DeCourcy on BE- Calls out MU

[bilsu]

But not Hatch's alma mater, BYU. Or Utah State, Harry Reid's alma mater, for that matter. Or Boise State, UNLV, Hawaii and many others with some influence in their home states.
If the BCS schools break off, they would have abandoned all pretense that their athletics departments are part of an "educational program," but rather are for-profit corporations. As for-profit operations, they very easily could (and should, IMO) be stripped of their tax-exempt status. As would the bowl games they provide them with their millions in revenue. As would any basketball tournament established to compete with the NCAA tournament. And, of course, all the TV contracts they feed them most of their money would be subject to taxation.
That's a lot of money walking out the door, quite possibly too much to make it a profitable venture.

The tax exempt status only has value if you actually make money. Losses from one year will carry forward to offset future year's income for 15 years. The big issue here would be the allocation of indirect expenses. Why the badgers have a lot of revenue, I am not sure, if you remove donations, that the sport programs actually make money. It is hard to tell, because of the way expenses are allocated. However, if the sports programs were taxable as unrelated businesses the allocation of indirect expenses would be more highly scrutinized.
For example the president of a university would be an indirect expense to the sports program. The issue would be how much of his or her salary should be allocated to the sports program.  Or how much of the Al Center expense should be allocated, if it is also used by nonathletic department people. The indirect expenses would be the biggest issue as you would need a valid method for allocating each expense. It also would be a bigger issue, if they kept the tax-exempt status for the non-revenue sports, which are the real money lossers. The universities would argue that the other sports are required, so that their losses will offset the revenue sports. In the long run losing tax exempt status is more of an accounting nightmare than the potential taxes that would need be paid. there are probably 10 universities at the most that would pay any tax at all.

[Pakuni]

Pakuni, I don't think you understand one basic thing.  If you get rid of the BCS as it currently stands, and revert back to the old system with a few tie-ins and the rest being a free-for-all, Boise and their types have no chance at all to get to major bowls.  The biggest and most prestigious bowls are going to select the teams that give them the largest audience to keep their sponsors happy.  And if you decide to tax those bowls, you are just going to make it worse because they'll now need to earn even more money.

The Pre-BCS era is *loaded* with teams that got no chance at the big money bowl games...BYU in 1984 played in the Holiday Bowl, Tulane in 1998 played in the Liberty Bowl.  Both ended the season undefeated, but didn't play in the Rose, Fiesta, Sugar or any other bowl with major pay-outs.

The only reason people complain about the BCS now is because it is a sham way for determining a champion.  But don't let that cloud your thinking about how and why the Department of Justice should be investigating it for anti-trust reasons.  The BCS actually gives those teams a bigger chance now at $$$ than the old system did.

And if you want to tax intercolligiate athletics, that is a completely seperate issue.  Why you would want "federal oversight" when no federal dollars go to athletics, but basically to research and student aid, is beyond me.

You're presenting a false choice here .... BCS or pre-BCS.
Why not create something better (and more fair) than either? Why not create something that doesn't consolidate the power into the hands of a limited group? Why isn't that be an option? The fans want it. The networks want it. Many programs and even some coaches want it. Everybody but the powerbrokers in the BCS conferences and te bloated bowl committees wants it, because it could force them to share even more of the pie and weaken their fiefdoms.
Defending the current broken and unfair system by stating that the previous system was even more broken and unfair isn't much of a defense.

And no, taxing athletics revenues is not a completely separate issues. Athletics Departments receive tax-exempt status under the outdated premise that they are part of an educational system. The BCS system as it stands - and certainly if those programs were to break away and form their own group - pretty much does away with that pretense. College athletics, at least at that level - is nothing more than a for-profit business operation. I have no problem with that. I do have a problem, however, with for-profit business operations getting massive tax breaks by claiming they're something they're not. Arguing that athletic programs don't receive federal money seems, at best, misleading.
And while athletic departments may not directly receive federal dollars, those dollars indirectly support athletics by supporting the colleges and universities themselves. That's the entire basis for Title IX, and has long been a legally settled question.

[bilsu]

Tim said "The MUScoop community is all over this one".  Welcome to the longest thread on the front page.

Marquette is a burden to the Big East.  We're doing really well, but adding us was a mistake.

Thanks for the backhanded compliments.  I think your writing is decent, but it's too bad the Sporting News isn't as good as other content providers.  See what I did there?

The whole point of the article that the Big East should of added two football schools instead of MU and DePaul. It would be difficult to kick out a program that has been as successful as MU has been. I have no doubt that, if we have sucked as much as DePaul has since entering the Big East it would be a no brainer. It also will be hard to kick just DePaul out and keep MU. DePaul should be thanking us for saving their butts. The reality is the conference is not big enough for basketball. The problem is having to play mirror games to get to an 18 game schedule. The perfect conference for an 18 game schedule would be 10 teams and then you play everyone twice in a home and home schedule. This of course will not work, if you want 12 football teams to have a conference championship. Therefore the perfect conference would be to have 12 or 14 teams for football and 19 teams for basketball. 19 team league you play everyone once and alternate each year on whether you play a team home or away. The Big East needs 12 football schools and 7 basketball only schools. It helps that Villanova is moving up for football. Marquette, Georgetown, Seton Hall, St John's, Providence and DePaul are basketball only schools and Notre Dame's football independence makes 7. I do not see the Big East inviting another basketball only school, so Notre Dame is the big wild card here. If they would decide to join in football I could see the Big East going to 14 teams for football, which would result in either a 20 team conference with one to many teams for basketball or the Big East dropping a basketball school. Once you drop one basketball school, the door will be open to drop more basketball only schools. Notre Dame joining the Big Ten would also be a problem, because you now have lost a basketball only school that will not be replaced with a basketball only school. The only possible good outcome here would be for Villianova to stay a basketball only school. So basically the Big East will implode, if Notre Dame changes their current status as a basketball only school.

[Pakuni]

The tax exempt status only has value if you actually make money. Losses from one year will carry forward to offset future year's income for 15 years. The big issue here would be the allocation of indirect expenses. Why the badgers have a lot of revenue, I am not sure, if you remove donations, that the sport programs actually make money. It is hard to tell, because of the way expenses are allocated. However, if the sports programs were taxable as unrelated businesses the allocation of indirect expenses would be more highly scrutinized.
For example the president of a university would be an indirect expense to the sports program. The issue would be how much of his or her salary should be allocated to the sports program.  Or how much of the Al Center expense should be allocated, if it is also used by nonathletic department people. The indirect expenses would be the biggest issue as you would need a valid method for allocating each expense. It also would be a bigger issue, if they kept the tax-exempt status for the non-revenue sports, which are the real money lossers. The universities would argue that the other sports are required, so that their losses will offset the revenue sports. In the long run losing tax exempt status is more of an accounting nightmare than the potential taxes that would need be paid. there are probably 10 universities at the most that would pay any tax at all.

A fair point, but I'm not sure I agree completely. I think it could be more than just an accounting hassle.
I think it would be interesting to see how college programs would be allowed to report their expenses. Would UW be allowed to write off the $2 million they spent sending more than 800 people to the Rose Bowl (and putting them up in the Beverly Hills Hotel) as a legitimate expense? I think that under the watchful eye of the IRS, some of the things written off as expenses today probably wouldn't be allowed. Would they be allowed to write off private jets for recruiting trips as a necessary expense?  I'm not a tax lawyer, so maybe it wouldn't be a problem. I'm just raising the question.
But certainly the programs wouldn't be keen on having those expenses scrutinized and made public. Lord knows UW wasn't after the Rose Bowl fiasco.

[GGGG]

You're presenting a false choice here .... BCS or pre-BCS.
Why not create something better (and more fair) than either? Why not create something that doesn't consolidate the power into the hands of a limited group? Why isn't that be an option? The fans want it. The networks want it. Many programs and even some coaches want it. Everybody but the powerbrokers in the BCS conferences and te bloated bowl committees wants it, because it could force them to share even more of the pie and weaken their fiefdoms.
Defending the current broken and unfair system by stating that the previous system was even more broken and unfair isn't much of a defense.

There are two issues here.  Is the BCS an unfair method of determining a champion?  Yes, it obviously is unfair.

The other question is "Is the BCS an illegal restraint of trade and therefore worthy of Department of Justice investigation."  IMO, no it isn't.  In fact it is an improvement over the former system.

Don't let your hatred of the BCS over the first issue, cloud your judgement over whether or not the DoJ should be involved in the second.

[bilsu]

A fair point, but I'm not sure I agree completely. I think it could be more than just an accounting hassle.
I think it would be interesting to see how college programs would be allowed to report their expenses. Would UW be allowed to write off the $2 million they spent sending more than 800 people to the Rose Bowl (and putting them up in the Beverly Hills Hotel) as a legitimate expense? I think that under the watchful eye of the IRS, some of the things written off as expenses today probably wouldn't be allowed. Would they be allowed to write off private jets for recruiting trips as a necessary expense?  I'm not a tax lawyer, so maybe it wouldn't be a problem. I'm just raising the question.
But certainly the programs wouldn't be keen on having those expenses scrutinized and made public. Lord knows UW wasn't after the Rose Bowl fiasco.

Sending 800 people to the Rose Bowl should be an issue no matter what. It is basically screwing WI taxpayers. As far as private jets, they are a coomon use in large businesses, so it probably would be allowed.

[Pakuni]

There are two issues here.  Is the BCS an unfair method of determining a champion?  Yes, it obviously is unfair.

The other question is "Is the BCS an illegal restraint of trade and therefore worthy of Department of Justice investigation."  IMO, no it isn't.  In fact it is an improvement over the former system.

Don't let your hatred of the BCS over the first issue, cloud your judgement over whether or not the DoJ should be involved in the second.

Again, being an improvement over the former situation does not make the current system fair or even legal (though smarter minds than I can and will decide that issue). I'm sure some could argue that the oil industry prior to the ascent of the Standard Oil Company was worse off for many, but that didn't make Standard any less guilty of violating anti-trust laws.

FWIW, the BCS is unfair not just in how it determines a national champion. In my mind, that part is kind of trivial. Where the BCS is unfair, IMO, is in how it arbitrarily denies access to revenues created at least to some degree because of special tax benefits its members and bowl committees receive. What the BCS says is that if you're State Supported Insitution X from Conference A, you can go 8-4 and participate in one of our $18 million-per-team bowl games. But if you're State Supported Institution Y from Conference B, you probably must go 12-0 and even then your invite to one of our bowls essentially is at the discretion of our members.
Completely arbitrary and exclusive, and therefore, IMO, unfair.

I'm not making a case for DoJ involvement, though I'm not opposed either. I am, however, making a case against tax exempt status (both for the ADs and bowls), especially if the BCS breaks off from the rest of the NCAA.

[MarquetteDano]

The tax exempt status only has value if you actually make money. Losses from one year will carry forward to offset future year's income for 15 years. The big issue here would be the allocation of indirect expenses. Why the badgers have a lot of revenue, I am not sure, if you remove donations, that the sport programs actually make money. It is hard to tell, because of the way expenses are allocated. However, if the sports programs were taxable as unrelated businesses the allocation of indirect expenses would be more highly scrutinized.

I am confused by the comment above.  The key to tax exempt status for athletic departments is that you or I can give money directly to the Athletic department and it is tax deductible FOR US.  If athletic departments were not tax exempt you would see a drop of around 25-35% of donations to athletic programs (assuming the margin tax rate would reduce givings at the same rate).