The rise of College Sports Inc. didn’t happen by accident. Administrators at many universities have allowed athletic departments to operate independently, like stand-alone entertainment divisions. They have separate budgets, negotiate their own TV deals and, in some cases, employ hundreds of coaches and staff. And as long as they continue to collect ever-larger sums from ticket sales, boosters and television, who is going to tell them to spend less?
Another key element fueling the arms race is the increasingly indefensible tax treatment of sports revenues. Decades ago ”” before the lucrative television contracts, Internet marketing, Nike sponsorships and luxury boxes ”” Congress essentially exempted colleges from paying taxes on their sports income. The legislators’ reasoning now appears shockingly quaint: that participation in college sports builds character and is an important component of the larger college experience.
Many booster clubs are recognized as charities under the federal tax code. At Florida and Georgia, to name just two universities, the athletic departments are set up as charities.