ESPN Behind Conference Roulette, Moves May Jeopardize NCAA Tax Exemption
Before I dive into the topic of the post, let me first say a word or two about the absence of recent posting. I realize it's been a while and I want to apologize for that.
A combination of health issues, all now since resolved, thank you, and family matters have consumed my time for the last couple of months and I just haven't been able to devote any time to the blog. However, with most of that behind me, I hope to resume posting on a much more regular basis.
In my absence, it seems that college athletics is engaged in another round of conference roulette, touched off, in part, by another ACC raid on the Big East, grabbing Pitt and Syracuse.
Has there ever been a more insecure conference commissioner than John Swofford? This time, of course, the SEC joined in the fun early with Texas A&M longing to get out from under the huge shadow cast by its Austin rival, jumping from the Big XII.
The final shoe has yet to drop as Missouri is readying itself for a move to the SEC, with the Big XII then having to decide whether to just replace Missouri and stay at ten members or invite three schools and go back to 12. By all reports, there is no consensus yet, although the Big XII presidents meet this week.
The Big XII decision has ramifications for the Big East, which is trying to salvage itself with a plan to expand to 12 football members by adding Boise State, Air Force and Navy for football and Houston, SMU and UCF for all sports.
Since Louisville and West Virginia are widely thought to be two of the three leading candidates to join the Big XII, all the Big East can do now is wait it out.
Aside from where your favorite school may be playing next year or in 2013, there are two interesting undercurrents to all of this "ring around the rosey".
One is the unseen hand of ESPN, the other is the potential effect this maneuvering may have on the NCAA's and its members' tax exemption.
Let's take ESPN first.
To accept what I'm about to discuss takes a little bit of belief in conspiracy theories. While I'm not usually prone to believing in them, this story has too many coincidences not to give at least a little credence.
First, a little history.
Within the past year or two, three major conferences have signed new television agreements for football and men's basketball: the ACC, SEC and Big XII. Both the ACC and SEC signed very lucrative long-term deals with ESPN, which created branded "ACC on ESPN", and "SEC on ESPN" networks among other enticements, like hundreds of millions of dollars.
The Big XII spurned ESPN and signed with Fox, its previous media partner. Earlier this year, the Big East, in the final year of its existing ESPN contract, rejected an almost $1 billion contract in favor of negotiating next year, when all the other conference deals will have been completed. Leading the charge to reject the contract was Pitt Chancellor Mark Nordenberg.
The two conferences most adversely affected by all of the school movement so far: Big XII and Big East. One further bit of evidence is the comment by the ever-lovable athletic director at Boston College, who, in discussing the admission of Pitt and Syracuse, said via Boston.com "It’s 85 percent football money. TV—ESPN—is the one who told us what to do."
He later apologized and said he misspoke but what would you expect him to do?
The tax implications of the realignment game have potentially far more impact than any monetary gain a new conference and new TV contract may provide.
For more than five years, Congress has been "interested" in the tax exempt status of the NCAA and the athletic programs of its member institutions. For any number of reasons, members of Congress have thought that athletic programs' sporting budgets in the tens—and even hundreds in the case of Texas and Ohio State—of millions, and making decisions based on business necessity, not the welfare of the student athlete.
In 2006, the House Ways and Means Committee sent a letter to the NCAA asking it to respond to various questions and justify its tax exemption. While the issue has been on the back burner since, comments like these (via Boston.com), from our voluble friend at Boston College certainly don't help the NCAA cause.
When schools are jumping to leagues with questionable geographic and academic ties (see ACC or Boise State to the Big East), it becomes increasingly easy for the opponents of the NCAA to question its right to a tax exemption.
When the primary justification for a conference switch is to access a greater pot of TV money, or even to gain access to the BCS, without regard for the welfare of the student athletes who must do the far-flung travel, while also keeping up with classwork, can it honestly be said that such a move is furthering the academic mission of the university?
Before you say football is only once a week and they generally charter planes at this level anyway, remember that most of these moves are all sports moves requiring the Olympic sports—which do not have the budgets enjoyed by basketball and football—to make the same trips.
Olympic sports generally travel commercial if they must fly, and those are all-day trips in both directions.
We all know how pleasant the commercial flying experience has become.
Athletic department actions which are so blatantly commercial, as jumping conferences for a share of TV money, may go a long way toward solidifying the argument that the NCAA and its member institutions are not engaged in activities that further the academic mission of the school, but are commercial enterprises that deserve to be taxed like ones.
Should that happen, not only would there be taxes to pay, but donations to the athletic department would likely lose their charitable deduction, significantly decreasing the attractiveness of many season ticket packages.
As has been the case so often in the past, when it comes to college athletics, decisions are often made for all the wrong reasons or are not carefully thought through. Athletics seems to attract emotional decision-making more than any other aspect of university life.
As a result, the entire enterprise of college athletics as we know it may be placed in peril.
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