SBD/Issue 235/Collegiate Sports

College Sports Programs Study Report On Possible Sponsorship Tax

Programs Like Ohio State Could Generate $86M
Over Five Years On Potential Sponsorship Tax
Ohio State Univ. (OSU) Senior Associate AD for Finance & Operations Ben Jay said that "big-time college sports programs" are examining a new Congressional Budget Office (CBO) report claiming that a "tax on naming rights deals for college sports events, such as football bowl games, and athletic facilities could generate" $86M over five years beginning in '10, according to Jeff Bell of BUSINESS FIRST OF COLUMBUS. The report indicated that "such payments from corporations, now considered nontaxable income for universities receiving them, could be reclassified as advertising revenue and become subject to federal taxes." The report's section on college sports sponsorships "builds on the findings of a CBO analysis published in May," which "questioned whether larger college athletics programs deserve to keep their tax-exempt status because of a heavy dependence on revenue from commercial sources, such as corporate sponsorships and royalties from licensing contracts." The report concluded that NCAA Division I athletic departments "derive a considerably larger share of their revenue from commercial activities -- as much as [60-80%] -- than do other parts of the university." Bell notes the study was "done at the request" of U.S. Sen. Charles Grassley (R-IA), who has "argued that since college sports programs receive tax benefits unavailable to private businesses, they need to better explain how their use of commercial revenue helps fulfill their schools' educational missions." Jay said that OSU athletics was getting $8-9M annually "in corporate sponsorship revenue prior to selling its marketing and media rights to IMG College and RadiOhio Inc.," and "on the royalty front, the athletics department received" $3.9M from the $7.4M the university received in licensing revenue in fiscal '09. Jay said that if athletics departments are "saddled with a tax on such revenue sources," they would be "forced to look elsewhere for funding, including university subsidies and student fees, or cut staffs and programs" (BUSINESS FIRST OF COLUMBUS, 8/21 issue).

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