So this is a companion to what I wrote yesterday on big-time college athletics, and I have 10 minutes to type this before I start work. But I was thinking about this some more, and there’s another angle, besides the cartel issue: it’s a tax issue.
When a non-profit engages in activities that are clearly profit-oriented (even if the profits are put to charitable use), then that subsidiary entity is no longer exempted from tax. A non-profit hospital with a profit-making arm, for example. (Or I could run off on a tangent about how non-profit hospitals in general spend virtually none of their revenue on charitable care, using their funds instead on more and more building projects. And every now and again the state of Illinois makes noises about that, but the hospitals are too entrenched for the state to do anything but periodically complain.)
When a college sports program charges significant sums of money for tickets (rather than nominal amounts), and earns large chunks of cash from televising the games, licensing fees for apparel, even running a cable TV network — this looks like a for-profit enterprise, and these profit-making activities should be transparently separated out and taxed accordingly. That means a corporate income tax, and (of greater significance at least in Illinois, where property taxes are high) that the proportion of the university’s property used for these activities — the stadiums, the football workout buildings, and the like — should be liable for property tax.
Now, I’m not a tax attorney, so I don’t know how this area of tax law works, whether there are a lot of grey areas in other parts of the non-profit world, or even, more narrowly limited to universities, whether for-profit companies coming out of the research arm of universities are taxed accordingly. And maybe such entities as the Big Ten Network are already paying their fair share of taxes. (See? I really don’t know what I’m talking about.) But I don’t believe universities have yet been required to treat their entire football and basketball programs as profit-making enterprises, and provide full transparency around them.
And now I’ve reached the limits of what I can say about the topic. Someday, when I’m a big-name blogger (or, okay, may just on the blogroll of a big-name blogger, or maybe on the blogroll of a blog that itself is on the blogroll of a big-name blogger), you all will say, “wow, how prescient!” — or maybe just “wow, how clueless!”
Time for work . . .
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