College Athletics – Legislative & Regulatory Changes?

[jdoggivjc]

I personally don't have any issue with Congress removing the non-profit and tax-exempt status from college athletics, for the reasons that athletic departments are run with the specific intention to generate the largest amounts of profits possible (which flies in the face of non-profit organizations), as well as I'm not convinced that donations to athletic departments should show up on a person's 1040s anyway. What I do take issue to is Congress sticking its nose into how the BCS is operated and legislating changes to it because it's not fair to teams from the MAC and Sun Belt who have zero chance of ever making it to the BCS.

Do I think the BCS needs to be reformed to be more "fair"? At the very least, especially to the MWC and maybe to the WAC, who arguably deserve auto bids. I personally would prefer to see a playoff of some kind at the FBS level. But that being said, neither is it Congress' responsibility nor do they have the right to interfere with the BCS.

 

[Clark]

The problem with taxing revenue rather than profits is that like sales taxes it would essentially be a regressive tax. For example, it's much harder on Northwestern to pay taxes on the 23 million they get from the tv network than it would be for Ohio State. Even using unequal revenue sharing, it's still harder for ISU to pay taxes on 10 milion than it is for Texas to pay on 20 million.

So IMO if you're going to tax the system, it needs to be on profits. And I'd be surprised if any athletic dept if forced to pay taxes, couldn't get down to zero income.

 

[SCNCY]

The problem with taxing revenue rather than profits is that like sales taxes it would essentially be a regressive tax. For example, it's much harder on Northwestern to pay taxes on the 23 million they get from the tv network than it would be for Ohio State. Even using unequal revenue sharing, it's still harder for ISU to pay taxes on 10 milion than it is for Texas to pay on 20 million.

So IMO if you're going to tax the system, it needs to be on profits. And I'd be surprised if any athletic dept if forced to pay taxes, couldn't get down to zero income.

But there won't be any profits. If a team has extra money left over, they are going to find a way to spend the money, like buying new weight equipment every year and buying more stuff that essentially they don't need.

 

[PGreen ISU '92]

TV revenue is currently given to the conference and then distributed to each member instituion. In the case of the $15 Billion SEC/CBS contract you could tax the money at X% and then distibute it to the member institutions. The universities would still pay no taxes. Some of the proceeds could then be used to scrap the NCAA and come up with a brand new regulatory body with independent rule making authority and subpoena power.

 

[Clark]

But there won't be any profits. If a team has extra money left over, they are going to find a way to spend the money, like buying new weight equipment every year and buying more stuff that essentially they don't need.

exactly, which is why it won't happen.

So you've got two choices:

1) do nothing

2) enact a tax that hurts smaller programs more than the larger ones.

 

[PGreen ISU '92]

But there won't be any profits. If a team has extra money left over, they are going to find a way to spend the money, like buying new weight equipment every year and buying more stuff that essentially they don't need.

This is why a tax on athletic departments with revenue over X dollars would be a good idea. There needs to be an end to the "Arms Race." The sad thing is that despite record TV deals and all-time high revenues, only 12 Athletic Departments were profitable last year. There is a growing separation between the ultra elite programs and the rest of the pack.

 

[Clark]

TV revenue is currently given to the conference and then distributed to each member instituion. In the case of the $15 Billion SEC/CBS contract you could tax the money at X% and then distibute it to the member institutions. The universities would still pay no taxes. Some of the proceeds could then be used to scrap the NCAA and come up with a brand new regulatory body with independent rule making authority and subpoena power.

I see. This might work, but it's still regressive in that the lower revenue hurts the smaller schools more than the bigger ones. I think Pollard said that TV revenue makes up about 60% of ISU's revenue. What is it at Texas? 20%? So ISU would be paying (essentially, whether or not they actually paid or the conference paid it is irrelevant) on 60% of their revenue while Texas would be paying on 20% of theirs.

 

[simply1]

The problem with taxing revenue rather than profits is that like sales taxes it would essentially be a regressive tax. For example, it's much harder on Northwestern to pay taxes on the 23 million they get from the tv network than it would be for Ohio State. Even using unequal revenue sharing, it's still harder for ISU to pay taxes on 10 milion than it is for Texas to pay on 20 million.

So IMO if you're going to tax the system, it needs to be on profits. And I'd be surprised if any athletic dept if forced to pay taxes, couldn't get down to zero income.

Why couldn't there be tax brackets?

 

[Stormin]

I see. This might work, but it's still regressive in that the lower revenue hurts the smaller schools more than the bigger ones. I think Pollard said that TV revenue makes up about 60% of ISU's revenue. What is it at Texas? 20%? So ISU would be paying (essentially, whether or not they actually paid or the conference paid it is irrelevant) on 60% of their revenue while Texas would be paying on 20% of theirs.

But I have been told that the "Flat" Tax is a "Fair" Tax. Evidently not?

 

[BryceC]

If your going to go the Taxing path, this is how I think it should work

All revenue that is used for paying tuition, books, and other academic things for student athletes are not taxable. All other revenue is taxable. So you would take your total revenue, and subtract it from your academic costs of student athletes, the left over would be your taxable amount. Donations are not taxable.

If anything happens I could see this working the best. I am someone that thinks revenues need to be taxed for TV revenue. That is simply pure profit driven cash. However I don't think the federal government should be the one to tax it, I would like to see each state tax them at the same level and that money flow to their departments of education.

The Federal government should not be involved in college athletics in any way, shape, or form and I reject any proposal that they get involved immediately. Any sane person would do the same.

 

[simply1]

But I have been told that the "Flat" Tax is a "Fair" Tax. Evidently not?

Flat tax still excludes low incomes..

 

[SCNCY]

If anything happens I could see this working the best. I am someone that thinks revenues need to be taxed for TV revenue. That is simply pure profit driven cash. However I don't think the federal government should be the one to tax it, I would like to see each state tax them at the same level and that money flow to their departments of education.

The Federal government should not be involved in college athletics in any way, shape, or form and I reject any proposal that they get involved immediately. Any sane person would do the same.

The problem with having the states tax it is that states where the local government is interested in college sports, like Texas would/could have different laws than that of Iowa. The Federal government would need to tax it for it to be fair for everyone. I am all for the taxes going to the general college fund that is distributed from the federal government.

 

[simply1]

If anything happens I could see this working the best. I am someone that thinks revenues need to be taxed for TV revenue. That is simply pure profit driven cash. However I don't think the federal government should be the one to tax it, I would like to see each state tax them at the same level and that money flow to their departments of education.

The Federal government should not be involved in college athletics in any way, shape, or form and I reject any proposal that they get involved immediately. Any sane person would do the same.

Yeah, that's a great way to get re-elected in state. No way they would be set at the same level. Plus, if you're not non profit, you don't get to pick which taxes you pay.

 

[Clark]

Why couldn't there be tax brackets?

tax brackets are a big pain in the rear but yeah I guess so. If it's one thing the IRS does well, it's complicate things.:wink:

But I have been told that the "Flat" Tax is a "Fair" Tax. Evidently not?

:biglaugh: yeah I've heard the same things. But if I continue, I fear this thread will be banished to the cave.

 

[Clone9]

I agree tax-exempt status should be revisited.

In addition, the NCAA could put a "luxury tax" on athletic departments that get over a certain amount of revenue. This would even the playing field (a little), and would prevent government involvement - which I would like to avoid if for no other reason than to avoid hearing representatives ranting about how their school got screwed.

 

[JUKEBOX]

no government involvment please

 

[Clark]

If anything happens I could see this working the best. I am someone that thinks revenues need to be taxed for TV revenue. That is simply pure profit driven cash. However I don't think the federal government should be the one to tax it, I would like to see each state tax them at the same level and that money flow to their departments of education.

The Federal government should not be involved in college athletics in any way, shape, or form and I reject any proposal that they get involved immediately. Any sane person would do the same.

Whether it's the federal government or state governement, I'd be fine with it as long as the schools are allowed to offset the income by giving portions of it to the schools themselves.

For example:

ISU makes 15 million in tv revenue

They donate/transfer 10 million of that into the schools general fund

they pay tax on the remaining 5 million.


I believe reimbursing the general fund for athletic scholarships should be an allowable deduction (treated as donation to general fund).

 

[simply1]

One way to stop this is for the conferences and universities to actually act like non-profits. It's hard to say Texas is operating like a non-profit, while ND gives a good chunk of money to the university from the NBC contract.

If it's going to be all about money, then I'm sorry, you're not a legitimate non-profit.

 

[CyCy]

The people who are donating big sums of money to college athletic departments (and getting tax deductions for doing so) are probably the same people who are donating money to congress. Therefore nothing will change.

There might be a few politicians who will do some fake saber rattling on an election year, but that's about all.

 

[simply1]

I think Grassley would have some power to do it, and probably help his re-election chances given his spin on the super conferences and Iowa State precarious position. It's one of his pet topics.