Greg McGarity emphatically does not approve of this message.
South Carolina athletics is undoubtedly a business as it expects to both bring in and spend more than $120 million in the 2017-18 fiscal year. Revenues are expected to increase but so are expense in the upcoming year, according to athletics director Ray Tanner, who gave his expected budget to the Board of Trustees on Friday.
South Carolina has expected revenues of $121,852,857 the upcoming fiscal year and are expected to spend $102,900,953 and transfer $18,254,306 back to the University. [Emphasis added.]
Not a penny retained? Damn. Makes you wonder if Georgia would pursue a uniform policy for all SEC athletic departments about profit retention. Though I guess McGarity might settle for a state law…
Get The Picture 
Although I despise the Cocks a lot less without SOS, this is an athletic department I begrudgingly admire in terms of what they’ve accomplished the past few years. The highly competent AD has a clear vision of where he wants to take the various programs and has invested heavily in facilities and staff to get there. Their basketball and baseball programs are top tier and these are 3 of the big 4 revenue sports with football being the 4th. This is in a state with far less recruits and financial resources at their disposal than the State of Georgia/UGAA. Their Directors Cup ranking is typically worse (not by a lot) because they either don’t participate in certain sports or consciously invest more money in the big 4 sports and will live with mediocrity in the other sports, which is a trade-off many of us would accept.
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It’s getting to be time for the IRS to challenge the not for profit tax status of the athletic associations. If their business models can continue to stand under IRS audit and/or review, fine. If not, they should be paying taxes like every other for-profit business.
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You’ve said on hear plenty of times you’re an accountant, right? If so, i would expect you know that “non-profit” just means that the profits can’t insure to the benefit of any owners/shareholders? As long as the money is held for the benefit of the University (which our reserve fund is) which is itself a non-profit, 501(c)(3) educational institution, the excess revenue/surplus is not taxable as income.
I don’t think you want a regime where non-profits and 501(c)(3)’s could never run a surplus or have reserves.
All that being said, the stated reasons for the Athletic Association having such large reserves are, in my view, illegitimate, and a good portion of that money should have already gone to the University….
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Oh, I’m aware of that (not a tax guy, by the way). As a past board member for NFPs, I would expect that an organization absolutely should have adequate reserves and should be a good steward of what was contributed to them. My point is that with the media rights and the outside income from entities such as Nike, Under Armour, etc., these entities look a whole lot more like for-profit entities than not. The UGA AA looks a heck of a lot more like the Atlanta Falcons now than it does a traditional NFP.
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(speculation warning, not a non-profit expert). Agree in some parts, disagree in others. Where it gets murky from the standpoint of threatening 501c3 status is when/if McGarity is given raises or benefits that can be categorized as a quid pro quo (whether directly stated or not) for a healthy( balance sheet / reserve fund. Essentially, tying pay scale or other incentives to financial performance can (if not carefully done) be deemed to inure to the benefit of a stakeholder / shareholder. Basically, a backhanded stock dividend.
I’m sure the University has plenty of experts on it, but would agree that the optics are becoming FUBAR. In theory, if the whole system crashes down and kids from Russell and Creswell are playing on Herty field again, then so be it.
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“[T]he optics are FUBAR.”
That’s what may get the attention of the IRS especially with the NCAA and the P5 athletic associations. This may be one of the few situations where the court of public opinion may be with the IRS.
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The optics are indeed FUBAR, but as long as money is going back to University/held for the University’s ultimate benefit, and as long as officers/board members’ comp is not tied to revenue, surplus or growth, not much for IRS or Attorney General to do. (The Georgia Attorney General has ultimate oversight over Georgia non-profit corporations, such as the Association – I am sure we can all imagine how well an investigation would go over at election time….)
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This is what they ought to do with profit. If they don’t put it back into the department for things like facilities, they should use it for the good of the students. It should not be used to pay athletes
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If you believe that student-athletes shouldn’t be paid, do you think athletes should be able to get jobs or be able to profit on his/her name and likeness like any other student?
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First thing is get rid of athletics fees for all students.
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We’re OK fellas! so what our football, basketball, and baseball teams have done nothing but underachieve for the last handful of years… mens & womens track and our equestrian team are top notch 😉
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LOL, very true. Too bad Equestrian isn’t a recognized NCAA sport;-)
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