As professional and college sports continue to increase in popularity, the spending on major college athletic programs keeps soaring. At football powerhouses such as Florida, Ohio State, Alabama and Louisiana State Universities, head coaches receive more than $3.7 million a year in salary and compensation. With the rise in popularity, a tremendous increase in revenue follows from sources beyond ticket sales, such as the income from lucrative television contracts, sponsorships and luxury boxes.
Other colleges, whose athletic departments do not generate as much income, are subsidized at the expense of education. In balancing the competing claims of departments, colleges often fund their sports programs at the expense of academics. At public universities, some contributions from taxpayer dollars end up funding athletic programs. This means that money that could be spent on education gets diverted to pay for athletic programs.
College officials claim that to pay for less popular sports like volleyball and track, which generate significantly less revenue, they depend on their lucrative football and basketball programs. But this reasoning obscures particularly troubling facts. According to New York Times columnist Gilbert Gaul, colleges are exempt from paying taxes on their income from sports because colleges are considered nonprofit institutions. The justification used by legislators is absurd: Participation in college sports builds character and is an important component of the larger college experience.
Furthermore, at universities such as Florida and Georgia, the athletic departments are set up as ‘charities,” though a substantial portion of the money is spent on aspects such as coaches’ salaries and luxury boxes. These universities thus have access to tax-exempt financing when building ever-larger stadiums and arenas. This leads to a situation in which college sports programs that already generate millions of dollars in revenue receive even more money in the form of tax breaks.
What is even more absurd is that professional sports leagues like the National Football League and Major League Baseball claim to be nonprofit. Yet these leagues each earn billions of dollars annually through ticket sales, advertising contracts and merchandising, while team owners and top officials fly around in private jets. According to the Sports Business Journal, Roger Goodell, the commissioner of the NFL, earns a salary of $11.2 million per year, yet officially the NFL is a nonprofit organizationunder New York State law. MLB commissioner Bud Selig earned $18.35 million in 2007.
This preposterous nonprofit status results in the leagues not paying their fair share of taxes. Furthermore, professional sports teams have the audacity to seek taxpayer subsidies to help pay for the construction of stadiums. The potential tax revenue could be used to alleviate tax burdens on the middle and lower income families, as well as to subsidize social services such as education, health care and public utilities.
Moreover, both state and federal laws declare that nonprofit status cannot be used as a subterfuge to enrich individuals. But is this not exactly what the NFL and MLB are doing? Although they might want to conceal their true nature, ‘nonprofits” like the NFL and MLB are required by law to disclose their top executives’ pay, which is how we know the commissioners’ salary for the NFL and MLB. But the NFL has recently been lobbying Congress for an exemption from the disclosure requirement. To its credit, at least the National Basketball Association has the decency to be organized as a for-profit company, and pay its fair share of taxes.
I am not arguing against a free-market economy or entrepreneurship. Excessive taxes should not be levied on any party even the rich. But there is no reason that sports enterprises should receive revenue from special tax advantages, when there are true nonprofit organizations that depend on this money to provide needed services. In addition, some of the revenue generated by athletic departments at public universities should be used toward financial aid, enabling deserving students to earn the indispensable privilege of higher-education. Lastly, the NFL and the NBA should pay their fair share of taxes just like most other corporations.
Khan is a member of
the class of 2012.