Madeline had previously posted an interesting query about the economics and tax implications of (gulp) college football. It’ worth another look in light of this recent post by DevilGrad on a similar issue. There’s even more analysis here.
The real question is “Why is a multi-million dollar business, which is not effectively related to a charitable purpose, exempt from federal taxation?”
Okay, an argument can be made that football is related to a charitable purpose… You can claim that the revenue from football (and other college sports) is used to provide an education for its athletes. Additionally, the NCAA boasts its owns claims to tax-exempt status by stating that “95 percent of its money is returned to individual athletic programs in the form of payments and services. That helps fund the entire athletic department, including its lower-profile sports.” Athletics is, no question, a huge part of the collegiate experience – even at an all-women’s college with a low profile athletic program like mine. But what if it becomes bigger than the college itself?
The NCAA is, according to many reports, not worried about the inquiries into its status. The IRS makes that decision. And, the IRS Commissioner is not a grad of Notre Dame, Duke, UNC, PSU or other sports power-house. Mark Everson counts Yale and NYU as his alma maters. So, relying on sentiment about college sports (allegedly one of the NCAA’s aces in the hole) is not enough…
My guess is that this is an empty gesture – but the last few years of IRS regulation and Congress have taught me not to trust my “guesses” –
The NCAA is sort of the UN of college sports – they serve as the connective body for thousands for sports programs, from the biggest and richest to the smallest – They coordinate the post season tournaments and govern the overall ethics of collegiate sports. On the surface, it would appear that it is a completely altruistic venture – but when you look at the “numbers” you realize that they are dealing with a lot of revenue. The salary of their top guy ($800,000/year) is enough to give you pause.
This comes in the wake of changes to the game of college football (perhaps what the lawmakers are truly irked by) – Rules regarding the time keeping (essentially making the games shorter and thereby more attractive to tv audiences with more time for commercials) and the addition of a 12th game to the regular season (eliminating the bye week for many programs – which, typically is used for student-athletes to “catch up” in school) have come under much scrutiny /ridicule and continued speculation that it’s just “all about money”.