrust laws and the House settlement itself. In fact, House plaintiff attorneys Jeffrey Kessler and Steve Berman believe the Big Ten's proposal violates settlement terms.
The SEC's plan has its own issues for lower-resourced programs. The potential for the biggest spenders to further exploit even the new penalty system strikes fear in smaller-spending programs, especially those in the Big 12 and ACC. Many officials in those leagues wonder if the loophole is truly closed and believe the penalties are not severe enough. For reference, MLB's luxury tax ranges from 20% to 50% depending on how many consecutive years a team has exceeded the soft-cap figure. "Anything north of $50 or $60 million should come with a 1-for-1 tax," one Big 12 school administrator said.
It is unclear if NCAA or College Sports Commission policies would need to change under the SEC's penalty structure. It is also unclear if House settlement terms need amending. To modify settlement terms, the NCAA and the five conferences—including the Pac-12 as an original defendant in the House antitrust lawsuit—must agree to changes, along with plaintiffs and their attorneys. This is considered a laborious process that may drag well past January's transfer football portal, when many officials believe conference caps are necessary to slow spending.
The SEC's formalized proposal comes amid what administrators describe as a chaotic environment in the industry, where court rulings and state laws have crippled NCAA rules and created a landscape of free player movement, mostly uncapped compensation, and even uncertain eligibility standards—which some contend is the fault of college leaders failing to adapt quickly enough.
For some, the solution lies on Capitol Hill, where college leaders have spent years and millions of dollars lobbying lawmakers to pass a congressional bill, the Protect College Sports Act. The legislation attempts to bring order to the unruly environment by limiting athlete movement, establishing eligibility standards, and granting the NCAA and College Sports Commission an antitrust exemption to regulate athlete compensation in a way that many believe is unfair. However, the Act, though overwhelmingly passed by the Senate in striking bipartisan fashion, faces a steep climb in the House of Representatives, which only has five working weeks before a new Congress—and likely a new, more Democrat-friendly bill—arrives in January. The Democrats won back control of both the Senate and House in last week's mid-term elections.
Some administrators are frustrated enough to support an employment and collective bargaining model—a concept that, while rife with hurdles, is gaining momentum among stakeholders. The predicted congressional failure now has conferences returning to what many describe as Plan B, where leagues create and enforce their own rules. While on with Paul Finebaum earlier this week, SEC commissioner Greg Sankey encouraged Congress to pass the legislation to provide regulation around player movement, eligibility, and compensation. "If left without a signed bill, conferences perhaps individually, to the extent they can legally, will have to be involved in addressing those issues directly," he said. "Some of those are embedded in the Protect College Sports Act. Some are about conference policies we've had in the past. Some we've emphasized this year. They haven't changed. Others we've introduced as we move forward."
Originally reported by yahoo.