A great advantage for big-time college athletics is that they are tax-exempt. From the NCAA to the athletic departments at Texas and Ohio State, they can reap the revenue and not pay taxes because they are part of educational systems.With the country in a recession, the national deficits rising and tax revenue declining, the U.S. Government has to find other revenue streams. The Congressional Budget Office (CBO), in a report, suggested looking into the commercial activities of collegiate athletic departments.
Senator Chuck Grassely (R-Iowa), who initially called for the CBO to investigate, at the very least would like to get some more transparency from the athletic departments around the country.
"The fact that congressional analysts had to rely on information collected by a major newspaper for source data highlights how little information is available about how these programs work. Given all the tax benefits involved, tight state budgets, and rising tuition despite the recession, it's pretty clear that Congress needs to engage and policymakers need to know more in order to act as responsible stewards of the tax policy that drives this fundraising and commercial activity. This report shows colleges receive tax benefits that aren't available to private businesses that engage in the same commercial activities. Colleges should explain how they use their commercial revenue to get the biggest bang for the buck in fulfillment of their educational mission."The CBO used a database compiled by the Indianapolis Star in its report.
This will ultimately come to nothing. Congress will not, in any way, change the tax exempt status of colleges and their athletic departments. There will be, at best, a public hearing where Senators and/or Representatives can sanctimoniously berate some college presidents and athletic directors.
The college presidents and athletic directors will feebly counter with claims of how the athletic departments and programs support non-revenue sports, give back to the universities, and how athletic activities further the character and development of students. Nothing will come out of it, though, after a few brief moments in the news cycle.
Why? Because there is no way fans and alumni -- specifically voters in each state -- would be willing to see anything hurt their own school's athletic programs.
Do you think a member of Congress from Alabama, Florida or Texas would support legislation that would remove the tax-exempt status of corporate sponsorships, royalties and other revenue streams for the football programs? What are the odds of support to tax that revenue from an Ohio or Michigan Congressman? Do you think an Indiana or Kentucky Congressman would do anything that could be perceived as hurting the basketball programs in their states?
Royalties from licensing, corporate sponsorship programs and the like are huge income producers for programs like the Crimson Tide, Gators, Seminoles, Longhorns, Buckeyes, Wolverines and many other programs.
Fans of major programs are savvy enough to know that the money advantages translates into being able to have higher budgets for paying coaches, facilities and recruiting. They are not going to support losing that advantage. The BCS conference schools are in 35 states. There is simply no way that there would be political support in Congress for minimal tax revenue gains.
