One of the most closely guarded secrets in the history of sports is about to be revealed: exactly how much does JoePa get paid?

The Pennsylvania Supreme Court has ruled that the Penn State University football coach’s salary must be made public. The request had initially been made by a newspaper (The Patriot-News in Harrisburg) to the State Employees’ Retirement System; employees enrolled in the system are covered by an open records law. The university had previously blocked attempts to make Paterno’s salary public.

Speculations run rampant about exactly how much Joe Paterno is paid for his role as head coach at Penn State University. He holds more bowl victories than any coach in history. He has won each of the major bowls, the Rose, Orange, Fiesta and Sugar Bowls, at least once.

Those numbers put him in a class all by himself – will it be reflected in his salary? And more importantly, what does it have to do with tax?

Plenty. As I reported previously, salaries for coaching collegiate sports outpace the salaries of college faculty. And the trend is continuing: the University of Alabama agreed to pay Nick Saban $4 million per year to coach their football team. In comparison, the average UA professor makes $108,000 and the average UA associate professor makes just under $75,000 (source – pdf). That’s a pretty wide discrepancy. And it’s worth noting that UA didn’t even crack the top 25 of the BCS for November.

Colleges are increasingly devoting more and more of their resources to raising money through sports programs since sports programs bring in astounding amounts of revenue. Those schools are, however, not paying tax on this money – ostensibly from entertainment revenue and not related to the college’s primary purpose (education) because most colleges and universities are de facto tax exempt.

Congress has conducted a ridiculously half-hearted inquiry into the tax-exempt status of colleges and universities in light of accusations that these institutions are not using funds for education and are instead focusing on paying coaches, building stadiums and selling tickets. Critics have focused on the frenzy to collect dollars on the backs of student athletes when many of student-athletes in top programs perform poorly in an academic setting; in that regard, those critics argue, NCAA sports programs are little more than pro-sport training camps. So far, no decision has been reached by Congress or the IRS with respect to the inquiry.

If Paterno’s salary is as high as some speculate (numbers that have been bandied about go as high as $5 million per year in straight salary, not including perks), it may well accelerate the inquiry into coaching salaries and the tax-exempt status of the NCAA and educational institutions. Of course, it could be revealed that he was paid $20 million per year and no one would really care until the end of January. It is, after all, bowl season.

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Author

Kelly Erb is a tax attorney and tax writer.

Comments

  1. It’s an interesting point – certainly some football coaches are paid extreme amounts (all so their teams can lose to Louisiana-Monroe and Navy) – but most college coaches are not. If you consider collegiate athletics as a whole – balancing out the amount of money a program like Penn State Football generates, it is not a “for profit” system – especially if you look at all of the programs that the NCAA “governs”. In my opinion, athletics is a part of college life and it is an integral part of a young person’s education – as participants and/or spectators.

    I have no idea what Coach Paterno’s salary is – and frankly, I don’t care. It’s either going to be modest, on par, or high. Regardless of what his numerical salary may be – it can never compensate what Coach Paterno has done for Penn State as an educational facility – He’s been at Penn State for over 50 years – we have really no way to estimate his contribution, because there is nothing to compare it to.

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