The holiday season is a time to consider a generous gift to those in need, such as a food bank, a homeless shelter or perhaps the athletic department at your alma mater to help finance the buyout of the recently fired football coach.
Say what?
With more than a month left in the college football season, over a dozen universities are already on the hook for a record $228 million in buyouts to 15 fired football coaches, and much of this will be financed by tax-deductible donations from alumni.
It’s unlikely that when Congress created the charitable tax deduction a century ago, it envisioned it as a tool to subsidize losing college football programs. University athletic departments should no longer be treated as charities.
The most notable buyout this year is the $54 million severance package LSU owes fired football coach Brian Kelly, which is reported to be underwritten by one donor.
Kelly’s buyout is still short of the record $76 million that Texas A&M owed fired coach Jimbo Fisher in 2023. LSU hired Ole Miss coach Lane Kiffin Sunday to replace Kelly with a pay package worth $13 million annually over seven years, making Kiffin one of the highest-paid coaches in college sports.
These buyouts are just the latest in what has been an expensive pattern by top collegiate athletic programs. According to the Knight Commission on Intercollegiate Athletics, the universities in the 10 conferences that compose the Football Bowl Subdivision — and who compete for the national championship — have paid out over $852 million in severances to coaches fired between 2012 and 2024. This year’s buyouts brings the total to over $1 billion.
While this is certainly a staggering sum, these schools and conferences generated nearly $110 billion in revenue over the same period.
As Sen. Maria Cantwell (D-Washington) reminds us in a recent letter to Congress’s Joint Committee on Taxation, “Unlike professional sports, however, the NCAA and athletic conferences operate as tax-exempt organizations because they are under the umbrella of the tax-exempt educational institutions with whom they are affiliated.”
While athletic departments rely heavily on revenue from media rights, corporate sponsorships and ticket sales, charitable donations play a key role.
At LSU, donations accounted for 37 percent, or $82 million, of the athletic department’s total revenue of $220 million in 2024. Media rights and distributions from the NCAA accounted for 28 percent ($61.6 million) and ticket sales 24 percent ($51.8 million).
To rein in coaches’ salaries, Rep. Michael Baumgartner (R-Washington) recently introduced the Correcting Opportunity and Accountability in Collegiate Hiring (COACH) Act. It would limit the amount an athletic department could pay an employee to no more than 10 times the amount of the in-state tuition for a full-time undergraduate student.
This is well-intentioned, but the base salary most coaches are paid is a fraction of their total compensation from endorsements; shoe deals; name, image and likeness (NIL); and appearance fees. As we have seen with attempts to restrict corporate chief executive compensation, there are always ways to game the rules.
In a broader effort, Cantwell has asked the Joint Committee on Taxation to help her “develop legislative proposals that address the tax implications associated with the future of college athletics.”
This could mean removing the tax exemption for the NCAA, member institutions and their affiliated conferences.
Or it could mean taxing the revenue these organizations receive from TV contracts, corporate sponsorships, ticket sales, advertising and licensing — just as professional sports teams are taxed.
