College athletic programs get big lumps of coal in GOP tax plan
In millions of American homes, mine included, families are sitting down right about now to enjoy Christmas dinner, with gifts from earlier in the day, nestled under the tree.
But, in the offices of more than a few sports executives, visions of something other than sugarplums are dancing in their heads.
Indeed, according to the USA Today, some of the nation’s biggest college athletic programs will have to make do with a lot less, thanks to the tax reform package passed last week.
Assuming President Trump signs the GOP-sponsored bill – and there’s no reason to think he won’t – many schools will have to dig down and pay more for big money coaches and athletic directors.
According to the USA Today article, starting next Monday, colleges and other non-profit organizations will have to pay a 21 percent excise tax on annual compensation above $1 million paid to any of that organization’s five highest paid employees.
The University of Alabama, for instance, will have to pay a penalty of at least $1.2 million to cover the more than $7 million in base salary that it pays to football coach Nick Saban.
Texas A&M will have to shell out more ducats to cover the salary of new football coach Jimbo Fisher, who fled the meager $5.7 million he was making at Florida State, for a 10-year deal in College Station that will net him a reported $75 million.
And while, locally, the University of Maryland is ranked only 47th in terms of compensation to its football coach, D.J. Durkin, it does pay him nearly $2.5 million a year. And that’s on top of the $2.5 million Maryland pays annually to its men’s basketball coach Mark Turgeon.
Since both Durkin and Turgeon are almost certainly among the five highest paid Maryland employees, it would appear that someone at College Park is going to have to cough up some cash.
In all, the USA Today article estimates that 65 public colleges and universities will have to shell out $30 million in this new tax just to cover football coaches.
The bill also changes the taxation of income for unrelated businesses. In an athletic context, that could mean more taxes on things like a university’s golf course, sports camps run by coaches and sports medicine and physical therapy facilities that are open to the public.
Many of these costs could be borne by big money donors, who use their purchases of tickets and the wining and dining of clients during games as business expenses and, thus, tax deductions.
But the bill will eliminate those deductions and some schools are already encouraging donors to pony up before next Monday to take full advantage.
Look, there’s clearly a discussion to be held about the wisdom and the ethics of colleges and universities paying out millions to non-classroom employees.
But in the real world, the discussion is more about who will foot the bill for the largesse of college athletic departments.
And that lump of coal will likely end up in the stockings of students, through higher fees, and taxpayers.
God bless us, everyone!
And that’s how I see it for this week.