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It's time to tax the NCAA, too.


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March Madness is upon us. Although the focus will be on the heroics of players, the event is no longer just an athletic spectacle, it is big business: both for the NCAA, which sponsors the tournament, and now for the athletes, who can earn big bucks trading in on their name, image, and likeness.

As they ink their NIL deals, many athletes will go from being college students to being among the top 1% of taxpayers, which means they must pay income taxes on their earnings like the rest of us. Meanwhile, the NCAA will pocket upwards of $1.2 billion in TV revenues, ticket sales, and sponsorship deals — and pay zero taxes on that income.

If student athletes are taxed on their earnings, it’s time the NCAA should be taxed on theirs.  

Prior to the NCAA allowing NILs, the rap against March Madness (and college sports in general) was that the universities and organizing conferences were getting rich off lucrative TV contracts and corporate sponsorships. Meanwhile, the athletes — who are the show — weren’t paid and shared in none of the spoils.

To some degree, NILs have taken steam out of that argument. For example, USC guard Bronny James is said to have endorsement deals worth $5.9 million, and Iowa Hawkeye Caitlin Clark’s total deals are nearing $1 million. No one can begrudge their ability to cash in on their notoriety while they can. But there is still a major inequity in this multibillion-dollar business.

Unlike professional leagues like the NBA, which must pay income taxes on the revenues they earn from TV contracts, ticket sales, and licensing merchandise, universities and athletic conferences including the NCAA can pocket the same income tax-free because of their tax-exempt status under section 501(c)(3) of the Internal Revenue Code.


Charities and nonprofits are required to pay tax on income unrelated to their core mission to prevent them from engaging in business activities as a nonprofit. But lawmakers have carved college sports out of these laws under the theory that “the broadcasting of these events promotes various amateur sports, fosters widespread public interest ... and encourages public participation.” Therefore, TV revenues and licensing fees are related to their core mission.

Watching the Los Angeles Lakers compared to the USC Trojans may spark different emotions, but one would be hard-pressed to identify the differences in the presentation of the broadcast. As forensic accountant Serena Mornes reported, in 2022, more than 93% of the NCAA’s income came from March Madness ticket sales, merchandise, and TV broadcast rights. The NCAA received zero charitable donations.

So, she observed, “if one were to define the modern NCAA by its revenue sources, it would be described as a basketball tournament organization.”

One could go even further and say that the NCAA has become a sports and entertainment company. After operating expenses, the NCAA distributes about half of its income to member schools and other conferences, but this is no different than the revenue-sharing plans the NFL, NBA, and MLB have with their league members. The only difference is that the NCAA’s members are also 501(c)(3) tax-exempt organizations.

The NCAA is a small fish in a bigger tax-exempt sports pond. After digging through nonprofit form 990 tax returns, Mornes estimated that college athletics earned upwards of $13.6 billion in total revenue in 2022 through various channels and entities, more than any professional sports league other than the NFL.

Indeed, the College Football Playoff organization just signed a six-year $7.8 billion extension to their TV deal (worth $1.2 billion annually) to the 10 college conferences, plus Notre Dame, which own the CFP. The CFP is a limited liability corporation jointly owned by the members, an arrangement that conveniently hides the organization’s finances from public scrutiny. The legal entity passes any profits through to the universities tax-free who, in turn, pay no taxes on the profits.

The big professional sports leagues were once nonprofit organizations, but gave up their tax-exempt status after years of criticism. Parity suggests that the major college sports leagues do the same.

NIL income has turned student athletes into paid athletes; the line between college sports leagues and professional sports leagues is thinning. If student athletes are taxed on their earnings, the NCAA and its brethren should be taxed on theirs.


Agreed. The NCAA and it's member institutions should all be taxed.

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