Anti-trust lawsuit against NCAA

[Mike80]

I don't understand why unionizing would matter to taxation. Twice in the article, they say the schollies would become taxable if they unionize. But if they are ruled to be employees, and the schollies are compensation, wouldn't that make that income taxable immediately (maybe even retroactively)? Employees are taxed; employees can unionize; aren't those separate issues?

Basically they are asserting that the act of unionization itself would make the players into employees per IRS rules... which is a very odd stance, since they have to be employees in the first place in order to unionize.

Guess I ought to read the ruling at some point...

I think what the Northwestern guys are shooting for is better health benefits by calling themselves employees while also trying to avoid the taxes with calling the scholarships compensation for being employees. Good luck with that - the IRS will always get their pound of flesh....

and this will eventually land in Title IX land - someone will represent a female athlete who feels that they should get the same benefits as the unionized football players do - this is Pandora's box opening up for college athletes and athletic departments.

 

[OH10]

Asked a tax attorney I know yesterday. Says scholarshps are tax exempt and this ruling would have no impact on that.

 

[OH10]

I would disagree with you there.

I'm not entirely sure what you mean by OUTSIDE THE CLASSROOM, or what your point is there. But quite a few people who bring money to the university academically do so outside the classroom, e.g. from a laboratory.

If your view is that Universities shouldn't derive income from athletes, I suppose that is true. But that's not my view nor is that the point I was addressing. I was addressing the question of why profits from jersey sales should more obviously be redirected to athletes' pockets than should, say, profits from ticket sales or from tv contracts.

The OUTSIDE THE CLASSROOM aspect is very important. And if you read the ruling, you'd understand its importance. Academic scholarships are generally contingent upon performance in the classroom. The athlete has additional responsibilities to provide labor to the university to maintain their scholarship IN ADDITION to what they do in the classroom. It's not a particularly complicated distinction.

Profits from jersey sales are more directly derived from an athlete's likeness. If Ohio State and Nike think that somehow jersey sales are based primarily on the university brand, then why is it necessary to use the number of the most recognizable player on the team? Why not just, I don't know, sell a jersey with the number 1 on it every year instead of blatantly changing it to reflect the popular player of the day? That's why we argue about redirecting some of that money to the athlete. Again, not a particularly difficult distinction.

I'm not sure if this was just a rhetorical point, but how would you implement a system in which only "generic numbers" are printed on jerseys? Should Universities be required to put out a list of star players every year whose numbers can't be printed on jerseys? Or should fans be forced to walk around with jerseys that have square-root-of-negative-one on the front (which would actually be kind of cool, so long as you didn't mind getting your ass kicked)?

All absurd suggestions aside, this is not a difficult problem. The universities and apparel companies have been fairly blatant in their attempts to profit off players like Braxton Miller and Johnny Manziel. But I'm sure the #5 jerseys on the shelf are just a coincidence... and if you can convince yourself of that, you can convince yourself of just about anything.

 

[Jaxbuck]

Outline of 11 issues the college football players' union expects to bargain for and about (none of which will bring about the destruction of college football as we know it):

http://www.sbnation.com/college-foo...8/college-football-players-union-pay-for-play

But doom and gloom away people...

Can we get a Vbet set up for the next 11 issues they'll want addressed?

Then the 11 after that?

I've seen you use the phrase "laughable" and "hilarious" many times in this thread. For the record I find it highly amusing that anyone past the age of reason is naive enough to think a Union will stop asking for concessions.

Once an institution is created the only thing that matters to it is survival. They don't just volunteer to go away. There will be bureaucrats that are fond of their jobs and want to keep them, they will find new issues that need addressed "for the good of the people/workers" to justify their existence.

 

[jlb1705]

Just how would colleges force this on the NFL? Do you think the NFLPA would agree to cutting off a nice piece of the pie and handing it over to these kids? Would the NFL teams who drafted the players and are paying them get to decide where the kids go to school?

They could have started by backing Maurice Clarett in his lawsuit instead of backing the NFL. That move was extremely shortsighted.

 

[OH10]

Can we get a Vbet set up for the next 11 issues they'll want addressed?

Then the 11 after that?

I've seen you use the phrase "laughable" and "hilarious" many times in this thread. For the record I find it highly amusing that anyone past the age of reason is naive enough to think a Union will stop asking for concessions.

Once an institution is created the only thing that matters to it is survival. They don't just volunteer to go away. There will be bureaucrats that are fond of their jobs and want to keep them, they will find new issues that need addressed "for the good of the people/workers" to justify their existence.

I find it highly amusing that people feel threatened by college athletes organizing together to bargain for anything just because they're concerned they may bargain for too much, eventually. As if that isn't the American way.

Everyone should have the right to organize for bargaining if they feel it is in the group's collective interests. Simply because that group (just like any ordinary person or institution) may eventually overplay their hand shouldn't exclude them from that right. So, yeah, I think all of the visceral opposition to this union is laughable (and, quite frankly, selfish).

 

[OH10]

They could have started by backing Maurice Clarett in his lawsuit instead of backing the NFL. That move was extremely shortsighted.

Yup. If they had done that, they could have possibly forced a settlement mutually beneficial to the NCAA and its athletes in the long term.

 

[ORD_Buckeye]

They could have started by backing Maurice Clarett in his lawsuit instead of backing the NFL. That move was extremely shortsighted.

Yep. As much as I loathed Clarett back then, I fully supported his lawsuit because I thought it was both correct from a moral and legal standpoint and ultimately in the best interests of college football and more importantly higher education.

 

[ORD_Buckeye]

Asked a tax attorney I know yesterday. Says scholarshps are tax exempt and this ruling would have no impact on that.

Not so fast, my friend. I think the can of worms--particularly if actual payola is also added to the equation--has now made athletic scholarships different from academic scholarships. Academic scholarships are integral to the university's core mission. Students are not seen as employees of the university. Students are getting them not for "doing a job" but simply to defer the costs of attending the university. Now, you have the NLRB ruling that football players "are doing a job" for the university and directly stating that their scholarships are their "in kind compensation" for the performance of that job. I think that has created a fundamental divide between the two types of scholarships.

I was never a TA at Chicago. I was in a terminal Masters program, and only high level Ph.D students did any kind of teaching at U of C. I do, however, believe that graduate students remuneration for GA and TA duties is separate from their scholarships and fellowships. Can anyone tell me specifically whether the former are taxable in contrast to the tax-exempt status of the latter.

 

[Oh8ch]

From the IRS:

Tax-Free Scholarships and Fellowships

A scholarship or fellowship is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution.

A scholarship or fellowship is tax free only to the extent:

• It does not exceed your expenses;
  
  
• It is not designated or earmarked for other purposes (such as room and board), and does not require (by its terms) that it cannot be used for qualified education expenses; and
  
  
• It does not represent payment for teaching, research, or other services required as a condition for receiving the scholarship. (But for exceptions, see Payment for services,later.

Payment for services. Generally, you cannot exclude from your gross income the part of any scholarship or fellowship that represents payment for teaching, research, or other services required as a condition for receiving the scholarship. This applies even if all candidates for a degree must perform the services to receive the degree.

Example 1.

You received a scholarship of $2,500. The scholarship was not received under either of the exceptions mentioned above. As a condition for receiving the scholarship, you must serve as a part-time teaching assistant. Of the $2,500 scholarship, $1,000 represents payment for teaching. The provider of your scholarship gives you a Form W-2 showing $1,000 as income. Your qualified education expenses were at least $1,500. Assuming that all other conditions are met, $1,500 of your scholarship is tax free. The $1,000 you received for teaching is taxable.

http://www.irs.gov/publications/p970/ch01.html

 

[cincibuck]

Be careful what you wish for....

Yep. If this goes through, it won't stop at Northwestern and other private schools. Good bye any scholies to any sport other than football and basketball for men and when Title IX kicks in, basketball, possibly volleyball for women. All other non-revenue sports will either disappear, shrink to competition within a small geographical area, or revert to club level with all expenses on the players themselves.

I would look for many schools to drop athletics period. The MAC is a prime example. I sincerely doubt that any of those schools can meet their expenses from gate and TV revenues. I KNOW that Cincinnati depends upon the school's general fund to keep the football program running. I have to wonder about football surviving at Purdue, Indiana, Northwestern in the B1g, Vandy and Kentucky in the SEC and almost half of the ACC. Certainly U Miami will be hard pressed.

I see a huge upside to this. If the NCAA is banished, schools will have to come up with a governing body to take its place. That governing body will place all schools under the same rules (either everyone over signs or no one does, comes to mind). If the top fifty programs don't want to end up in a death struggle they will have to put a salary cap in place. Coaches salaries will cease to rival CEOs. Maybe college athletics will return to where - and as a huge Buckeye fan, it pains me to say this- they belong; games involving students, little more than intramural sports.

 

[cincibuck]

Be careful what you wish for....

Yep. If this goes through, it won't stop at Northwestern and other private schools. Good bye any scholies to any sport other than football and basketball for men and when Title IX kicks in, basketball, possibly volleyball for women. All other non-revenue sports will either disappear, shrink to competition within a small geographical area, or revert to club level with all expenses on the players themselves.

I would look for many schools to drop athletics period. The MAC is a prime example. I sincerely doubt that any of those schools can meet their expenses from gate and TV revenues. I KNOW that Cincinnati depends upon the school's general fund to keep the football program running. I have to wonder about football surviving at Purdue, Indiana, Northwestern in the B1g, Vandy and Kentucky in the SEC and almost half of the ACC. Certainly U Miami will be hard pressed.

I see a huge upside to this. If the NCAA is banished, schools will have to come up with a governing body to take its place. That governing body will place all schools under the same rules (either everyone over signs or no one does, comes to mind). If the top fifty programs don't want to end up in a death struggle they will have to put a salary cap in place. Coaches salaries will cease to rival CEOs. Maybe college athletics will return to where - and as a huge Buckeye fan, it pains me to say this- they belong; games involving students, little more than intramural sports.

 

[Oh8ch]

On further review it would seem that the statement "It does not represent payment for teaching, research, or other services required as a condition" would already make football scholarships taxable since playing football is a condition of the scholarship.

 

[cincibuck]

Not so fast, my friend. I think the can of worms--particularly if actual payola is also added to the equation--has now made athletic scholarships different from academic scholarships. Academic scholarships are integral to the university's core mission. Students are not seen as employees of the university. Students are getting them not for "doing a job" but simply to defer the costs of attending the university. Now, you have the NLRB ruling that football players "are doing a job" for the university and directly stating that their scholarships are their "in kind compensation" for the performance of that job. I think that has created a fundamental divide between the two types of scholarships.

I was never a TA at Chicago. I was in a terminal Masters program, and only high level Ph.D students did any kind of teaching at U of C. I do, however, believe that graduate students remuneration for GA and TA duties is separate from their scholarships and fellowships. Can anyone tell me specifically whether the former are taxable in contrast to the tax-exempt status of the latter.

I was a GTA at that other UC, Cincinnati. I received tuition and a monthly stipend. I monitored student teachers in a practicum, not their final "student teaching." I was also receiving GI Bill ed funds. I don't recall either being taxed - but then I was driving a 1950 Chevy and eating a lot of Ramman noodles. You can't take tax blood from a turnip.

 

[zincfinger]

The OUTSIDE THE CLASSROOM aspect is very important. And if you read the ruling, you'd understand its importance. Academic scholarships are generally contingent upon performance in the classroom. The athlete has additional responsibilities to provide labor to the university to maintain their scholarship IN ADDITION to what they do in the classroom. It's not a particularly complicated distinction.

The issue wasn't the complication of the idea, it was what bearing it has on anything. AS I noted, there are plenty of cases of non-athletic scholarships being contingent on things that happen outside the classroom, such as the one I gave above of a laboratory researcher.

Profits from jersey sales are more directly derived from an athlete's likeness. If Ohio State and Nike think that somehow jersey sales are based primarily on the university brand, then why is it necessary to use the number of the most recognizable player on the team? Why not just, I don't know, sell a jersey with the number 1 on it every year instead of blatantly changing it to reflect the popular player of the day? That's why we argue about redirecting some of that money to the athlete. Again, not a particularly difficult distinction.

The point was not that jersey sales are based primarily on the university brand or primarily on the performances and identities of individual players. It was that they are based substantially on both, in a way that is probably not quantitatively deconvolutable. Just as ticket sales, tv contracts, and all the other revenue streams deriving from football are.

All absurd suggestions aside, this is not a difficult problem. The universities and apparel companies have been fairly blatant in their attempts to profit off players like Braxton Miller and Johnny Manziel. But I'm sure the #5 jerseys on the shelf are just a coincidence... and if you can convince yourself of that, you can convince yourself of just about anything.

I think it was clear even to you that no one was suggesting it is coincidental that OSU sells jerseys with #5 on them. No one disputes that Universities profit from the performances and identities of their star players. That's largely the point of all the various forms of marketing that surround a revenue sport. The question was why jerseys with player numbers are a particularly objectionable way of doing it. You can continue your serial exercises in pointless, self-congratulatory sarcasm. Or you can consider and discuss the legitimate questions being raised on both sides, in a way that actually says something. I know which way I'm betting.