The Wall Street Journal reports that the Internal Revenue Service has decided that the collectives provide too much financial benefit to individuals (i.e. players) to qualify as charities. That means donations will not be considered charitable contributions and that the income earned by the collectives will be taxable. Unfortunately, the WSJ story is behind a paywall The story also mentions that Texas and Oklahoma have passed laws prohibiting the NCAA from penalizing universities that get involved with their collectives. https://www.wsj.com/sports/irs-tax-...roups-427d403f?mod=djemCapitalJournalDaybreak
SIAP: Internal Revenue Service is denying charitable organization status to NIL collectives
- Thread starter retired711
- Start date
As they say, "great minds". Posted this yesterday but it's back on page 2.
The IRS made a sane decision. Not only are the players earning income for their services, but donors looking to purchase a roster shouldn't be given a tax deduction.
If they want deduction, donate to the school to provide infrastructure or scholarships to those in need. This is essentially buying rosters and IRS decision would appear to be reasonable.
It's an obviously sane ruling by the IRS, but further complicates the NIL picture for schools and donors.
The schools are now in a position of asking donors to give money to NIL collectives for no benefit other than to pay players.
Personally, I have a problem with that.
The schools are now in a position of asking donors to give money to NIL collectives for no benefit other than to pay players.
Personally, I have a problem with that.
As long as they're transparent about the non-deductibility what's the problem?
For decades schools have been asking donors to contribute to their various athletics-related funding exercises. Whether it's for scholarships, facilities, coaching salaries or what-have-you, the donors have ponied up. The secondary benefit of those donations is that they're tax deductible.
Now those same donors are being asked to donate to NIL collectives. For schools with enormous donor bases, the PSUs, OSUs, etc. of the world it's not an unreasonable ask.
Rutgers, however, has about 15,000 annual donors in its database. We have far fewer "Sugar Daddy Donors" than other large schools. We do not have the ability to raise the kind of capital necessary to compete for top tier players in the NIL sphere.
The downside is obvious, but to spell it out - at least in part - the gap between the "Haves" and "Have Nots" is only going to get bigger in the NIL age. It's not good for us.
All respect to Geo Baker and the efforts of him, and others, the objective of getting players compensated for the use of their names, images and likenesses is going to severely hurt programs like Rutgers.
I understand people's concerns here but I think the tax benefits are a big reason people donate to non profits.
I suspect the ruling will help to curb the "roster buying" and other illegitimate practices. NIL was intended to allow players to earn money, not be bought.
I still think players should be able to earn money, I think that was a dumb ruling by NCAA, but there should be some tax regulations and not on the backs of donors.
I suspect the ruling will help to curb the "roster buying" and other illegitimate practices. NIL was intended to allow players to earn money, not be bought.
I still think players should be able to earn money, I think that was a dumb ruling by NCAA, but there should be some tax regulations and not on the backs of donors.
Not sure about that.....NIL isn't mainly new money in the equation. I believe it's money that donors would have and did pay for the other purposes in the past. The OSU, PSU, etc, donors aren't suddenly going to be spending more. Nor are our donors. So, the donation gap is the same.
Only in part. It's true that the much higher standard deduction established by the Trump tax cut, along with the limit on how much in taxes can be deducted, will mean that few donors are affected. But the donors who are affected will be the richest -- those who generate deductions in excess of the standard deduction. In addition, the ruling also means that any profit made by a collective will be taxable
Why is donating to pay for an athletes scholarship tax deductible?
Or to pay for a weight room for players to work out in?
NIL collectives shouldn't be tax deductible.
But should "donations" (especially mandatory ones) be tax deductible as well?
Or to pay for a weight room for players to work out in?
NIL collectives shouldn't be tax deductible.
But should "donations" (especially mandatory ones) be tax deductible as well?
Now you know why I included "SIAP" in the thread title. I haven't been here for a while and so I thought maybe someone had already posted this.
Is donating for a weight room any different than donating to build, say, a new dance studio at Mason Gross? In addition, the donation is no more mandatory than the donation you might have to make, say, to be a member of a church or synagogue: you can always elect not to buy tickets or join the church.
If there was a choice, and someone asked me- "Could you provide money to support this super smart young person who wants to major in science/engineering but only has a partial scholarship and needs the money to go to college?"
Ask me a 1,000 times, and every time I would provide the money to THAT student over an athlete who is already on a full scholarship, receiving free room and board, nutritionists, doctors, trainers, access to world class gym and training facilities, and lots of other perks.
At some point the schools are going to have to figure out a way to take a fraction of their media money and/or pay their football and basketball coaches a lot less (salaries are ridiculous for the value they bring to society) and make it work if they also want to pay their athletes.
That's how a I feel. If it means Rutgers never wins, so be it.
I agree with what you said, but unfortunately, the way NIL has been working is the opposite in many cases. NIL is allowing players to be bought without earning money.
Agree 100%. Have had this debate off these boards with people who hate athletics and think athletics is a waste of money and resources at universities. If that's the case, there should be no money for anything except classes and the related expenses of teaching. No band, no glee club, no drama, no fraternities.
One could argue that a new dance studio goes towards the educational mission of the school.
It's a classroom.
Not the case for a private weight room only available to certain students.
You are correct - you can buy tickets and not donoate. Just like a church.
But not season tickets.
Literally can't purchase season tickets without a "mandatory donation".
Hence why "mandatory seat donations" are no longer tax deductible.
Q: Is my seat fee to the Rutgers Scholarship Fund tax deductible?
A: Due to new federal tax legislation, Rutgers Scholarship Fund seat fees are no longer tax deductible as of January 1, 2018. Any gift made to athletics above required seat fees, is tax deductible.
https://rfund.scarletknights.com/sp...ade to athletics,seat fees, is tax deductible.
Do those entities receive funding from the school?
Note - I don't care about athletics getting funding. Give them more.
Just annoyed at how athletics is always crying "we need more more more" without a clear understanding of how they are managing that money and why they'll never be ahead of the curve.
Well I am by no means rich and given the tax law changes the new standard deduction makes it moot to me.
I would need to donate in excess of $10K more before hitting standard deduction
That's the wrong question.
The question is why are you being asked to provide money to the athlete instead of the entity that is benefitting from the athlete?
You are already being asked to pay for that "free" room and board, nutritionists, doctors, trainers and access to world class gym and training facilities and lots of other perks.
Imagine that the science major is generating millions of dollars for the science department through their work and experiments.
If the science department then said "Oh, we can't give him a part of those millions he's generating. We need to pay the science administrators more money. We need to hire a new head of the department - and keep paying off the old head of the department. YOU need to pay for his academic scholarship. We also need you to help pay for that room and board, lab supplies, trips to collaborate with other scientists around the world. And if you don't, then it's your fault we can't get more brilliant science majors to make the science department more money."
Sure the other entities receive money and consume resources. Eliminate all of them if athletics is eliminated.
Or....hear me out.....eliminate them and give the funds to athletics?
Just an idea.
Maybe a test and learn experiment for a year.
It's the wrong question to you, but the pertinent question to ME.
The point, perhaps poorly made, is athletes get more than enough benefits and free perks.
Regular students get squat most of the time.
Your example is a tangent, but off the top of my head, in both cases when a student athlete or scientist has quantifiably caused the University to earn more money on their talents, both of them SHOULD be compensated. But had that debate with retired711 in another thread about Bobby Benchwarmer, who may have been a star in HS, but is a practice squad player that never sees action in college. One could argue that "we" need to support the entire ecosystem, including all of the Bobby Benchwarmers, but as I understand your hypothetical, then all students should get a free ride. Some politicians argue that college should be free to all, but that is topic for another thread, I think.
I've had this conversation on The Twitter with one of my mutuals, who is has an RU undergrad science degree and is doing post-grad work at USC (and will be coming back to RU for her Phd). She's on this year's 30 Under 30 list in science, has generated revenue and recognition for both schools and is displeased that athletes are now getting compensated while academics are not.
I think reasonable people have to see her point.
Absolutely. If a student scientist makes valuable contribution to a scientific concept, their only reward may being named an inventor on a patent. But the inventor, just like most employees of a corporation, get squat for being a named inventor on a patent. Some corporations give nominal monetary awards of $1000 or less, but that's it- that is part of your job.
There are multiple slippery slopes at play. Let's take the scientist-inventor. Shouldn't it be enough that she was "given" access to world class professors, mentors, laboratories, etc, and she can leverage the prestige of having her name on a patent and related scientific publications to a fabulously well-paying career? Should that be enough? Actually, I think yes.
So now let's take the same look at a college football or basketball player and perhaps baseball players (these are the ones that have the opportunity to make the most $$$ in professional leagues. Can't we use the same rationale for athletes? As discussed above, they are being provided with world class training, facilities, coaches (at least outside of Rutgers 😜 (bad joke)), exposure on a national stage and on national networks, etc. We know it is very expensive for Universities to provide all of these resources--the facilities, the equipment, the coaches, the trainers, the maintenance, the travel, etc., etc.
These expenses need to be taken into account BEFORE any player is paid, right? And aren't many athletics departments running a deficit, largely because universities have to provide Title IX sports that are revenue drains, not sources of revenue.
Gotta get back to work, but I'm failing to see the difference here between student scientists (and for that matter artists who make it as painters, singers, sculptors, etc) and athletes. How did we get tot his point where athletes are special and "deserve" to get paid? What is their value to society and the University mission, and is it greater than artistic or scientific contributions, which are more closely aligned with the University mission. IDK.
The point of NIL was never to have the schools or their boosters pay athletes. Rather, the point of NIL is to let the athletes get the value they create. Suppose you are Wilt Chamberlain playing for Kansas. Before NIL, Kansas and the NCAA could make a ton of money by marketing Chamberlain's image. Now Chamberlain would get the money by contracting with the same people and companies who were contracting before with Kansas and the NCAA. That's fair -- it's Chamberlain who is creating the value by his ability and hard work.
I guess I should clarify. I myself would never donate for a weight room, but I would certainly donate for a dance studio if asked nicely (which, by the way, Rutgers never does; if they ask, they sound like they think they're entitled). All I was suggesting is that one is tax-deductible, then the other should be too.
It failed to turn out that way, pursuant to developments that were eminently foreseeable.
IMHO, it still can turn out that way if the right legislation is enacted -- and, more important, enforced.
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BTW, the Oklahoma and Texas statutes I mentioned above mean that there *has* to be federal legislation. Otherwise schools in those states will be protected from punishment for being involved in arranging NIL. Federal legislation could pre-empt (that is, displace) state laws on NIL.
Hey, now I know what SIAP means (I was able to backsolve), Thanks!
It speaks to society’s warped value system, not just in academia. But, she surely knew the monetary consequences when she chose her career path.
If Sally Science attracted 100,000 to a physics seminar at $50 a paying customer 7 times a year she’d get paid accordingly.
So if an athlete gets more NIL because he gives mostly all to some charitable cause.. and that causes more people to donate to an NIL for his benefit... confusing as heck.
I agree with your statement in bold. And to a degree, I agree with your Wilt Chamberlain case study.
However, as I outlined above (minus Wilt), Wilt's revenue generation does not exist in a vacuum and without the University he plays for investing large sums of money and having huge overhead for Wilt to display his talents. So, while we agree Wilt should get paid, there will always be a question HOW MUCH the Wilt's of the college world SHOULD get paid.
IMO, expenses have to be taken into account. As I noted above, very few University athletics departments turn a profit. Huge amounts of money go to supporting the many non-revenue sports. Generally, I don't have an issue with that either. All of these sports are part of the University athletics ecosystem. And these are college athletes, not pro athletes.
Some initial thoughts, and just that, initial thoughts--some sort of balance sheet approach should be used where the University's revenues and expenses related to athletics should be taken into account. There will be many slipper slopes and arguments against this. The Wilt's will scream that this is not fair and this is not their problems. THEY are generating the revenue, and the expenses are not their problem.
There are clearly ways in which the Wilts of the college world can earn compensation for the NIL. Rutgers is doing that right now through their NIL merchandise store, where fans can purchase player-specific merchandise. This is the purest form of a college athlete "getting paid" for their "name, image and likeness."
And our own Geo Baker continues to come up with innovative ways where players "get paid" for use of their name, image and likeness. --"Make an appearance or perform a service, get compensated. Receive financial support from fans – and give those fans something personal in return."
But back to individual athletes getting a direct cut of the University's athletics revenue stream, that is going to be difficult to directly quantify, and determine an appropriate amount to pay, without taking into account the overhead in running the athletics department of the University.
By the way, Rutgers is the place where NIL originated with the Ryan Harv vs. Electronic Arts case, where EA tried to make money off of Hart's name, image and likeness, and they were required to compensate him, which is fair and warranted.
An interesting note about the case involving Ryan Hart- back then, The NCAA Manual stated:
where a collegiate athlete‟s
name or picture appears on commercial items . . . or is used to promote a commercial product sold by an individual or agency without the student-athlete‟s knowledge or permission, the student athlete (or the institution acting on behalf of the student-athlete) is required to take
steps to stop such an activity in order to retain his or her eligibility for intercollegiate athletics.
NCAA, 2011-12 NCAA Division I Manual § 12.5.2.2 (2011).
In the end, EA had to pay just under 25,000 college athlete's $60 Million in total. Ryan Hart got $15,000 in the case.
Hart v. Electronic Arts
Hart v. Electronic Arts, Inc., 717 F.3d 141 (3d Cir. 2013) (full-text). Ryan Hart, a former quarterback for the Rutgers University football team, with many achievements, has refrained from taking various commercial opportunities. Without Ryan's consent, Ryan was included in Electronic Arts'...
Athletes to get avg. $1,600 in EA settlement
24,819 athletes were determined to have valid claims to part of a $60 million settlement with video game maker Electronic Arts.
I hear the intellectual property lawyer you are. After all, if Professor X invents a product using university resources, the university owns the patent. But at least there Professor X is being paid. Professor X can also profit from his or her NIL: if Gatorade decides that displaying Professor X's image in its ads (maybe Professor X is drop-dead gorgeous) is the best way to sell the product, then Gatorade must pay Professor X and Professor X alone. The same is true if a graduate student makes the invention. An agreement between universities not to let faculty and students be paid for their NIL would certainly fall afoul of the antitrust laws. You'll recall that Madonna had a dance scholarship from the University of Michigan. But certainly she could have sold her NIL even as a student.I agree with your statement in bold. And to a degree, I agree with your Wilt Chamberlain case study.
However, as I outlined above (minus Wilt), Wilt's revenue generation does not exist in a vacuum and without the University he plays for investing large sums of money and having huge overhead for Wilt to display his talents. So, while we agree Wilt should get paid, there will always be a question HOW MUCH the Wilt's of the college world SHOULD get paid.
IMO, expenses have to be taken into account. As I noted above, very few University athletics departments turn a profit. Huge amounts of money go to supporting the many non-revenue sports. Generally, I don't have an issue with that either. All of these sports are part of the University athletics ecosystem. And these are college athletes, not pro athletes.
Some initial thoughts, and just that, initial thoughts--some sort of balance sheet approach should be used where the University's revenues and expenses related to athletics should be taken into account. There will be many slipper slopes and arguments against this. The Wilt's will scream that this is not fair and this is not their problems. THEY are generating the revenue, and the expenses are not their problem.
There are clearly ways in which the Wilts of the college world can earn compensation for the NIL. Rutgers is doing that right now through their NIL merchandise store, where fans can purchase player-specific merchandise. This is the purest form of a college athlete "getting paid" for their "name, image and likeness."
And our own Geo Baker continues to come up with innovative ways where players "get paid" for use of their name, image and likeness. --"Make an appearance or perform a service, get compensated. Receive financial support from fans – and give those fans something personal in return."
But back to individual athletes getting a direct cut of the University's athletics revenue stream, that is going to be difficult to directly quantify, and determine an appropriate amount to pay, without taking into account the overhead in running the athletics department of the University.
By the way, Rutgers is the place where NIL originated with the Ryan Harv vs. Electronic Arts case, where EA tried to make money off of Hart's name, image and likeness, and they were required to compensate him, which is fair and warranted.
An interesting note about the case involving Ryan Hart- back then, The NCAA Manual stated:
where a collegiate athlete‟s
name or picture appears on commercial items . . . or is used to promote a commercial product sold by an individual or agency without the student-athlete‟s knowledge or permission, the student athlete (or the institution acting on behalf of the student-athlete) is required to take
steps to stop such an activity in order to retain his or her eligibility for intercollegiate athletics.
NCAA, 2011-12 NCAA Division I Manual § 12.5.2.2 (2011).
In the end, EA had to pay just under 25,000 college athlete's $60 Million in total. Ryan Hart got $15,000 in the case.
Hart v. Electronic Arts
Hart v. Electronic Arts, Inc., 717 F.3d 141 (3d Cir. 2013) (full-text). Ryan Hart, a former quarterback for the Rutgers University football team, with many achievements, has refrained from taking various commercial opportunities. Without Ryan's consent, Ryan was included in Electronic Arts'...itlaw.fandom.com
Athletes to get avg. $1,600 in EA settlement
24,819 athletes were determined to have valid claims to part of a $60 million settlement with video game maker Electronic Arts.www.espn.com
Perhaps it's useful to quote Justice Kavanaugh's concurring opinion in Alston:
"The bottom line is that the NCAA and its member colleges are suppressing the pay of student athletes who collectively generate billions of dollars in revenues for colleges every year. Those enormous sums of money flow to seemingly everyone except the student athletes. College presidents, athletic directors, coaches, conference commissioners, and NCAA executives take in six- and seven-figure salaries. Colleges build lavish new facilities. But the student athletes who generate the revenues, many of whom are African American and from lower-income backgrounds, end up with little or nothing. See Brief for African American Antitrust Lawyers as Amici Curiae 13–17."
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