I’ve taken it as a given that the NCAA and its member schools lobby Congress for an antitrust exemption and will necessarily ratchet up the effort if the efforts of Kessler and others result in an unfavorable court ruling regarding amateurism. While my opinion on that hasn’t changed, I’m starting to question how successful that effort will be. It’s one thing to assume that Congress favors the wealthy and powerful; it’s another to ignore what seem to be several trends that make the NCAA’s cause a harder sell than it used to be. (h/t)
Television revenues and corporate sponsorship are not taxed
In the words of Mike McIntire who writes extensively on the subject for The New York Times, “…college sports remain largely tax exempt, the beneficiary of a public subsidy that is increasingly difficult to defend.” This will only be more “difficult to defend” in the future.
Scholarships not being taxed
College sports scholarships are easily worth six figures and more thanks to the “extraordinary benefits.” These are not taxed, which could be around $40,000.00 if the IRS and state authorities came in heavy. Expect that to happen if players are paid or allowed to profit from images or sponsorships. With the average college student in the United States graduating nearly $40,000.00 in debt with much of that going to fees to support athletics, it is not difficult to imagine support for scholarship athletes to be taxed, especially if they start receiving salaries.
There are still plenty of tax breaks for ticket purchases, facilities construction, and related areas. These are always targets in tax reforms. It was that was last year and it will be in the future.
Salaries for administrators in non-profits
As little support there would be for athletic scholarships to not be taxed, there is even less for administrators at non-profits such as colleges and conferences having seven and eight-figure compensation packages. In a country that has seen massive change at the national level in elections in 2006, 2008, 2010, 2014, and 2016, do not expect much support to protect massive pay for higher-ups at non-profits.
Student loans to pay for athletic fees
At power five schools, more than $2 million in student fees goes to the athletics department, well over $100 million annually. The average college student graduates nearly $40,000.00 in debt. Obviously, much of that money borrowed that is subsidized by the American taxpayer goes to support college sports. Since attendance at colleges sporting events is falling, its tough to argue that every student is a fan. But all pay these fees at the schools that charge for it, and the average one graduates nearly $40,000.00 in debt.
For all the faux hand wringing over student-athletes suddenly faced with tax consequences over their compensation, it’s worth remembering that there are much bigger pots of money out there that can generate public outrage. Throw in current public concerns about the cost of college and it gets harder to see how schools can waltz into a Congressional hearing and expect tons of sympathy from legislators who will have plenty of targets over which to grandstand. That, in turn, begs the question of what sort of price the schools and the NCAA are willing to pay for the exemption. That’s not to say it won’t be a price that ultimately won’t be paid. You get the feeling it’ll be more expensive than Jim Delany and his buddies probably thought it would be at one time, though.