The Day the Scholarship Died: Why College Sports Just Became a Business—And How Schools Better Catch Up
For over a century, the “student-athlete” label has allowed universities to live in a fantasy world—one where billion-dollar revenues, TV contracts, and stadium deals could exist without athletes being recognized as employees.
That world is ending. Fast.
With courts and labor boards inching ever closer to reclassifying athletes—starting with revenue-generating sports like football and men’s basketball—as employees, universities are waking up to a truth the NFL and Fortune 500 companies already live with:
Talent is expensive. Risk is real. And if you don’t have a plan, both can bankrupt you.
⸻
🏛️ From Campus to Corporation
Think about this: A 19-year-old wide receiver at a major D1 school suffers a torn ACL on national TV. Under current rules, he’s lucky if he gets an MRI, a redshirt, and a sympathetic tweet.
Under an employee framework? That same injury triggers:
• A workers’ comp claim
• Wage replacement while he recovers
• Lifetime impairment ratings that could lead to long-term payouts
• Potential mental health claims tied to loss of opportunity
This isn’t just a locker room issue anymore—it’s a HR and insurance bombshell.
⸻
🛡️ Football: The Billion-Dollar Liability
No sport embodies this shift more than college football.
It’s violent. It’s high-risk. And it’s almost impossible to insure affordably.
Even the NFL—arguably the most sophisticated sports entity on Earth—doesn’t buy traditional workers’ comp. They created their own captive insurance company in Bermuda to handle claims.
Why?
Because no insurer in their right mind wants to be on the hook for a league where 300-pound men sprint at each other for a living.
Now imagine you’re a university with 100+ unpaid “employees” doing that every Saturday.
⸻
💡 So, What’s the Move?
That’s where companies like Marsh and Mercer come in.
Together, they help Fortune 100 companies—and yes, global sports leagues—deal with exactly this kind of chaos. Here’s the playbook we’d call for colleges:
⸻
1. Build a Safety Net Before You Need It
Translation: Don’t wait until your quarterback files a workers’ comp claim.
Marsh helps institutions build insurance programs that aren’t just defensive—they’re strategic. That might mean setting up group captives between schools or using alternative risk financing to spread out big injury payouts.
⸻
2. Treat Athletes Like Talent, Not Tuition Recipients
Once athletes are employees, the scholarship isn’t a gift—it’s a starting point.
Mercer helps design total rewards packages like the ones you’d find at Nike or Goldman Sachs: benefits, retirement contributions, mental health support, and long-term disability coverage.
Yes, even for 20-year-olds with cleats and TikTok deals.
⸻
3. Reimagine Recruiting as a Human Capital Strategy
Forget booster dinners and facility tours—athletes (and their agents) will start asking:
• “What’s your workers’ comp structure?”
• “Do I get dental?”
• “Is my contract guaranteed if I get hurt?”
And if your school can’t answer confidently, the five-star talent goes elsewhere.
⸻
🎯 The Big Picture
This isn’t just about compliance—it’s about survival.
• Some schools will lead and become the Alabama/Georgia/USC of this new era.
• Others will downsize, cut sports, or fall behind.
• And a few—those who combine risk management with human capital expertise—will redefine what it means to be a college athletic powerhouse.
We don’t know exactly when the employee status ruling will become law. But make no mistake:
The scholarship era is dying. The employment era has already begun.
And in this new game, the winners will be the ones who understand the business—not just the scoreboard.