NCAA tax status in question
TEXT OF INTERVIEW
MARK AUSTIN THOMAS: A Congressional committee has sent a letter to the president of the National Collegiate Athletic Association. The letter raises questions about whether the NCAA deserves the education-based tax exemption it currently receives. David Carter is the Executive Director of the USC Sports Business Institute. I asked him how playing college sports furthers the educational purpose of NCAA-member schools?
DAVID CARTER: Well, that’s precisely what the Committee on Ways and Means wants to figure out. I think they’re wrestling with the issue of, is the NCAA truly in the core business of educating students or are they pushing a little bit too far maybe in terms of exploitation. And so I think that’s what they’re really looking at. But you have to think about the fact, there are 1,000 schools that make up the NCAA. Most of them have consistently demonstrated the right balance between academics and athletics, and again we only hear about the big money conferences, the Michigans, the Tennessees, the USCs. But most of these schools, 90 percent of them, are under the radar doing the right things and so there certainly is the right place for it.
THOMAS: The letter points out the NCAA has a $6 billion – with a B – TV and marketing contract for college basketball. With that kind of revenue, why does it feel it should receive tax exempt status?
CARTER: Well I don’t know that there’s any connection between revenue generation and the need for tax exemption. I don’t think those two things go together. I think where you run into trouble is if the revenue that you generate isn’t going to your core mission for which you were granted the tax exempt status. If you look at the money coming in for basketball, 85 percent of the NCAA’s budget comes from the basketball tournament and they use a lot of that money in the end to then redistribute that to member institutions, including a lot of these smaller schools that again we don’t hear too much about.
THOMAS: Would you say that chances are slim and none that Congress would reverse decades of IRS tax policy here?
CARTER: Well they probably are slim and none. You have to understand the high-level connections between university administrations and the politicians and just really core relationships that are in place and I don’t think they really want to undertake any wholesale reform. You add to that the fact that corporate sponsors also aren’t inclined to want to move forward with a lot of reform. But having said that, the NCAA, college sports in general, really does have to begin to, to continue I guess, to look at how it has balanced academics and athletics. And they’ve gotta do it in a way that really helps matriculate students and protect the ongoing issues that are very important like gender equity. So I think there is some reform coming, exactly how it’s positioned with these core constituencies though is gonna be tough to balance.
THOMAS: How did college sports arrive at this state of affairs? How did we get here?
CARTER: Well I think it’s been a steady progression over the last 20 years or so, mostly linked to the advent of big-time college athletics on television. As that has happened, you’ve seen schools believing that they can leverage that to build student bodies, to generate more money from marketing. And corporate sponsors have also wanted to jump on the bandwagon and take advantage of the added megaphone that college athletics gives them from a marketing standpoint. So it’s been steady over the last 20 years, and I think that where we find ourselves today is that everybody attached to college sports seems to want to be able to find a way to make money from it.
THOMAS: David Carter is Executive Director of the USC Sports Business Institute. And in Los Angeles, I’m Mark Austin Thomas. Thanks for joining us. Have a great day.
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