Hamill: Rethinking taxes in big-time college sports

As we move toward another 12-team college football playoff, there are both old-time blue bloods and a few newcomers represented.

A few of these programs have experienced major turnarounds. This is often due to new players arriving on campus.

Football and men’s basketball, the two major sources of revenue for college athletics, do not resemble the game of even 20 years ago.

Even the “non-revenue” sports have seen major shifts in the top schools. And this is not perplexing.

The change is money. Who has it, how much they have, and how effective they are in spreading the wealth around.

Fifty years ago, college coaches in any sport did not become rich. Players could receive limited benefits related to their educational experience.

First, the coaches started to become rich. Then the stadiums started to grow in seats and luxury appointments.

Players found the weight rooms and locker rooms increasingly professional in experience.

But players were locked out of the money game. We were told this was fair — they were students who also participated in athletics.

With the growth of television packages, advertising revenues, coach salaries, seat licenses and so on, the myth of the student-athlete began to wane.

For the major teams in the revenue sports, money did not seem to be an object. If you had to ask what that “special” non-roster coach cost, you couldn’t afford him.

Yes, money was not an object. Oh, except for the players. They wanted some of the money. First, they were accused of being greedy.

Then they were accused of being disloyal. The NCAA painted a picture from a 1930s Marx Brothers movie.

Players could get a sweater and a letter jacket and play for dear old State or Tech in the big game. Maybe see how many of them would fit into a phone booth.

My uncle was a fan of Notre Dame in the radio days. His dogs were all named Gipper.

Loyalty to school led to “Win one for the Gipper.” Loyalty to the team in the face of racial animus led to “We are Penn State.”

Coach James Franklin won over 100 games in his first 11 seasons at Penn State. Three bad losses in 2025 and he is no longer part of the “we” in Penn State.

This is not a Marx Brothers movie anymore. Life marches on. But in the face of all these changes, why is a major college athletics program tax-exempt?

The story was — I say was — that the athletics were part of the university experience. It was all wrapped up in the school’s tax-exempt purpose.

Sen. Maria Cantwell, a Washington Democrat, sits on the Finance Committee. That’s the committee that writes tax laws.

On Nov. 17, Sen. Cantwell wrote to the Joint Committee on Taxation to ask for an analysis of policy issues surrounding the new college athletics world.

Sen. Cantwell asked for answers to five key issues. The first: What are the implications of denying tax-exempt status to the NCAA, member institutions and the athletic conferences?

Second: What are the implications for the university of subjecting athletic income to unrelated business taxable income rules?

Third: Is it necessary for Congress to enact legislation holding that name, image and likeness, or NIL, collectives are not tax-exempt organizations?

Fourth: Can Congress enact legislation that creates financial penalties for excessive coach compensation (Section 4960 has a 21% excise tax) or buyouts?

Fifth: Should Congress get involved in the tax treatment of NIL payments, including the classification of athletes as employees or independent contractors?

Sen. Cantwell suggests that Congress must be proactive in these areas. The issues are important, are growing and are unsettled.

Louisiana State University seems to be on the hook for $54 million as a buyout to their former football coach. LSU has already spent $43 million on coach buyouts in the last 10 years.

LSU is currently under a campus-wide hiring freeze due to funding cutbacks. I suppose this meant they were unable to hire a new football coach, but they did.

Whoa, sorry, I had to pick myself off the floor at my last sentence. It’s sad when you laugh at your own jokes.

LSU is a tax-exempt organization. Does LSU’s athletic department, or the Southeastern Conference it belongs to, also serve a proper tax-exempt purpose? Maybe we should decide.