Can BYU Afford $20M Annually in Revenue Share?

Friday was a historical day in the world of college sports. California Judge Claudia Wilken approved the House vs NCAA settlement. The settlement grants universities the right to pay their athletes directly for the first time ever. The revenue share cap will be approximately $20.5 million this year and will slowly increase every year for the next 10 years.

This major change will impact every Power Four team in the near future, including BYU. BYU could pay its athletes up to $20.5 million annually in revenue share starting on July 1, 2025. That's, of course, if BYU can afford it.

That significant "if" isn't unique to BYU. Schools across the country are concerned about the prospect of paying $20 million annually to their athletes. Not because they don't have enough revenue to go around - they certainly do. Over the last couple decades in college sports, however, major college athletic departments have been in an arms race to build the best facilities, hire the biggest staffs, and pay for every competitive advantage imaginable. If they've earned a dollar, they've spent that dollar. These athletic departments haven't been making a profit to pay shareholders - they've been spending everything they make in the name of winning. Schools have been preparing for the revenue share era over the last 12 months, but that can't undo the last 12 years of the arms race in Power Four athletics.

Can those schools really unwind those costs to absorb $20 million annually? Some simply will not be able to afford the full 20 million. Most importantly, will BYU be able to afford it?

First and foremost, we know that BYU athletics is financially independent. They say as much on their website. "BYU Athletics is self-sustaining and receives no tithing or tax dollars to run its programs." Second, while we can't look at BYU's financials to confirm, it's pretty safe to assume that BYU does not spend more than they earn. That would go directly against the church's council to spend within your means. For the purpose of this article, we will assume that BYU has been spending within its means.

There's never an easy time to absorb a $20 million increase in expenses, but now is certainly the best time in BYU history to do it. According to data from the Department of Education, BYU's revenue grew from $106 million in 2022 to $130 million in 2023. 2023 was BYU's first season in the Big 12.

That $24 million increase in revenue could cover the revenue share had BYU held its expenses flat, but we know that's not the case. BYU has increased its investment in coaching staffs, recruiting staffs, nutrition staffs, and other areas of the athletic department since joining the Big 12.

Again, we don't have the detail, but we can assume that those cost increases will eat into some of that incremental revenue. Either way, the gap that BYU will need to close could be closer to a couple million instead of the full $20 million that other schools are needing to come up with. If BYU is short a couple million, perhaps another increase in revenue in 2025 could cover the rest.

BYU's revenue is going to materially increase once again in 2025. BYU will receive a full share of media revenue starting in 2025. BYU has received only a partial share of Big 12 revenue in its first two seasons.

BYU's frugality during independence might have limited their competitiveness at the time. Ironically, that same financial discipline might be what enables BYU to be more competitive in the revenue share era. Unlike many other schools, BYU didn't announce plans to construct new facilities worth hundreds of millions and they ran a very lean department. It must have been tempting to spend more aggressively to keep up with other programs, but BYU didn't spend more than it could independently fund.

BYU has talked about projects like renovating Lavell Edwards Stadium. Perhaps projects like that will need to wait while BYU gets accustomed to athlete revenue sharing.

It's a new era of college athletics. To be competitive, BYU will need to be competitive in revenue sharing. On the surface, it appears that BYU will be able to play ball.

A few of BYU's Big 12 peers, like TCU, have already pledged to full participate in athlete revenue sharing. Former BYU AD Tom Holmoe said BYU would try its "very best" to share the full $20.5M with its athletes.

In an interview with John Kurtz at Big 12 Media Days last year, BYU director of athletics Tom Holmoe said BYU would "do our very best to get there" when asked if BYU would fully participate in revenue sharing. "I think that every team, especially the power autonomy conferences, are saying that [they will fully participate in athlete revenue sharing]. I'll believe it when I see it," Holmoe said. "I think each team will have to go through that first year and maybe the second year of transition. I figure for BYU, we'll do our very best to get there."