Daily Archives: January 12, 2019

That’ll show ’em.

Remember when Congress passed that bill sticking it to schools and other non-profits paying big salaries to certain folks (like coaches and athletic directors)?  How’s that working out?

However, while many athletics departments are now facing a substantial new expense, there also are schools that employ some of college sports’ highest-paid coaches and will not have to pay, according to newly issued guidance from the Treasury Department and the Internal Revenue Service and the schools’ assertions of their federal tax-exempt status through documents posted on their websites and statements to USA TODAY Sports from school spokespeople.

The excise-tax provision was supposed to cover all non-profit organizations, imposing a 21% levy on compensation above $1 million — including bonuses — that goes to any of their five highest-paid employees in a year.

The guidance means that the provision has created three groups of schools: Those that clearly will have to pay the tax; those that can claim they won’t have to pay; and those that currently have to pay, but might have the ability change their status.

 ►Private schools and public schools carrying one type of federal tax-exempt status clearly will have to pay. For example, Duke faces a significant tab based just on men’s basketball coach Mike Krzyzewski’s pay, who has made more than $5 million for years, according to the school’s federal tax filings.

 ►Other public schools — including Texas, Texas A&M, Clemson, Oregon, Minnesota and Houston — can claim they will not have to pay because they assert that they are government units that have federal tax immunity without holding any other tax-exempt status. Whether they ultimately will take this position remains to be seen. If Texas A&M does, it would save close to $1.4 million related just to the compensation of football coach Jimbo Fisher, whose basic annual pay is $7.5 million.

 ►Public schools that have another type of federal tax-exempt status are currently subject to the excise tax, but the new guidance also says these schools may voluntarily relinquish that status, although doing so might still leave them subject to the excise tax. Alabama, Michigan, UCLA and at least a dozen other public schools in Power Five conferences are in this group, according to documents posted on the schools’ websites. Alabama football coach Nick Saban’s $8.3 million in basic compensation, plus $875,000 in bonuses, for this season means the school faces more than $1.7 million in excise tax for him alone.

Hey, that sounds fair.

“You’ve got a major competitive imbalance here,” said Roger Denny, an executive compensation attorney with the law firm Spence Fane LLP who assists USA TODAY Sports with its annual compilation and analyses of college coaches’ compensation. “You have schools from the same states and the same conferences that are going after the same recruits, and you have an artificial restraint that affects hiring decisions at the highest level of those programs. …

“And there’s a trickle-down effect to that: You have a difference of $500,000 here, $1 million there (in the cost of paying a coach and the excise tax) and that can be the difference in being able to go after the best coordinator in the game or hiring a football staff full of analysts as some schools have done, or installing a camera system in your gym to help the basketball teams with video study, or putting WiFi in your stadium.”

Aw, don’t worry.  The guy who screwed the draft up in the first place thinks he’s on the mother.

But the new Treasury/IRS guidance doesn’t take into account Congressional intent. It’s based on what the law actually says.

“The positions reflected in this notice constitute a good faith, reasonable interpretation of the statute,” the document says.

Former House Ways and Mean Committee chair Kevin Brady, R-Tex.. has circulated a draft of a bill that would make “technical and clerical corrections” to the tax-law changes, including one designed to make the excise tax applicable to all public colleges and universities.

That “former” status might be something of a road block, Congressman.  But you do you while TAMU keeps its money.

13 Comments

Filed under It's Just Bidness, Political Wankery

We’re cuckoo for Notre Dame tix.

Crazy, man, crazy:

Stunning, for sure.  For all the sneering we do about Notre Dame being overrated these days, our wallets seem to be telling another story.

Meanwhile, Greg McGarity wishes there was someway B-M could tap into that sweet, sweet secondary market for itself.

56 Comments

Filed under Georgia Football, Notre Dame's Faint Echoes