New at Reason

January 4, 2007

Aaron Steinberg ponders the NCAA's non-profit status.

Comments

|1.4.07 @ 7:59AM|#

Spelling correction:

s/you'll nrbrt take the profit/you'll never take the profit/

|1.4.07 @ 8:49AM|#

NCAA football and basketball had better be major cash-flow generators, as they're expected to subsidize all of those other sports that nobody cares enough to watch, like bowling, cross country, fencing, field hockey, gymnastics, lacrosse, rifle, rowing, skiing, swimming, and water polo.

Guy Montag|1.4.07 @ 8:51AM|#

If no other part of a particular university is taxed then the athletic department should not be singled out for special treatment. And I am NO FAN of the athletic departments.

All sorts of departments make gobs of money just like Defense contracting and Financial research firms do, but the Defense Contractors get taxed, the universities don't. Added bonus for the Socialists, er, schools: labor (students) paying to work for them.

Of course I did not RTFA, I transported over here from /.

|1.4.07 @ 8:57AM|#

Congress moves 10x faster on anything when the potential for new taxes exists.

|1.4.07 @ 9:01AM|#

This is just a symptom of a larger problem, which is that charities are tax exempt. Full Disclosure: I'm a professional taxman, and President of a non-profit.

Whether it is the NCAA selling college sports, or the local YMCA selling gym membership, they are in business, competing with other businesses, and laundering their tax exemptions. I suppose the solution is to subject all non-profits to tax. The truly non-profits will have nothing to tax, and would not be affected.

Rhywun|1.4.07 @ 9:05AM|#

If no other part of a particular university is taxed then the athletic department should not be singled out for special treatment.

Then the obvious solution is to divorce athletics from schools--like, oh, every other country in the world. As if that'll ever happen. Even schools with negligible athletic departments like the one I attended put much of their money and most of their publicity into sports, trying to emulate the "big guys". It's disgusting.

Guy Montag|1.4.07 @ 9:35AM|#

This is just a symptom of a larger problem, which is that charities are tax exempt.

That is one of the items I bring up when the politicians in DC start griping that they have a lot of tax exempt organizations lowering their tax base. My response is to stop tax exempting them.

Not sure if local governments are required to exempt them or not, but that is another issue, they should not be required to honor federal tax exemptions, it should be a local choice.

|1.4.07 @ 10:02AM|#

I hope Coach Saban proves he's worth every penny of his 32 million. Successful coaches pull in fortunes for athletic departments. If congress insists on enforcing their silly title 9 requirements they should let the major sports earn as much as possible.

|1.4.07 @ 10:17AM|#

"NCAA spokesman Erik Christianson told the Indianapolis Star that when it comes to non-profits, it doesn't matter how much money you take in; it only matters how you spend it."

And you should see the fabulous new headquarters facility they spent their money on in Indianapolis (winner of the "bidding war" for the NCAA's relocation).

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"The truly non-profits will have nothing to tax, and would not be affected."

What a novel concept; of course, it all depends on one's definition of "profit." One could, if one were a rent-seeking Congressman (as if any other type exists), attempt to create a definition of "non-profit enterprise" based on the ratio of administrative expenses and overhead to donation revenue. Then, step back, and let the gaming begin!

Robert|1.4.07 @ 10:30AM|#

This came on the same day I was going to write an article on the subject and post it to Delphi's single wing forum -- not that I haven't written about it several times before.

It was Wally Olson who explained this to me first. I'd already had a beef against varsity sports vs. independent amateur, semi-pro, and pro sports, but he explained the tax advantage to me. It's worse than Steinberg's article makes it out as. The problem isn't with amateur sports per se. You can play amateur sports tax-free, and it's not hard to set up sports clubs that have no tax liability. However, educational institutions have 501(c)(3) tax exempt status, meaning that not only are their monetary gains (paid out however) not taxable, but also you get schedule A-B deductions for donations to them. That is, they capture a tax-free revenue stream.

So a school's athletic program can not only take in $ via sales for spectator purposes, they can also get income tax deductible donations from alumni, etc.

Think of all the resources they've tied up that could be more efficiently deployed in club sports, whether associated with or independent of educational institutions, and whether non-profit or for-profit. I'm particularly a fan of minor league football, American & rugby, men's & women's, and even children's, and that field (heh) is starved for resources by competition with varsity (and JV) sports, which are supported partly by taxes (high school level) and partly by tax exempt status (college, mostly).

NCAA's & NAIA's rules of eligibility impose enormous inefficiencies on the use of talent which in some cases could get paid and in other cases have to pay out less. That is, if you could join financially viable teams without satisfying academic requirements and being automatically kicked out after a certain number of years, if you were good you could profit more, and if you were not so good it wouldn't cost you so much for club membership.

|1.4.07 @ 11:31AM|#

"as they're expected to subsidize all of those other sports that nobody cares enough to watch, like bowling, cross country, fencing, field hockey, gymnastics, lacrosse, rifle, rowing, skiing, swimming, and water polo."

pardon me getting all protective of my niche sport here - but the ncaa lax championships over memorial day weekend draw more spectators than any other college sport championship other than football, basketball final 4, and i think the college world series. last i checked the event filled up the stadium in baltimore where the ravens play - whatever it's called.

and many lax schools have better lax programs than football programs so i think the subsidy may go the other direction from time to time.

just sayin

further, i'd also be curious to what extent booster contributions actually account for athetic budgets. i know a lot of people get pissed when they see a school building large athletic facilities - but lets face it, most alumni want to see a good football stadium than a new academic hall.