House vs. NCAA

[RonJohn]

When will the IRS, states, counties and cities start collecting income taxes on these folks? And with California in the mix of ACC schools now, they have some bizarro tax laws for athletes coming in to California to play for pay.

N-I-L & now athletic schollies, room & board, tutoring, swag, transportation to & from game sites, et al, should all be taxed.

Going to be some very interesting unintended consequences from this nonsense.

Makes being a walk-on with HOPE or ROTC or National Merit or whatever all the more attractive.

This may be what finally kills it for this old TechEx.

I don't think it will be any different with regards to scholarships. I believe that qualified educational expenses are generally not taxable income, while things like money from room and board are taxable. I think that the way it worked before NIL was that the room/board/stipend portions of full ride scholarships were taxable, but most student athletes didn't have other income which would mean the income would be too low to pay taxes on anyway. After NIL, if a student athlete got 1099 income from NIL for $100k, they would have to include the non-qualified expenses portion of their scholarship and pay taxes on $120-140k of income, whatever it came out to be.

I said early on when NIL was beginning that the athletic departments needed to provide some financial education to the athletes. I would be willing to bet that several athletes around the country got 5 figure or higher checks, 1099s, and never paid taxes on it. I also think it would be a safe bet that some of those spent all of the money and wouldn't have the money available to pay the IRS if they get audited. If the players are paid as actual employees and taxes are withheld when check are cut, it might help prevent that situation.

I hope you don't drop support for GT athletics yet. If college athletics become completely non-educational minor league teams for the NFL, my support will probably drop also. However, I think many people who are upset that players are going to be paid have simply been in denial about what college football has been about in the recent past. Even when you were playing, Bobby Dodd was upset with the SEC teams for treating players like employees. Signing as many as they could get and then just cutting players for athletic performance. In my biased opinion, GT has treated players much better. Even if a player isn't cutting it, if they wanted to stay and get their degree they have been able to. At many schools it has been purely a business. Athletes do the absolute minimum to remain eligible. Athletes are simply cut if their performance doesn't match what the coaches thought it would be. At many schools the ONLY difference between them and a professional sports team is that they don't pay the athletes.

 

[Oakland]

It gets even more interesting. If athletes are considered employees, then state ethics guidelines and laws take effect. Not every state has the same rules on ethics, so a new battleground will emerge. It's particularly interesting for GA as the law mentions "Learning Management Systems" specifically. So it looks like not only can GA universities pay, but ... the GA legislature will have to issue rules.

Governor's Code of Ethics

State employees are expected to demonstrate the highest level of professional integrity as they conduct their daily business on behalf of the citizens of Georgia.

doas.ga.gov

Good point. If a player is found to violate a state ethics code, he or she could be fired and probably couldn't play for another school in Georgia. This is all hypothetical.

 

[Pappa P]

For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.

I do feel sorrowful about the state of college football. I do feel like the days of GT football might be numbered at this point.

I agree. But I won’t judge others for continuing to support college athletics as it ventures forward with direct payments to players. And while I will not continue my support, God knows I’ve supported for decades an ever increasing system forever impacted by large amounts of money. So I helped create this situation. In good conscience though, I cannot continue. And I don’t pretend it makes me better than others who will continue to support college sports. I certainly expend money in other ways that could benefit others. I have my share of idols I don’t want yo give up.

 

[roadkill]

From ESPN:

The $20 million per year is not related to past athletes, it is to pay current/future athletes. However, that is not negotiated with the current athletes as a whole. Even if you get current athletes to sign a contract to receive part of the $20 million from their school, it is still collusion among the schools and conferences to arbitrarily limit payments to players. Players that the schools themselves will be paying as employees. (or athletic departments of the schools) It isn't a collective bargaining agreement, it is a forced situation to the current and future players. I don't know much about employment law, but I think that if you want to have multiple employers agree to maximum compensation, then you need a collective bargaining agreement with the employees to do that.

Does the proposed agreement set a cap on compensation? That's not clear to me. I also don't believe that the NCAA at this stage would deliberately set up an agreement that still runs afoul of antitrust.

 

[stinger78]

When will the IRS, states, counties and cities start collecting income taxes on these folks? And with California in the mix of ACC schools now, they have some bizarro tax laws for athletes coming in to California to play for pay.

N-I-L & now athletic schollies, room & board, tutoring, swag, transportation to & from game sites, et al, should all be taxed.

Going to be some very interesting unintended consequences from this nonsense.

Makes being a walk-on with HOPE or ROTC or National Merit or whatever all the more attractive.

This may be what finally kills it for this old TechEx.

I cannot wait to hear the backpedaling from these kids when the tax man cometh. Maybe they can sue for government reimbursement?

 

[UgaBlows]

So why isn’t everyone alive who’s ever played cfb not getting paid? And is Tech going to have to pay this out of the Athletic Dept funds? Will that bankrupt us?

 

[roadkill]

I don't think it will be any different with regards to scholarships. I believe that qualified educational expenses are generally not taxable income, while things like money from room and board are taxable. I think that the way it worked before NIL was that the room/board/stipend portions of full ride scholarships were taxable, but most student athletes didn't have other income which would mean the income would be too low to pay taxes on anyway. After NIL, if a student athlete got 1099 income from NIL for $100k, they would have to include the non-qualified expenses portion of their scholarship and pay taxes on $120-140k of income, whatever it came out to be.

I said early on when NIL was beginning that the athletic departments needed to provide some financial education to the athletes. I would be willing to bet that several athletes around the country got 5 figure or higher checks, 1099s, and never paid taxes on it. I also think it would be a safe bet that some of those spent all of the money and wouldn't have the money available to pay the IRS if they get audited. If the players are paid as actual employees and taxes are withheld when check are cut, it might help prevent that situation.

I hope you don't drop support for GT athletics yet. If college athletics become completely non-educational minor league teams for the NFL, my support will probably drop also. However, I think many people who are upset that players are going to be paid have simply been in denial about what college football has been about in the recent past. Even when you were playing, Bobby Dodd was upset with the SEC teams for treating players like employees. Signing as many as they could get and then just cutting players for athletic performance. In my biased opinion, GT has treated players much better. Even if a player isn't cutting it, if they wanted to stay and get their degree they have been able to. At many schools it has been purely a business. Athletes do the absolute minimum to remain eligible. Athletes are simply cut if their performance doesn't match what the coaches thought it would be. At many schools the ONLY difference between them and a professional sports team is that they don't pay the athletes.

As a former co-op student and an employee of GTRI, I would have been ineligible to play had I wanted to. In principle, this is a ridiculous notion. I think the core issue with most fans isn’t that athletes shouldn’t be able to have some income, but the concern over the best athletes going to the highest bidder, such that college sports become essentially a pay-to-win game. This is already taking place with NIL. Let’s hope that those in charge recognize the need to preserve a semblance of competitive parity.

 

[RonJohn]

Does the proposed agreement set a cap on compensation? That's not clear to me. I also don't believe that the NCAA at this stage would deliberately set up an agreement that still runs afoul of antitrust.

I haven't seen the actual agreement, only the reporting about it. What has been reported is that the P4(or5) conferences have agreed to pay about $20 million each in direct compensation to student athletes. It isn't the NCAA, it is the P4(5) conferences. I am making an assumption that the conferences/schools are agreeing to that $20 million each per year. It might be a minimum or a maximum instead of a fixed amount. If it is four conferences and 60-70 schools agreeing to a fixed price for labor pool, that seems exactly like collaboration to fix pricing to me. If I misunderstand the agreement, then I am likely wrong.

 

[LongforDodd]

I cannot wait to hear the backpedaling from these kids when the tax man cometh. Maybe they can sue for government reimbursement?

If past is prologue, as they say, every four years a tax forgiveness program may become available.

 

[roadkill]

I haven't seen the actual agreement, only the reporting about it. What has been reported is that the P4(or5) conferences have agreed to pay about $20 million each in direct compensation to student athletes. It isn't the NCAA, it is the P4(5) conferences. I am making an assumption that the conferences/schools are agreeing to that $20 million each per year. It might be a minimum or a maximum instead of a fixed amount. If it is four conferences and 60-70 schools agreeing to a fixed price for labor pool, that seems exactly like collaboration to fix pricing to me. If I misunderstand the agreement, then I am likely wrong.

You're correct that any group, whether it's the NCAA or the conferences, setting either a fixed price or a cap on athlete compensation does sound like price-fixing. I'd still be astonished if any attorney involved in this process wouldn't try to avoid that, given the circumstances.

 

[roadkill]

In case anyone hasn't seen this from Cabrera and Batt:

A Message from Ángel Cabrera and J Batt

A message to the Georgia Tech community from Tech's President and A.D.

ramblinwreck.com

I am encouraged that Cabrera's is the first signature.

 

[RonJohn]

You're correct that any group, whether it's the NCAA or the conferences, setting either a fixed price or a cap on athlete compensation does sound like price-fixing. I'd still be astonished if any attorney involved in this process wouldn't try to avoid that, given the circumstances.

Purely speculation on my part, but I think they are trying to get ready for a labor negotiation. This is a settlement of this lawsuit with these plaintiffs. Start paying the players and a union will form shortly thereafter. They can go into the negotiations having already started to pay players and setting a base for the beginning of the negotiations. The union will probably try to start at something like the NFL's approximately 50% of revenue. The P4 conferences definitely don't want to start at that point.

 

[orientalnc]

The problem with the pre-House environment was that the NCAA and their members set a salary cap for every SA. It was set at zero, but setting at higher level is still an illegal salary cap. If zero was illegal because it set a limit on what a college could pay an athlete, then $20 million should also be illegal. A big bag of money is better than an empty bag, but the size of the bag should be determined by market forces if having a bag is legal. The fact that all these conferences and the NCAA quickly ratified the agreement looks suspiciously like it was a pretty good deal for them.

Here is an extreme example:

Jose is the #1 qb in his class and is being recruited by everyone. His dad is the head coach at State U. He wants to play for his dad's team, but they have used up all of their allowed $20 million. Jose has offers for several million from multiple teams, but State U. is where he wants to play and they are willing to match the offers from other teams. He sues the NCAA for constraint of trade in setting an arbitrary limit on what State U. can pay its athletes. We already know a HS recruit is suing Florida for not paying him the promised $1 million signing bonus on a $13 million NIL deal he had. $20 million is not going to last long at those prices.

I believe this will be appealed by someone (maybe a BigEast basketball school) and the settlement will be delayed while the appeals play out. Also, the Fontenot plaintiffs might appeal the whole mess if the NCAA appeals the exclusion of that case from the House class. There is also the possibility that someone like Zion Williamson will appeal a flat retroactive award when he could have gotten millions more than some other former player in the class had he been able to negotiate his own deal. Also, the judge may say it doesn't resolve the issues at stake and there impacted entities that did not have a say in the settlement.

 

[forensicbuzz]

Does the proposed agreement set a cap on compensation? That's not clear to me. I also don't believe that the NCAA at this stage would deliberately set up an agreement that still runs afoul of antitrust.

There will never be a cap. There will be a cap on what a school can do, but individuals outside school can always hire someone for their NIL and pay them whatever they want to pay them. There's no way to control that without it being constraint of trade and challenged. So, schools will pay up to whatever is agreed to and then outside boosters will put the cherry on top. The haves will still have the advantage, always will.

 

[gte447f]

I don’t think you would have mid season transfers cuz I would expect contracts would be signed if they become employees and/or not students at all anymore.

4 year contracts I hope

 

[gte447f]

There will never be a cap. There will be a cap on what a school can do, but individuals outside school can always hire someone for their NIL and pay them whatever they want to pay them. There's no way to control that without it being constraint of trade and challenged. So, schools will pay up to whatever is agreed to and then outside boosters will put the cherry on top. The haves will still have the advantage, always will.

I agree with what you say about outside compensation, but the cap on school spending still doesn’t seem right.

 

[awbuzz]

From J and Angel

 

[LT 1967]

From J and Angel

View attachment 16199

From J and Angel

View attachment 16199

Thanks for posting. I like their Positive Attitude and Confidence!

 

[forensicbuzz]

I agree with what you say about outside compensation, but the cap on school spending still doesn’t seem right.

It will only happen with a CBA, which I don't know if that's possible with how big the system would be. What if these kids are under 18? That money actually can be taken and managed by their parents, unless they're emancipated.

 

[RonJohn]

It will only happen with a CBA, which I don't know if that's possible with how big the system would be. What if these kids are under 18? That money actually can be taken and managed by their parents, unless they're emancipated.

You seem to be making a couple of different points there. I think the CBA would be with either the P4 or a super league, not with NCAA athletics as a whole. I am thinking the super league is becoming more and more possible.

How many student athletes are under 18 when they report to college? I'm certain there are some, but it is probably a very low number. What happens when high school kids have part time jobs? Their parents can control, manage, and even take away that money? Should high school kids be prevented from having part time jobs because it is possible for their parents to control that money? I don't understand what this point has to do with paying college students.