Washington Post Op-Ed:  This Billion-Dollar Sports Behemoth Should Not be a Nonprofit, by Scott Hodge (Former President, Tax Foundation):

Despite its nonprofit status, the National Collegiate Athletic Association is big business. Its 2024 financial statement shows that it earned more than $1.3 billion in income from the sale of television rights, advertising, tickets, merchandise and membership dues. All these revenue streams are tax-free for the NCAA.

Meanwhile, in the wake of a recent court ruling permitting Division I schools to pay student-athletes starting July 1, the NCAA is lobbying Congress for antitrust and labor protections such as preempting state laws that conflict with NCAA rules. Any deal should require the NCAA to shed its tax-exempt status and reincorporate as the for-profit sports and entertainment behemoth it has become.

It is time for the NCAA to go pro.

The NCAA is just the tip of the tax-exempt sports economy. In 2022, tax returns of the then-Power Five collegiate athletic conferences — the ACC, Big 12, Big Ten, Pac-12 and SEC — show that they generated more than $3.5 billion in combined revenue, including $2.5 billion in television rights. The College Football Playoff — which is a limited liability corporation managed by the 10 Football Bowl Subdivision conferences and the University of Notre Dame — generates another $1.3 billion annually. …

In form and function, these organizations are no different than the major professional sports leagues in that they collect broadcast rights and redistribute much of that revenue to their members, who in this case are university athletic departments. …

Under normal nonprofit rules, income from broadcast rights and advertising would be subject to unrelated business income tax (UBIT), but the NCAA and the conferences have been granted waivers by Congress, the IRS and court rulings. …

Some might argue that taxing the television and sponsorship income of the NCAA and major conferences will destroy college sports. But the NFL, MLB and NBA were once nonprofit “business leagues” under the internal revenue code. After years of controversy surrounding their tax-exempt status, they gave up that distinction and reincorporated as commercial enterprises.

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