Sure, $500M TV Contracts Are All About the Non-Profit Status

This should be interesting to follow over the next few weeks:


NCAA’s tax-exempt status questioned

Congress is putting the NCAA on the defensive, asking the association — which generates more than half a billion dollars annually — to justify its tax-exempt status.

In a sharply worded letter to NCAA President Myles Brand, the chairman of the House Ways and Means Committee points to the lucrative television contract, coaches’ escalating salaries and schools’ “state-of-the-art” facilities, and questions college athletics’ connection to higher education.

“Most of the activities undertaken by educational organizations clearly further their (tax) exempt purpose,” Rep. Bill Thomas, R-Calif., writes. “The exempt purpose of intercollegiate athletics, however, is less apparent, particularly in the context of major college football and men’s basketball programs.” He asks for a response from the NCAA by Oct. 30.

The request escalates what has been a low-key congressional review of the association’s tax status in conjunction with a two-year look at not-for-profits in general. Thomas’ committee has talked informally with former Michigan president James Duderstadt and Auburn sociology professor and academic fraud whistle-blower Jim Gundlach, among others.

Spokesman Erik Christianson says the NCAA disputes the “underlying assertion that having not-for-profit status is linked to the amount of revenue that an organization generates.”

The NCAA’s projected 2006-07 budget anticipates nearly $563 million in revenue, including $503 million from its TV contract with CBS. Some $332 million is distributed to member leagues and schools, about 60% of that through student-athlete welfare, academic-enhancement and other funds.


The mere fact that a college athlete from the 1940’s — or even the 1970’s — wouldn’t recognize today’s big bucks NCAA ought to clue us in at least a little bit. I don’t know or understand the rules for tax-exempt status, and I don’t care about them either.

I do know that when a school like Duke, which graduates nearly all of its student-athletes, is lauded as an example to shoot for, instead of the norm, we have a problem.


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