Revenue sharing is coming to college sports: What student-athletes can do to right now
Revenue sharing is finally on its way to college sports. But are student-athletes prepared to handle everything coming at them when it gets implemented in the next school year?
Earlier this May, a lengthy courtroom battle involving the NCAA and power conferences reached a $2.8 billion settlement that has already begun transforming the college sports landscape by introducing a revenue-sharing model.
It’s a massive step forward into a brighter future for collegiate sports. And things are moving fast with revenue sharing on the heels of colleges nationwide.
What does revenue sharing mean for college athletics?
Introducing revenue sharing will mean that a school’s athletic departments will be allowed to funnel up to 22% of their average annual revenue to pay student-athletes.
The ruling also means that college athletes will have more control over their contracts and earnings. Soon, incoming and current athletes can exercise more agency and transparency over their name, image, and likeness (NIL) compensation.
Since the ruling was made, schools will have the ability to pay out about $21 million per year to athletes, and this number can rise as revenues do over the next 10 years.
In sum: there will now be more ways for a college athlete to get paid. Compensation for student-athletes will thus include the revenue-sharing model, scholarships, and NIL payments.
Are student-athletes ready for when revenue sharing hits campuses?
While the news sets a positive precedent that college athletes should be paid for NIL opportunities without needing to go through so many hoops, it also brings with it a few anxieties. Particularly, are college athletes prepared to handle the barrage of new financial decisions they’ll face in the coming months?
More developments regarding this landmark decision are sure to become known, but in the meantime, here’s what student-athletes should do to stay informed, get ahead, and make the best decisions for themselves and their careers.
Four things college athletes can do to prepare for revenue sharing and NIL changes
If you’re a student-athlete, you may be feeling overwhelmed by the idea of taxes as a Big Bad that’ll drain your earnings. Don’t sweat it – that’s why we’re here! We’ll help you be in the know before revenue sharing is officially implemented into college sports and as NIL changes occur.
Below, we’ve outlined four things that every prospective and current college athlete can do to prepare themselves for this new financial frontier.
1. Prepare sooner than later to file your taxes
It’s important to know when you should file your taxes and take action as early as you can. While the official deadline to submit your taxes is April 15, 2025, you don’t want to find yourself trying to beat the buzzer at the last minute with this. It is imperative that you collect documents such as 10-99 forms and any bookkeeping you may have done throughout the year to help when you file. You should also shoot for an earlier deadline.
The reason for having an even earlier deadline ahead of April 15 is to leave room for any unexpected circumstances if they occur. More time may be required when working with tax professionals, or you may have additional items pop up that you'll have to review, like if your scholarship may be taxable or tax-deductible (more on this later.) Either way, it’s better to get things ready sooner and leave yourself ample time to make any changes before the federal deadline.
2. Use high-yield savings accounts to your advantage
A hack to grow your savings even faster with very little effort can be found in high-yield savings accounts. Having a high-yield savings account means you can get more cashback on top of your savings, thanks to these accounts having a higher annual percentage yield (APY) on the money that you deposit into them.
If you use a high-yield savings account, you can treat it like a standard savings account by either making regular deposits or leaving a decent chunk of cash in it. And that’s it – the cash will accrue from your account’s high-yield APY, and you can more easily focus on doing your thing.
Just keep in mind, you wouldn’t want to make withdrawals from your high-yield savings account too often, as there may be penalties depending on the bank you’ve created your account with. Scout Money Coaches will help you make the right decisions here.
3. Track your earnings, tax forms, and potential tax deductions
It’s wise to keep track of your income, tax files, and purchases. You might be wondering, What kind of purchases should I be tracking? Things like equipment, travel mileage, and event-related expenses may be tax-deductible. Knowing what might count as a deduction will help you keep more of your hard-earned cash when the time comes to file your taxes.
Remember how we mentioned scholarships may or may not qualify as a deduction? This is where you’ll want to refer to your contracts and any forms you receive from your school or organization to triple-check. Depending on the kind of award, it may be tax-exempt if it’s per the IRS’ definition of scholarships.
Be sure to keep your receipts to calculate your purchases and potential deductions more accurately. You can also seek guidance from tax professionals to learn more about what you can and can’t deduct.
4. Choose how you will file your taxes
There are different tax returns when you file as an individual or as a business entity, so make sure you know which applies most to you beforehand. You don’t want to start your return as an individual to later find out you should have filed as an LLC, or vice versa.
The tax forms you receive can help determine how you should file. For example, if you’re getting paid by your school or organization in wages with taxes withheld, it’ll be one less thing to worry about. But if you’re an independent contractor, LLC, or sole proprietor, you may want to set aside some earnings for your federal income tax. With Scout you can file directly on the app and that is important because you’ll need to report your NIL earnings, including non-cash compensation or benefits, as those also count as taxable income.
Together, we’re a dream team
There you have it! Now you have a few positive steps you can take in 2024 to set yourself up for the new NIL and RevShare era in college athletics. This is the best time to get ahead of the huge changes coming and take control of your finances. And you’re not alone – we’re right here with you to help manage your tax planning and financial success.
About Scout
Scout is a financial coaching platform that provides student-athletes with the knowledge and tools to facilitate personal financial success — from investing and saving to budgeting and tax planning. We work with individual athletes, college teams, and athletic programs to empower and protect students in the changing NIL landscape. Black-led and with a deep commitment to diversity, equity and inclusion, Scout is intentional about welcoming, educating, and guiding those from under-resourced and marginalized communities.
